As more and more financial institutions move online, they are all at cyber security risk. Although customer data protection is relevant for any business, cyber security in banking and other financial systems is especially acute due to the sensitive data they store.
Fraudsters become more cunning year by year. Therefore, financial institutions have to look for new ways to counter modern cyber threats. That is why it’s important to keep up with the times and implement innovative tools and technologies for cyber security in banking. Let’s take a look at top cyber security threats and find out how financial institutions can guard against them.
What is Cyber Security in Banking?
Cyber security in banking is a set of technologies and methods designed to ensure the safety of customers’ data and assets and uphold the bank’s reputation. A well-thought-out cyber security strategy can help a financial institution effectively protect its clients from associated threats, such as cyber attacks, data theft, malware, hacking, and more.
This is especially true in an environment where digital transformation in banking is taking over its traditional forms. More and more users are becoming cashless, so financial institutions must take measures to protect digital payments and customers’ sensitive data. And it’s much easier to fight the threat when you know what it looks like and can spot a scam.
Top Threats to Banking Industry in 2023
Among all the cyber security risks financial institutions face, there are some prevailing ones. Let’s take a look at the biggest threats to the banking industry in 2023.
Malware and Ransomware
Malware and ransomware remain a major headache that won’t go away. These attacks become more advanced each year and bring multiple problems to the banking industry and payment processing companies. They work as follows: cybercriminals infect computers with malicious software, typically via phishing emails, and restrict access to some data by using encryption. Then, fraudsters claim a sum of money banking organizations have to pay to get access to data back.
Malware attacks come with dire potential consequences, such as disruption of business and operations, financial losses, and reputational damages. Additionally, cybercriminals can use vulnerable web services to deliver ransomware to multiple users.
Also, companies that provide secure and efficient transactions between customers and financial institutions have become a major target for cybercriminals. Among those targets payment processing companies may often be found. Due to their role in processing large volumes of confidential financial data, such companies face the same threats as banks. In particular, to malware and ransomware attacks. Cybercriminals often see payment systems as a lucrative target. They try to infiltrate systems to introduce malware or compromise transaction data. If successful, they can disrupt payment flows by locking companies out of their systems until a ransom is paid. Therefore, to mitigate these risks, payment processing companies must implement advanced cybersecurity measures. They vary, but first and foremost, you should pay attention to multi-level encryption and constant monitoring of the system.
Phishing
Phishing is one of the favorite tools cybercriminals use to spread malicious software. Then, they use various tricks to make individuals install it on their devices under false pretenses. Some attackers may also want customers to share their personal details in order to use them for fraudulent purposes.
Thus, clients can receive phishing emails disguised as official bank correspondence. This way, they will be able to access financial information and steal money from customers’ accounts. Also, such attacks can be directed at employees. Cybercriminals may want to get hold of login credentials that provide access to inside information, including customer data.
Cyber Risk Associated with Remote Work
After lockdowns amid the COVID-19 pandemic, remote work is a common practice and is available in many areas of activity, including the banking sector. And in the case where a remote worker has access to important or sensitive information, it is very important to take cybersecurity seriously.
People who work remotely often work from a cafe, home, or co-working space using coworking software from their personal devices. Thus, there are additional risks associated with data breaches. More than that, banking IT specialists can’t keep employees’ software safe or control it in any way. Thus, remote work comes with more potential cybersecurity vulnerabilities. That is why banking organizations need to be especially diligent in educating remote employees about potential threats. Employees must know how to recognize them and stay safe in a remote work environment.
Unencrypted Data
Data that is stored in a bank’s device but is left unencrypted creates many potential threats. If your data are unencrypted, hackers can easily access all the sensitive information and use it against you and your customers. Therefore, all the information stored must be kept encrypted. This way, fraudsters won’t be able to use it, even if they steal it from your computer.
Internet of Things (IoT)
As 5G networks develop, new cyber threats appear as well. As 5G is relatively new, its architecture has multiple loopholes that are not researched properly. Therefore, when we use the network, each step may result in a cyber attack of a new kind. Keep in mind that your devices become more vulnerable to external threats when they communicate with each other via 5G.
Smartphone Viruses and Malware
Mobile devices are now at risk. According to the Check Point research, mobile malware infected about 25 million smartphones in 2019, jumping by 50% compared to 2018. This is the result of the increasing popularity of mobile banking. As people become cashless and store sensitive data on their mobile devices, smartphones become targets for hackers. Therefore, they try to infect them with viruses and malicious software.
Cloud-based Cyber Attacks
Cloud-based attacks become popular as many financial services store their confidential information in the cloud. Therefore, cybercriminals start to organize mass attacks in order to get the data they need from cloud storage. Therefore, financial institutions should be cautious. It’s recommended to ensure a safe configuration of the cloud infrastructure to avoid data breaches.
Cyber Attacks Delivered Through Software Supply Chain
This malware distribution method uses a bank’s supply chain to deliver malicious software. For cyber attackers, it’s a great opportunity to compromise the distribution systems and stay in them for a long period. Such attacks usually take the form of legitimate updates that contain malicious code. To resist the cyber attack, financial organizations need to inform their clients about the ways cybercriminals can get their personal details via updates.
