A man holds a laptop computer as cyber code is projected on him.
(photo credit: KACPER PEMPEL/REUTERS)
Israeli cybersecurity firms are increasingly developing their products in the financial services sector, using banks as a “sandbox” to test beta products before selling them to other companies.
Given that financial institutions are often the targets of hackers – and they can pay top-notch dollar for cyberdefense – fledgling financial-technology start-ups are seeking to work with banks, panelists said at a heated discussion at Fintech Week Tel Aviv 2018 on the Tel Aviv Stock Exchange Wednesday morning.
“One of the benefits to Israel’s relatively small size, also in the financial industry, is that people can reach a security manager at a bank directly, suggest a pilot project for a new innovative security solution and even in the biggest Israeli banks, two million users, that is a good testing environment,” said Keren Elazari, a senior researcher at Tel Aviv University’s Blavatnik Interdisciplinary Cyber Research Center. “The community we have in Israel – it allows innovative security companies to quickly and dynamically bring creative solutions to banks, to Israeli banks, to test them out.”
Many of the cybersecurity companies that service the fin-tech sector specialize in threat intelligence, identity and access management and antifraud technologies.
Other firms help banks with beefing up authentication for online transfers and in-store payments.
Locally, banking competitors are already cooperating with each other by anonymously sharing information about security breaches, said Lavy Shtokhamer, financial center head of the Israel National Cyber Directorate.
“Think about a major bank in the US sharing an incident that happened anonymously with all the other banks, and all the other banks are implementing a solution to prevent such an attack,” said Shtokhamer, dismissing the likelihood of such cooperation.
Other Israeli security firms working in fin-tech can apply data analysis software to minimize fraud, seeking to detect patterns that could identity questionable activity and pinpoint identity theft.
“The market is looking for disruption, innovation and for a product that can be integrated into the corporate,” said Nadav Aleh, a partner at Ernst & Young’s security center. “There’s not enough time to do a three-year beta product,” since criminals will be onto the next cyber pitfall.
The short time frame gives an advantage to nimble Israeli firms focused on proactive friendly hacking and then fixing the computer code, as opposed to playing defense with a static firewall and antivirus software approach.
“Criminals are getting creative, moving upstream, and innovating all the time, coming up with a different technique to bypass security,” said Elazari. “Security by design – that in itself is not sufficient these days....
The more dynamic approaches are to create solutions, automatically use machine learning, algorithms, behavioral analytics.”
Aside from using AI tools, Elazari said that Israeli companies are good at offering automated attack simulation and incorporating security at each stage of the product software development team.
A more radical approach is to hire an Israeli “Red Team,” or employing an external assessment team to bring the full spectrum of technology techniques and approaches that a criminal organization may employ against a business. They could be physical intrusions, attempts at social engineering – or using your personal information to trick you online – along with planting gadgets in your work environment.
IN 2017, investors poured a record-breaking $815 million into the Israeli cyber ecosystem, totaling some 16% of all global investment in the cybersecurity industry, second only to the United States, according to a report by Start-Up Nation Central.
Cybersecurity has become a multibillion- dollar export for the Jewish state. There are around 420 active related firms based in Israel, as of the end of 2017. Thirty multinational corporations manage local cybersecurity- related R&D centers.
And Israeli cybersecurity firms are increasingly getting bought up for hundreds of millions of dollars. Some of these firms can boast Fortune 500 companies as clients, such as Check Point – the second-largest Israeli company by market valuation – which offers cloud-based threat protection services.
“What Israel has to offer, based on its interlocking ecosystem... as we all know, we’ve got government interlocked with the defense establishment, such as Unit 8200,” said Aleh. “We got the education system talking about cybersecurity, we’ve got innovative investors. Everyone is moving around, and this synergy is disruptive.”