Latin America is one of the most vulnerable regions for cyberattacks but also has unique opportunities
By Sebastian Stranieri
There are only two types of companies in today’s digital age. Those that have been hacked, and those that will be hacked. Three, if we add those who have been hacked but just don’t know it.
Emerging markets in Latin America and beyond are the most vulnerable to hacks and breaches because, on a general cybersecurity level, they’re playing catch up. As it stands, Latin America does not yet have the strong cybersecurity foundation it needs to protect its businesses’ futures.
Within the last six months, the largest banks in Chile and Ecuador have been hacked, shutting down online systems and potentially revealing personal data of millions of clients. It took Banco Pichincha in Ecuador almsot two months to fully restore all its operating systems, drawing condemnation and complaints from government regulators as well as customers.
Latin America is becoming an even more attractive location for cybercriminals as an unprecedented amount of money is pumped into its companies. Local startups raised a record-breaking $9.6 billion in the first half of 2021, per Crunchbase data, and SoftBank has just announced a new multibillion-dollar fund for the region.
Latin America urgently needs to generate better cybersecurity solutions to ensure the longevity of the next generation of businesses. But more than that, we’re looking at a giant opportunity in the making.
The fact that Latin America is on a back foot actually means it has the unique chance to build a sturdier cybersecurity infrastructure from the ground up, maximizing the potential of today’s frontier technology in a way more developed markets can’t. And it can export those solutions to the world.
This is how I see Latin America’s promising cybersecurity scenario unfolding, if all the players put their best foot forward.
Frontier technology needs to be starting point
Earlier this year, the EU’s cybersecurity agency warned that traditional cybersecurity mechanisms are no longer effective against today’s fast-evolving attacks.
Emerging markets are already at the cutting edge of new technologies, from neo banks that give citizens more options for entering the financial system, to B2B startups smoothing the path for businesses across industries. As they lay the groundwork in these new niches, they should also be adopting technologies that are moving at the same pace as cybercrime.
One of the most essential innovations is that of unique “online personas.” When each of your banks, payment platforms and e-commerce sites has a totally separate user identity for the same person, every single one of those platforms is a point of entry for a hacker to steal your identity or commit fraud. But when your identity is a singular, decentralized “persona,” you alone are the point of entry to that online ID.
Technologies like blockchain are making it possible for your identity to be truly sovereign—unique and controlled by you — because it’s near impossible for hackers on the blockchain to clone or breach that information. And other emerging technologies, such as advanced anti-phishing software like Pixm, are removing the risk of human error in losing that information online.
Emerging markets could spearhead progress
When companies in developed markets prop up their digital defenses, they’re building on existing cybersecurity structures, which cybercriminals also know their way around. Or, they’re having to build a new cybersecurity structure around existing products while keeping those products up and running. That’s like having an old house, realizing the foundation is falling apart, and trying to rebuild the foundation while keeping the rest of the house intact.
Retroactively applying cybersecurity protections has huge stakes. For SMBs, it means taking time to integrate better solutions to their e-commerce site; for banks, it’s about reinventing their defenses while never compromising the funds millions of people have entrusted to them.
But emerging markets have the advantage of bypassing antiquated cybertech and moving straight onto today’s most unbreachable—and scalable against future iterations of cybercrime—technologies, and that should not be underestimated.
Latin America is equipped to thrive in the space
A big part of Latin America’s growth is resilience. Emerging market startups have to deal with far more pressures — money, governance, socioeconomics—meaning they have to innovate while building sustainably from Day One.
What does that mean for cybersecurity in the region? This resilience coupled with the urgency of cybercrime will push Latin America’s phenomenal tech talent to the forefront of a wave of new technologies. The cybersecurity industry is growing in emerging markets to the point that it is drawing investment away from Silicon Valley. And the pot is getting bigger: VC funding in cybersecurity reached a stunning $9 billion in the first half of 2021—more than for all of 2020.
Businesses in Latin America are already breaking new ground. The LACChain alliance — focusing on the Latin American and Caribbean ecosystems — is seeking to better integrate blockchain technology into organizations and countries, and is working toward a sovereign ID based entirely on blockchain. Argentina has been moving toward the sovereign ID concept with the consumer app MODO, which connects transactions of the country’s major banks on a single platform.
Government and private businesses need to collaborate
As entrepreneurs seek solutions, governments must help create an open-minded ecosystem in which young companies are encouraged to move past existing infrastructure limitations and into little-explored territory.
Government bodies can offer financing strategies, from supporting local investment funds to attracting foreign VCs with conferences, incentives and awareness campaigns, and spotlighting today’s most prominent digital startups to nurture those of the future.
It’s also crucial that governments foster better education on IT security among youths. Nor can countries forgo updating their laws around privacy, user consent, or right to be forgotten. This isn’t just about bringing them up to speed—Argentina’s data protection law is 20 years old—it’s about unifying regulations across countries, so that tomorrow’s life-changing technologies can be truly borderless.
Finally, private businesses must have an ongoing dialogue with governments on cybersecurity and technological progress, providing constant feedback and acting as a source of current information on trends that will help the government regulate and enable the tech space.
Cybersecurity is one of today’s most critical needs. But it is also a source of opportunity in a region that has the talent, will and potential to construct a far more modern and impenetrable security infrastructure on a blank slate.
Sebastian Stranieri is founder and CEO of cybersecurity company VU. The company provides cybersecurity solutions for fraud prevention and ID protection. Its core offering is the “online persona” which unifies people’s identities, allowing for their ID to be authenticated continuously based on behavior, biometric, location and more.