Security acquisitions are on a roll, and this week IBM rocked the security community with its plans to acquire Trusteer for almost $1 billion dollars. What does this huge premium tell us? The online fraud problem is worse than ever, and fraud prevention is becoming a challenge for any company that does business online. Specifically, it points to a number of things:
- Financial services companies need fraud prevention now more than ever
- Online fraud has become such a major problem that financial services firms aren’t the only ones who need fraud prevention technologies
First, financial institutions are under attack as never before. In their recent 2012 Financial Stability Oversight Council (FSOC) report, the feds issued a strong warning to the financial services sector to beware of cyber threats, finding cyberattacks to be a significant “operational risk to institutions.” Criminals are leveraging cross-channel fraud (such as the recent online + NY ATM heist, that netted $45M) to extract ever-greater sums of money from banks.
Second, online fraud is now pervading every industry that conducts business online. CyberSource’s recent annual report estimated that online fraud cost e-retailers $3.5 billion in losses last year. While Trusteer might have built a very attractive business initially serving financial services companies, a company like IBM doesn’t pay that kind of a premium for a niche technology. Fraud prevention is going mainstream.
Not just the largest retailers, but also the tens of thousands of smaller businesses that conduct commerce online every day are going to have to address the fraud challenge quickly and effectively. That’s what makes the fraud prevention market so attractive.
Fraudsters are becoming smarter and more aggressive than ever, and are realizing that financial institutions are not the only lucrative online targets. IBM’s acquisition of Trusteer highlights the urgency in this market, and we’re excited about Easy Solutions’ opportunity to meet this growing need.