At mid-year, total investment in cybersecurity was well above the investment seen in all of 2019, led by the US$700 million acquisition of anti-fraud firm RDC by Moody’s in February. As businesses around the world scrambled to empower people to work from home due to COVID-19, there was a significant increase in concern about attacks, ransomware and potential internet disruptions. Concern about general fraud was also high as governments allocated significant funds to mitigate the impact of the pandemic on both individuals and businesses.
In H1’20, there was an increasing focus on detective capabilities and products, in addition to a continued focus on identity and access controls related to consumer privacy and consumer fraud prevention. AI and automation were also big priorities for corporates looking for ways to better manage their spend. Given the rapid rise in remote access and use of online channels, it is expected that both corporates and other investors will increasingly invest in password-less technologies, biometrics and behavior monitoring solutions.
Given how people are now working and how businesses are now operating, we’re already seeing a huge uptick in interest in cybersecurity, particularly in consumer identity and access controls. Looking forward, we’re going to see big interest in fintechs focusing on fraud prevention and on providing smooth, more password-less cyber capabilities. Interest is going to absolutely explode if it hasn’t already.
While there has been a strong shift toward cloud solutions over the past few years, the pandemic has seriously challenged many legacy firms that have not gone down the cloud path. The sudden strain on legacy infrastructure resulting from the major shift to remote work poses a serious threat to operational resilience. With companies also looking for quick ways to create digital customer sales and service channels, cloud is quickly becoming the new normal. These shifts are driving companies to rethink their risk and controls to account for different platforms and connections, which will likely lead to an upswell in interest in cloud governance and security solutions.
In H2’20, there could be some consolidation among cybersecurity startups as VC investors focus on big ticket offerings and small firms struggle. More mature cybersecurity firms will likely use the opportunity to pick up their smaller competitors and gain market share. There could also be a few large-scale acquisitions as global companies sell off portions of their cybersecurity businesses to more traditional managed services firms.
Over the next 6 months, cybersecurity is expected to be a very hot area of investment, particularly in areas related to cloud security and governance. Access and identity management will likely also be big priorities given the increasing focus on fraud prevention and detection.