AI Technologies
Artificial intelligence brings many benefits in the field of cybersecurity. Certain financial software uses AI principles that reduce money laundering risk, making your compliance efforts more effective and less time-consuming. With its help, IT specialists create the latest automated security systems that help financial institutions improve their security protocols and prevent cyber threats. However, AI-driven tools can also be used by cyber attackers to develop smart malware tools and deliver malicious code, bypassing innovative security systems.
Social Engineering Attacks
Social engineering is close to phishing. However, these cyber security threats may pursue different goals. Social engineering can also come in the form of whaling attacks or sending bogus invoices. Simply put, this is a form of threat that uses behavioral tactics to force people to disclose confidential or sensitive information or give their money to cybercriminals.
The methods attackers usually use are based on building trust and being polite. For example, fraudsters may hack into your friend’s account and ask you to lend them money on their behalf. It is important to remember that people are the most vulnerable link in this chain. Therefore, it is crucial to inform customers and employees about the methods that fraudsters use to prevent cybercrime.
Fraud and Identity Theft
These cyber attacks are not new for the financial sector but are still quite successful for attackers. This is because they take different forms and use other channels and chains to conduct personal data. Therefore, it’s important to implement modern cyber security strategies to protect customers and employees from these cyber threats. This includes tools that can detect suspicious account activity and block it to prevent further criminal actions.
Spoofing
This kind of fraud is a bit similar to phishing but is more complex and confusing. It can come in the form of a fake domain that is very similar to an existing legitimate domain. This way, not very attentive customers may take it for a real bank service and share their data with attackers. Some fraudsters can also text or call a bank client on its behalf using a fabricated phone number that is indistinguishable from the legitimate number.
Why Do Financial Institutions Need to Be Aware of Banking Cybersecurity Trends?
Financial institutions store sensitive information they collect from plenty of customers. That is why the banking sector is one of the most targeted areas when it comes to cyber threats. If a financial institution wants to improve customer satisfaction without compromising safety, it needs to resist cybersecurity attacks and take confident steps toward minimizing their implications.
But as innovative ways to counter existing threats appear, the fraudsters start using new tricks to wind the system around their fingers. Thus, those methods that worked a few years ago may be completely useless in the new reality.
“As a Financial service, we always want to be one step ahead of cyber attackers. That’s when learning about banking cybersecurity trends comes into play, – states Latoria Williams, the CEO of 1F Cash Advance. “Knowing them is like knowing your enemy’s face. This knowledge helps businesses choose a set of tools and measures that will provide effective data security in compliance with potential security threats.”
What Steps Should Financial Institutions Take to Guard Against Cyber Security Threats to The Financial Sector?
To prevent significant financial losses and reputational damage, banking institutions need to undertake some actions. Below are the steps to follow in order to ensure system security and avoid cyber security threats to the financial sector:
- Estimate your current security measures. Take a look at top cybersecurity threats and find out whether there are some weak points in your tactic.
- Delegate cybersecurity services to third party partners. This will help you bridge the talent gap and get the needed protection;
- Use multi-factor authentication. This form of authentication means that a user will only get access to its data if they will be able to give two or more login credentials. This way, even if cybercriminals will steal your customers’ login information, there will be an extra layer of security that will prevent them from accessing clients’ data;
- Think about cyber insurance. Cyber insurance is a mandatory element of your entire cyber security plan. It will help you rest assured your organization is financially safe in the event of a cyber attack. It will contain legal costs, inform customers of infringements, and help your company cover the cost of fixing damaged systems and data rebuilding;
- Train your staff. Tell your employees about current threats and risks and explain how to recognize them. Such training should be regular so that you don’t miss any important changes;
- Inform clients. It’s in your best interest to tell your customers about the methods cyber attackers use to steal their personal information and money. This way, it will be easier for them not to fall for tricks.
Additionally, central banks, regulators, and banking organizations must create a national cybersecurity strategy for the entire banking sector. This will make it easier for banks and financial firms to resist cyber threats.
FAQ
What Are Top Cyber Security Threats to the Financial Industry?
The top biggest cybersecurity threats include malware and ransomware attacks, phishing, social engineering, remote work, unencrypted data, the Internet of Things, smartphone viruses, cloud-based attacks, supply chain attacks, and others.
How to Make Banking Institutions Cyber Secure?
To stay cyber secure, banking institutions should pay special attention to the key elements of financial cyber security in banking and implement them into the operating process. These elements include risk management, risk analysis, data integrity, and security awareness training.
What Cyber Security Jobs Are Available in the Banking Sector?
The most popular cyber security jobs in the banking sector include Chief Information Security Officer, Network Security Engineer, and Security Architecture.
Why Do Financial Institutions Need Cyber Security?
Cyber security in banking is needed to protect customers from money loss and data breaches. By providing clients with a safe financial environment, banking organizations can maintain a good reputation and improve customer experience.
What Threats Cyber Security in Banking The Most?
Errors made by customers and employees are at the top of factors that threaten cyber security in banking the most. Therefore, banks and other financial companies need to warn their clients and employees about potential risks and teach them how to protect sensitive data and guard against cyber threats.
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