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Banks Spend Big To Fight Cybercrime, Heighten Efforts To Supervise Employee Behavior

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Banks are spending billions to battle cyber attacks, according to the Wall Street Journal. Much of the efforts focus on employees who unintentionally expose information to hackers. Many banks are now banning workers from using USB drives, warning them to be careful about what they post on social media, and telling them not to put “out of office” replies on emails. They are even sending fake spear phishing emails to see how many employees open them.

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J.P. Morgan Chase & Co. sent a fake phishing email to more than 250,000 employees after getting hit with a breach that exposed data from 76 million households. About 20% of the employees clicked on the email.

J.P. Morgan Clamps Down After Breach

J.P. Morgan did not comment on the phishing test, but a memo issued following the hack prohibits employees to use work email addresses for personal use, including registering for social media accounts or shopping sites.

J.P. Morgan expects to spend around $500 million in 2016 on cyber security, twice the amount spent in 2014.

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Brian Moynihan, chief executive at Bank of America Corp., said the company’s cybersecurity budget is essentially unlimited, and the focus is increasingly on the employees. The bank discourages employees from using out-of-office voicemail and email features since they can alert criminals to unattended computers, a person familiar with the company said.

Wells Fargo & Co. spends an “ocean” of money on cybersecurity, according to CEO John Stumpf in a recent interview. A spokesperson declined to give an actual budget number.

Tracking Employee Behavior Gets Tricky

Banks are finding it hard to decide how far to go to track employee behavior on social media websites where information might get posted that hackers could use to determine the best target in an organization. The situation becomes more difficult for banks if it involves postings that are personal in nature like vacation pictures that can give criminals an opportunity to break into the person’s home and nab their laptop, according to cyber experts.

Bank employee

A survey by the Association of Corporate Counsel reported that about 30% of data breaches come from employee error. Theodore J. Kobus III, an attorney at BakerHostetler in New York who specializes in data security, said employees don’t realize their actions increase their organization’s risk.

Morgan Stanley suffered a high-profile breach recently in which a financial adviser illegally accessed client data and took it home. Galen Marsh, the adviser, pled guilty to a felony charge in September and awaits sentencing. Prosecutors suspect he was behind client data that was posted online, which he denied. Morgan Stanley officials think Russian hackers gained access to his home computer and posted the client data online.

A core hacker tactic remains spear phishing. Emails that appear to be from a high ranking official sent to an employee are increasing.

Also read: U.S. & U.K. banks’ cybersecurity capabilities put to the test 

Spear Phishing On The Rise

Richard Jacobs, an assistant FBI special agent who handles cybercrimes, said the office is getting complaints about spear phishing almost daily.

TD Bank Group, a Canadian financial services firm with branches in the eastern U.S., sent fake phishing emails to employees that included instructions to click a link to get a package or to download a human resource department form. Those who clicked on the link then saw a video that alerted them to the test and advised them how they should have handled it. Those who clicked the email are likely to receive another one soon, said Glenn Foster, head of the company’s cybersecurity.

Some small banks are following suit. Pinnacle Financial Partners Inc. of Tennessee sends fake phishing emails to its employees every three months, according to Clayton Weber, director of information security. Even though the employees know they are being tested, about 2% still click on the fake phishing email.

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Jamie Dimon May Hate Bitcoin, but J.P. Morgan Is Embracing Blockchain

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J.P. Morgan Chase CEO has made it abundantly clear that he hates bitcoin, but that hasn’t stopped his firm from adopting the technology that underpins the digital currency system.

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J.P. Morgan Launches Pilot Program 

On Monday, America’s biggest bank rolls out the next phase of its blockchain pilot program. The effort will facilitate a faster, more secure transfer of cross border payments between J.P. Morgan and other banks, including Royal Bank of Canada and Australia and New Zealand Banking Group.

Although the new program will not trade cryptocurrency, it will use the landmark record-keeping technology that underpins it. The Wall Street Journal reports that J.P. Morgan will use the same blockchain technology behind digital currency Ethereum.

Despite widespread concern over cryptocurrency, financiers are enamored with blockchain. They, like many others, say the technology can significantly increase the speed of cross-border payments. The system currently in place is extremely complex, and requires multiple streams of communication between various participants. The blockchain has the potential to cut down transaction time from as much as 15 days to mere hours.

