financial companies are expected to increase spending on fraud detection by 12 percent, or $1 billion over the next two years

After a number of corporate and government-related cyber attacks occurred throughout 2011, many have called for greater transparency on the topic of cyber security. In other words, federal agencies need to share what they know with certain others in order to prevent such criminal activity from happening again. Now, banks are taking this advice to heart as well by coming together and sharing cyber information.

Morgan Stanley and Goldman Sachs Group Inc. officials are planning to meet with Polytechnic Institute of New York University researchers this month to collaborate on a potential solution for cyber threats. The solution is a new center that would sort through bank data to identify possible cyber threats.

Bank of America is also making security efforts of its own by bringing experts from other banks to quarterly roundtables to openly talk about cyber defenses.

The act of banks coming together to discuss the matter of security is not a new idea, but a fairly new practice. In 1998, former U.S. President Bill Clinton required public and private sectors to work together to protect critical infrastructure. This led to the creation of an industry group called the Financial Services Information Sharing and Analysis Center, which was made to bring banks together. However, banks didn't actually start making an effort to share information until recently.

"The mentality of banks has been, 'Let's do everything internally because we don't want to give anything away," said Peyman Mestchian, managing partner with Chartis Research in London.

But Bank of America put it best when saying that hackers are collaborating, and so must the banks. According to Avivah Litan, analyst with Gartner Research, financial companies are expected to increase spending on fraud detection by 12 percent, or $1 billion over the next two years.

This need for shared information echoes ex-Marine Corps General James Cartwright and former CIA/NSA head Michael Hayden, who both called on federal agencies to quit keeping cyber information confidential from public and private industry.

Source: The Wall Street Journal

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