The speed and scale of transformation is ushering in a new wave of business hazards, found the trade body in a joint study with consultants Parker Fitzgerald.
And firms must now consider their exposure in light of the changes to business operations.
Financial companies are expected to adopt new technology, including artificial intelligence (AI), to reduce costs.
But data protection must be at the heart of change as cyber vulnerabilities and more risks become ingrained within the business supply chain, the report warned.
Mind the gap
Financial firms must also close the gap between their digital aspirations and the reality of their legacy IT estates, it was added.
It comes ahead of this week’s introduction of the General Data Privacy Regulation (GDPR).
Dan Crisp, director of technology and digital at UK Finance, said: “Given today’s ever-increasing threat of cyber-attacks and data protection violations, it’s vital that the financial services sector prioritises operational resilience – just having a firewall simply doesn’t cut it.
“The speed and scale of digital transformation makes it essential for new technologies to be integrated safely within existing operating models while minimising risk.
“This isn’t a zero-sum game; these risks are not isolated to specific organisations and financial services firms can harness innovation while simultaneously tackling these new challenges, through the analysis of operating models and building new risk frameworks.
“The industry is working hard to develop technology and water-tight risk programmes, but only collaboration with policymakers and regulators, both domestic and cross-border, will facilitate success.”