The first day of the Mediterranean Smart Cards Company (MSCC) conference, “Together for a Better Africa, wrapped up with a panel focused on outsourcing business in the context of maintaining security and improving companies’ bottom lines.
With a lack of basic banking services infrastructure in Africa, the panelists said, outsourcing is a critical way to spur business on the continent. But outsourcing, with all the data transfer that it entails, runs security risks that companies must overcome or risk losing the confidence of their clients.
“Security can actually be an opportunity to improve your bottom line, said Mani Tulasi, account information security manager for Visa.
One of the aims of Tulasi’s talk was to debunk the idea that secure networking is a drag on business. Banks, by and large, he said, are committed to building security infrastructures, but they view the costs as a major burden to their bottom-line.
Tulasi, though, encouraged banks to look at the security issue from another angle.
Data theft, he said, impacts a bank’s brand, share price, and, ultimately, its bottom line. On the flip side, if a bank were to build a reputation as a secure institution with which to do business, it may thrive as a result.
This line of reasoning may be especially true in Africa, where the population is still broadly skeptical of banks.
Tulasi warned that banks should not underestimate the costs of a security breach. In the short term, he said, banks would have to spend to contain the problem, hire legal counsel, and launch an investigation. In the long term, a bank will suffer “negative brand impact, fines and penalties, and loss of consumer confidence, among other costs.
Trueb is a Swiss-based card design and manufacturing company based in Switzerland that has made significant inroads to the African market.
According to Moritz Wittwer, Trueb’s sales manager for the international division, his company specialized in offering clients a complete approach to card issuance. From the design, to the manufacturing, to the chips and the printing, Trueb is working to offer full business solutions to African countries.
According to Wittwer, Trueb offers a variety of security options to customers and works with the client to balance the need for a secure card network and cost constraints.
One of its major products is DynaPrint, which produces cards with sophisticated optical properties. Tilting a DynaPrint card reveals to different sets of numbers. It’s a hologram-like illusion that is difficult to counterfeit. Trueb offers a number of products in this vein, aimed at protecting the physical integrity and uniqueness of a card.
Earlier this year, Trueb launched a major business operation in South Africa. While not in the banking business, Trueb won a tender to design and issue new passports for the African nation that would meet the security standards issued by the International Civil Aviation Organization (ICAO).
The data pages on the new passports are laser engraved in order to prevent fraud.
Kofo Akinkugbe, the CEO of Secure ID, said that Africa, while “still a cash-based society, has shown “remarkable growth in cards.
In growing the card market in Africa, Akinkugbe said, banks should adopt the EMV standard, one of the most secure methods under which cards and machines interact. EMV stands for the names of the three companies that championed the technology: Europay, MasterCard, and Visa.
EMV has taken a strong share in the market, boasting over 730 million cards that comply with its standards as of the beginning of 2008.
EMV cards are characterized by microchips that contain data in a more secure fashion than the tradition magnetic strip does. The key, though, has been to develop machines that also comply with the EMV standards so that they can read EMV compliant cards.
“Global interoperability between EMV cards and machines, including ATMs and credit card machines, is the aim of the EMV group. It represents a significant step towards developing universal security standards.
The last panelist to speak was Arinola Kola-Daisi, Skye Bank’s general manager of commercial banking.
Kola-Daisi made a strong case to African bank executives to outsource a number of their operations.
For one, she said, outsourcing is an effective means of reducing costs. Rather than setting up massive operations in home countries, sending some of the work to, say, Europe, is a way to keep expenses down.
Outsourcing is also a way, she said, to maximize efficiency. Sending some of the operations overseas allows banks or banking solutions companies to keep a streamlined team that can focus on local tasks instead of managing a vast bureaucracy.
Lastly, she said, outsourcing is a way to reduce risk. Instead of setting up divisions locally that need to build security operations from the ground up, banks might benefit by sending some of the most sensitive operations overseas, to companies that specialize in them.
Addressing security and cost were the two challenges that consumed this panel, tasked with discussing outsourcing. All of the panelists, though, concluded that outsourcing was a means of bolstering security and keeping costs down – two considerations that are likely to appeal to banks anywhere.
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