Banks have some of the best security systems in the world to protect the billions of dollars in deposits and other transactions sloshing about in their networks on a daily basis. But such systems also depend on less secure systems such as the internet and the mobile phone.
It is this vulnerability that hackers exploit to pursue their criminal activities.
To address this clear and present danger, Qihoo 360 Technology Co. Ltd. (QIHU.US), one of China’s leading software companies, is linking up with Hong Kong banks and offering state-of-the-art solutions to enhance the security of online payments, top management said.
The company is also diversifying into the hardware business to provide better security systems as well as improve its product line-up.
“We are going to expand our cooperation with banks to Hong Kong, hoping to establish strategic cooperation instead of just a simple buy-and-sell arrangement,” vice president Li Tao told the Hong Kong Economic Journal’s EJ Insight.
“Although the banking system in Hong Kong is very secure, it is only secure as far as its internal system is concerned, but if your phone is hacked, the secure banking system cannot do anything to help,” Li said.
Earlier this year Qihoo 360 started similar collaborations with mainland banks, including five of the country’s biggest lenders. “Using our software, the mainland banks can save about 10 billion yuan (US$1.61 billion) on security expenses each year,” he said.
The company is currently in talks with several Hong Kong banks on strategic collaboration. “We offer protection for handsets to lower the risk of being hacked, including detecting fraud in calls and messages,” Li said. “For the banking part, we would like to put our safety modules into the online payment systems of the lenders to make them more secure.”
The services will cover payments through personal computers and wireless devices.
“Besides upgrading the security system users already have, we can also secure payments between Hong Kong consumers and mainland online shops, as well as help banks that would like to expand into the mainland,” he said.
“In this era, securing privacy and personal data on the internet is most important. Not many people are aware of this,” Li said.
Security systems have become all the more important with the rise of new modes of business such as internet finance and online-to-offline retailing.
Qihoo 360 is looking for overseas partners, particularly in Hong Kong and Southeast Asia. “We hope to copy our business model in expanding overseas, including Brazil, Russia, Indonesia, India and Malaysia,” Li said.
Under this business model, the company offers its security software to create a client base, then increases user data flow by offering more platforms such as its search engine, and provides value-added services such as systems for online games, e-commerce, bill payments or even lottery betting.
Last year the company set up subsidiaries in the United States and Singapore, and completed its investment in a unit in Taiwan, Li said. It has also grabbed a 30 percent market share in Brazil after acquiring Brazilian cloud-based online security company PSafe Tecnologia last year.
“The strategy for expanding overseas is localization, and that is why we insist on working with local partners. It wouldn’t work if we just changed the language just as we can’t develop a product for Canadian consumers if we don’t know what they need,” he said.
For the domestic market, there are now more than a billion users of genuine software, which translates to a US$10 billion market. Chinese software technology is more advanced that those in Southeast Asian markets and only behind the US by a year at most, Li said.
Besides its core software business, Qihoo 360 is also stepping into the hardware market. “As many household products like television, air-conditioners and thermometers will connect to the internet in the future, it is important to ensure the security of those products, or the hackers can take your information easily,” he said.
“For example, the health of a person may not be a big deal for others, but the health profiles of the top management or board members of a listed company may trigger moves in stock prices. This is a matter of privacy and we are trying to protect it.
“The products we are launching are mainly for households, and those that can provide convenience to individuals,” Li said.
Among the products it has launched are portable WIFI sets, routers, location monitors and air purifiers. Also, it has worked closely with TCL Group (000100.CN) to develop smart controls and management systems for the maker of electronic products.
“We are moving from internet protection to information protection, and we are now doing health and personal life protection. We would also like to develop a product that can call the police automatically in case of emergency or accident,” he said.
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