Novastone CEO and Founder Douglas Orr took to the podium at this year’s Annual PAM Operations Dinner to discuss the risks of cyber security in the wealth management sector.
“Wealth managers need to embrace the hard things such as Cyber Security and realise there is no manual or business book to give them the answers”
This year’s dinner highlighted the opportunities and challenges behind technology, and its impact on the wealth management sector. A key topic which was considered was cyber security, a topic which was also the theme behind Mr Orr’s speech.
After selling a business to Sungard, Douglas become wealthy enough to engage in the services of a private bank. However, over the coming years one of his relationships with a private bank came to an end, due to its reaction over the dangers of cyber crime, guests were told at the dinner. One private bank, presumably after they saw the cyber risks surrounding emails, explained to Mr Orr that only fax or telephone calls where accepted as a means in which to provide instructions in regarding confidential information and monetary transactions . Douglas later explained that the problem with the aforementioned method was that “he had thrown out their fax machine” and since he was a busy entrepreneur he was very difficult to get an hold off during working hours, which resulted in countless missed calls from his bankers, and his bankers in turn missing his calls back.
Fortunately, Mr Orr had another private banking relationship which still took instructions via email. However, this private bank had an additional security layer, in which it would call back immediately after to ensure the account holder sent instructions via email, which was fine as long as you could answer a call in a meeting. Eventually this bank closed their email services too and later requested an additional £1m be deposited with it in order for it to continue offering services due to the reduction in transactional work resulting from the elimination of email services. Sadly, this episode resulted in Mr Orr reluctantly leaving a “long personal relationship” with yet another private bank: “I am passionate about the private banking and wealth management sector. I value the bespoke service it provides.”
Douglas said that the bank had “thrown the baby out the bath water” rather than “embracing the future.”
To read the rest of Douglas’s speech, please visit the Wealthnet.