A new study by Optalysys has highlighted significant barriers to growth for UK financial services firms, primarily due to persistent concerns over data security.
Conducted in partnership with Obsurvant, the survey engaged over 250 IT decision-makers within the sector, revealing that 70% perceive data security issues as a major impediment to their company’s growth, according to FinTech Finance.
The research coincides with the introduction of the EU’s Digital Operational Resilience Act (DORA), which mandates robust ICT resilience for financial entities. Despite these regulatory requirements, only a third of the respondents feel fully prepared to comply with DORA, underscoring the challenges of aligning current practices with regulatory expectations.
Further findings expose the practical impact of these security concerns: 39% of IT decision-makers are hindered from collaborating with external entities, and 45% struggle with managing or accessing sensitive data internally. This situation not only affects operational efficiency but also limits opportunities for innovation within the sector.
Dr Nick New, CEO of Optalysys, emphasized the significant repercussions of outdated data security measures, stating, “The financial services sector is the lifeblood of the UK economy, yet businesses are being limited by outdated approaches to data security. Simply put, businesses can’t harness the real power of AI or can’t unlock the full value of their data because they are too busy trying to keep it safe. This is a massive missed opportunity and it’s holding the entire sector back.”
Dr. New also highlighted the potential of emerging technologies such as Fully Homomorphic Encryption (FHE) to revolutionize data security. FHE enables encrypted data to be processed without decryption, facilitating secure and efficient inter-organisational collaboration. This technology could potentially transform how financial services firms approach data security and collaboration, aligning with governmental priorities to harness AI for economic growth.
The financial services sector, contributing over £200bn in 2023 and recognized as the UK’s fourth largest industry, faces substantial costs from data security measures—cited by 52% of respondents as a significant challenge. Despite heavy investments in security, 44% of organisations still experienced data breaches or unauthorized access last year, indicating a critical need for enhanced protective technologies.
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