Should We Add Financial Services Majors to Cyber Buyer Lists?
It is striking to observe the financial services sector as an emerging slice in cyber company pie charts depicting revenue by customer. Though, not surprising given intrusion rates and multi-billion dollar insider trading scandals hitting headlines. In most cases, this market sector is currently focused on information assurance— contracting for situational analysis and insider threat tools, as well as services like vulnerability analysis, consulting and training.
This has led us to think about whether major financial services providers could be credible buyers for cyber companies in a sales process (particularly those focused on next generation “active defense”-type capability vice traditional information assurance).
Here’s how we are reasoning through it:
- Transferrable skill sets between defense and financials. Both have a similar problem space… global footprint, secure data, real time operations, as well as dispersed networks, supply chains, and operations.
- Majors may choose to have in-house capability as threat profile deteriorates.
- First mover advantage? A major’s commercial procurement process coupled with a large in-house IT infrastructure may sell out the backlog of a small cyber company thereby effectively making it a financial services firm (vice defense/intel) by the end of its five year plan.
- Majors have the financial wherewithal to competitively bid or outbid other sectors.
- Concentration of large banks could result in substantial competition to contract/purchase niche cyber companies.
- Would they retain existing defense business? (Probably not.)
- Financial services firms are most interested in leveraging defense/intel best practices and deploying “militarized” products/solutions. Can this “tie” be sustained?
- Financials are indirectly benefitting today from contractor defense threat understanding.
- Overall market/sector fundamentals may make financial services buyers reluctant to invest.
- Recruiting and retaining employees. Many employees of niche firms are attracted to the hardest State-level problems, clearances to work on diverse attack surfaces, and participation in national challenges.
On balance, we think the “CONS” are solvable, workable issues. It may be too early… but we are going to add this sector to our potential buyer list.