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The pilot program aims to achieve a secure distributed ledger across financial institutions, enabling banks to work together to process transactions. Connecting transaction data through a shared network will greatly reduce the number of steps it takes to verify and process transactions.

J.P.’s embrace of blockchain doesn’t mean he’s going to warm up to cryptocurrency. His latest criticism of bitcoin came on Friday when he said it had “no actual value” and that “governments are going to crush it.” He did, however, give a glowing review of blockchain.

“We actually use it. It will be useful for a lot of different things,” Dimon said at a conference in Washington, as quoted by The Wall Street Journal. “God bless the blockchain.”

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Cryptocurrency Adoption Will Lead to Free Money Transfers, According to Top Tech Investor

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The rapid adoption of cryptocurrency will soon pave the way for free global money transfers, according to a top technology investor.

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Cathie Wood, the CEO of Ark Invest, says cryptocurrencies like bitcoin are going to spearhead a system of free money transfers worldwide. She cites the already huge reduction in conversion fees from fiat currencies into crypto and back again. The current rate for those transactions is 2-3%, which is a fraction of the 7-8% money transfer services like Western Union charge.

But Wood says crypto transfer fees could soon fall to zero as companies prioritize valuable transaction information above anything else.

The cryptocurrency market approached record highs over the weekend, hitting a total value of $176.6 billion. Bitcoin’s market cap surged above $90 billion last week and reached a high of $96.7 billion recently. That surpassed the capitalization of major equities like Goldman Sachs and Morgan Stanley.

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If bitcoin were a stock, it would be the 15th largest member of the Nasdaq and the 58th largest on the New York Stock Exchange.

Computing Power as a Commodity

In Wood’s view, that the growing value of cryptocurrency will lead to the commoditization of bandwidth and computing power.

“It’s interesting that you’ve got corn and oil and copper trading on the exchange but you don’t have computing power, and bandwidth, and storage,” Wood said, according to CNBC. “Well we think that’s going to happen because of blockchain technology and all of the cryptos that are coming along.”

Woods has placed special emphasis on Ethereum, a unique platform that operates more like a “cryptocommodity” than anything else.

Ark Invest is the author of the widely cited whitepaper, Bitcoin: A Disruptive Currency. In it, the firm argues that cryptocurrency has the potential to be the most disruptive development since the Internet. The investment manager controls $1.7 billion of asset funds focused exclusively on emerging technologies.

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Jamie Dimon Doesn’t Want to Talk About Bitcoin Anymore

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Jamie Dimon doesn’t have anything to say about bitcoin anymore. The head of J.P. Morgan Chase & Co has been heckled by the blockchain community since he declared cryptocurrency to be a “fraud,” and that he would fire any employee trading it for being “stupid.”

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Bitcoin’s New Record

Dimon also doesn’t think much of bitcoin’s new record high. The virtual currency spiked more than 8% on Thursday to surpass $5,200.00 for the first time.

“I wouldn’t put this high in the category of important things in the world, but I’m not going to talk about bitcoin anymore,” Dimon said Thursday, as noted by Bloomberg.

J.P. Morgan has taken a less adversarial approach to cryptocurrency. In addition to handling bitcoin-related trades – something that came to light after Dimon’s warning – the financial giant is keeping its options open. J.P. remains “very open minded” to possible uses of cryptocurrencies “if they are properly controlled and regulated,” according to Chief Financial Officer Marine Lake.

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Mainstream Appeal Growing

The growth and widespread adoption of cryptocurrency hasn’t been lost on the financial community. Earlier this month, Goldman Sachs CEO Lloyd Blankfein tweeted that his firm is weighing the possibility of trading cryptocurrency.

Fidelity Investments is also mining cryptocurrency, and making a lot of money doing it. Fidelity says its chief motivation for mining isn’t profit, but learning about the growing cryptocurrency market.

Increased mainstream adoption of bitcoin is seen by many as a necessary precursor to a more stable currency. Countries like Japan are spearheading adoption by introducing favorable regulation of the cryptocurrency space. But regulatory approval has not been uniform.

Russia recently became the third major economy in the span of a month to put the clampdown on cryptocurrency trading. China and South Korea have also implemented new controls on the market, focusing heavily on initial coin offerings.

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