The Augentius 2018 Technology Survey reports that over half of the global private equity and real estate fund managers (PERE) managers contacted are dissatisfied with their firm’s current cybersecurity arrangements. It also confirms that 54% of firms have a commitment to investing in more effective cyber security measures. They also plan to spend on business enabling technologies such as data management and cloud services.
While these trends are consistent in companies around the globe, the need to improve cyber security is strongest in PE firms based in Europe. This is not surprising given the regulatory burden of the Alternative Investment Fund Managers Directive (AIFMD) and the strict legal requirements of General Data Protection Regulation (GDPR). Although the May 2018 deadline for compliance to GDPR has now passed, many companies are still struggling to ensure they meet the requirements of Article 30 (Security of Personal Information) and Articles 33/4 (Notification of Data Breach).
Private Equity Behind in the Financial Services Industry
The Survey comments that the PERE community has been traditional seen as being conservative regarding its tech investment, particularly when compared to the rest of the financial services industry.
Ian Kelly, Group CEO of Augentius, explained: “It’s fair to say the old stereotype of the industry lagging behind when it comes to seeing the importance of technology is now firmly outdated. The results underline how attitudes have shifted. There are positive signs that regulator warnings about the rising threat of cybercrime are getting through to the industry and having the desired effect on investment in this area. However, with half of the industry less than satisfied with their arrangements there is clearly still some road left to travel – regulators have been clear that there isn’t any room for half-measures on this front.”
Barriers to Investment
While attitudes may have shifted, there still appears to be many barriers to future investment in technology. Although dependent on size and type of the PE firm, the long-standing problems of ageing legacy IT systems and the lack of technology leadership and skills remain formidable obstacles. The latter is a particularly a problem in cyber security as recruiting skilled IT professionals is time consuming and expensive for most small companies. For many businesses, partnering with a trusted third party in an outsourced relationship is the only way to solve this skills gap.
Transforming PE Business in the Future
The Augentius Survey also asked managers which areas of technology they believed were most likely to transform the way they do business in the future. 68% of respondents chose data management and cloud services and 29% selected investor communication portals. There was also an indication that artificial intelligence and machine learning could have a significant impact within the next three to five years.
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Wizard Cyber is specialist cyber security provider to private equity firms and their partners in the UK. We are a trusted supplier to many of the leading PE firms and deliver 24/7 outsourced cyber security via our flagship range of CYBERSHIELD MDR services.
