WASHINGTON One problem for bankers trying to drag their industry into the future: "innovation" often becomes a code word for defensive action.
That was the case at a panel discussion of financial chief executives on Thursday. The Financial Services Roundtable gathered top executives from Visa (NYSE:V), Fifth Third Bancorp (FITB), GE Capital (GE), and insurers Allstate (ALL) and Principal Financial Group (PFG) to discuss the topic of "innovation in financial services." But the first and most looming part of the discussion revolved around cybersecurity and what financial companies can do to stave off the mounting online threats to their data and systems.
"There's nothing more important than ensuring security," Ryan McInerney, the president of Visa, said during the panel, adding that "the stakes are higher than ever" after recent massive data breaches at Target (TGT) and other retailers.
"Our job is to be more innovative than the people who are trying to steal" financial information and customer data, he added.
The speakers eventually worked their way around to less security-based "innovation" topics, including mobile payments and alternative currencies. McInerney was even asked to weigh in on the hot topic of the financial technology world of the moment: bitcoin.
"We study it, and I think there's a lot we can learn from it" especially when it comes to applications like peer-to-peer lending, McInerney said. But he stopped short of proclaiming himself a bitcoin advocate: "I don't own any bitcoin," he said in response to an audience question.
Still, most of the discussion Thursday remained focused on more defensive topics, especially the mounting cyberthreats that financial companies face and what they can and can't do to defend against virtual attacks. It's a hot topic in Washington these days; the Roundtable's event took place a day after the Securities and Exchange Commission hosted a similar discussion.
After the panel, several executives called on the government to do more to help their data security efforts.
Legislation is "desperately needed," Tim Pawlenty, a former governor of Minnesota and the head of the Roundtable, told reporters.
"It is a serious, evolving threat to the nation's financial infrastructure and to the cyberintegrity of the country and the economy," he said, adding that the trade group is urging the Senate to take up a cybersecurity bill that has advanced in the House.
The House Homeland Security Committee in February approved a bill that would lay out clear security standards for federal government systems and private-sector networks deemed to be critical to the economy. Pawlenty urged lawmakers in January to pass legislation that encourages better sharing of information between government authorities and the private sector, establishes stricter penalties for data criminals and requires heightened security for retailers and other industries.
A flood of data security bills have been introduced in the Senate that would, among other things, establish uniform standards for notifying those affected by a breach.
Thomas J. Wilson, the chairman and CEO of Allstate, joined Pawlenty's call to action: "We're being attacked every day and there are certain things we don't have the ability to do in terms of sharing those attacks with other people," he told reporters.
Rethinking hiring and recruiting tactics is one way that banks and financial companies are trying to stay ahead of the criminals, the executives said during the panel.
McInerney says that Visa is looking for more people with experience in law enforcement, and for programmers who speak different languages. Bill Cary, the chief operating officer of GE Capital, said his bank has set up recruiting centers near Detroit and New Orleans, two cities that have a higher concentration of government personnel after local crises. Kevin Kabat, the chairman and CEO of Fifth Third, mentioned that his chief operating officer and chief information officer had previous experience at, respectively, energy and tech company Emerson Electric and General Electric, and added that the Cincinnati bank had just hired someone from West Point.
"As cybersecurity becomes more understood and broader, we're going to have to grow with that," Kabat said.
Even a discussion about financial companies' willingness to invest in technology circled back around to cybersecurity. Larry Zimpleman, the head of Principal Financial Group, told reporters that his company spends roughly $250 million per year on technology, and considers about a quarter of its 13,000 employees to be in IT.
"That's a huge investment and commitment around IT, but it's what's necessary today to continue to be competitive in the business, manage your expenses and still provide the sort of defenses that you need in a world that has the cyberattacks that literally can come at you at any moment," he said.