Dec 22 2013, 8:12am CST | by Forbes
We are at war. The war I’m talking about doesn’t use those cute, bloodless drones that wreak havoc on foreign soil…or deliver Amazon baby wipes. This war is invisible and far more subversive. And you’re the target.
This week, Target confirmed unauthorized access to as many as 40 million debit and credit card accounts. That’s a huge lump to swallow. But Target is not alone. You’ve seen this headline over and over again. And those are just the breaches too big to sweep under the rug. Like a pretty girl sitting at the bar, it’s just a matter of time before your data gets approached by a lustful stranger.
Every day foreign hackers, sloppy security practices, or nefarious employees jeopardize your data. From credit card numbers to brokerage accounts to good old fashioned checking balances. They’re all at risk. Companies have invested billions in stopping it, but no one stuffs the big fat data genie back in the bottle. Ask the NSA. What happens next will have a profound impact on consumers, businesses and careers. Keep reading.
All money is digital - Most don’t think about it this way, but money has been digital since direct deposit. When was the last time your boss unrolled a wad of cash to pay you? When have you been handed a check to deposit? When have you looked at a physical stock certificate? You log in online to check balances, pay bills, and make transfers. Even if you don’t, your bank and employer does. Your entire net worth and life savings are nothing but numbers (or credits) on someone else’s computer. The Fed can create more numbers from thin air. You have to earn them to see the balances go up.
All money is networked – Every bank and merchant is connected to internal and external networks to facilitate transactions and provide customer service. Those networks also create potential holes for intruders. It’s just the way it is. Sure, it’s harder to break into a house that has no doors or windows, but why would you live in it? Same goes for money. Companies need doors and windows to do business. But they must do their best to make sure Russian hackers can’t break in. (I’ll cover in a future article why it always seems to be Russians…) It’s a risk that can be managed, but NEVERcompletely eradicated like cockroaches. It means having diligent inhabitants (employees) and good locks. It’s in their best interest to do so -their reputations and future earnings are on the line.
Explosive economics – As e-commerce took off, we gave our data to countless online and offline merchants. We signed up for direct financial accounts with banks or brokers and indirect ones like Paypal, iTunes or Mint.com. Every one of those companies stores your data to make commerce more convenient. They also do business with more and more specialists that require access to that data to do their jobs. Specialists range from marketing services to call centers to payment processors. No single merchant can ever all of them on their own. This increased frequency of exchange and storage increases the likelihood of breaches – simply because of math. There are more rooms in the house, more windows to protect, and more residents who might someday lose their keys.
Authentication is a joke – Passwords are a joke when it comes to authentication. There are too many of them and the experience of adding 2-step authorization (texting you temporary codes) is terrible. This has led to lots of passwords on Post-it notes and “social engineering” to get people to reveal enough details to raid their account or create a false identity. The good news is this will change soon.
I don’t need to explain why bad people might want your money or credit card details. As with the drug trade, as long as potential rewards are high, there will be a market. That means a massive shift of resources towards data protection. Like what happened in the real estate and finance bubble, our best and brightest will be siphoned into the data defense business, instead of building better end-products.
There will be more breaches, most of which you’ll never hear about. And a constant cat and mouse game among companies, criminals, and consumers. No one will be immune. Not if you buy food, have a job, or live anywhere but a log cabin near Ted Kaczynski.
Hackers will always be one step ahead, as in all security scenarios. They are the rogue “innovators”. (It’s not unlike how porn drives innovation in e-commerce.) The good news is it will open the door for smart, nimble entrepreneurs to compete with massive behemoths that take years to modify their legacy systems. When I was at Citi in 2006, the company was still integrating acquisitions from the late 90’s!
Some of the big innovations I foresee include:
Consumers aren’t completely helpless in all this. As we transition to better technologies, I suggest a healthy (but not conspiratorial) level of paranoia. Here are some things you should do to improve your chances.
Teach your kids how to code. They should know how the sausage is made, even if it’s too late for you. There will be jobs in cyber security. The army already has a “terrifying shortage of U.S. Cyberwarriors. Of course, if you’re an evil mastermind, ignore this message and stay analog!
Finally, don’t forget to sign up to the IdeaFaktory newsletter for updates on my future articles or visit IdeaFaktory for help creating and commercializing innovations and Upcelerator for selling and acquiring startups.
Source: Forbes Business
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.
blog comments powered by Disqus