The threat of financial fraud, cyber-attacks and other malicious activities has become a major concern for businesses around the world, especially in the banking sector. As risk management is essential to protect assets and maintain customer trust, it is important to keep an eye on the latest trends in cyber security in banking and best practices specific to banking. With constant changes in technology, regulations and security requirements adding to the overall complexity, it can be difficult to operate systems securely while meeting business objectives.
To help banks better protect their networks against evolving threats – both internally and externally initiated – this article takes a closer look at current cybersecurity risks banks face today and strategic solutions institutions can use to defend themselves against attacks.
Importance of cyber security for banking
Due to rapid technological developments, maintaining a secure system is becoming increasingly important for banks. In today’s digital world, there is an even greater risk of sensitive personal information such as bank details and passwords being hacked or accessed by malicious actors. The security of customer data is critical to the survival and reputation of a bank. To achieve this goal, banks need to be constantly vigilant and implement enhanced security measures that protect against security threats when browsing the internet or engaging in online banking activities. Banks should also ensure that they use the latest software updates and that all employees are trained in the secure handling of customer data and banking transactions. Ultimately, protecting customer data through strong cybersecurity is essential to ensure safety and security in the banking sector and the longevity of business operations.
The biggest risks for banks‘ cyber security
In recent years, cybercrime has increased so much that it is already objectively considered the biggest threat to the financial sector. As hackers‘ methods and know-how have become more sophisticated, it is becoming increasingly difficult to consistently defend against attacks. Below you are listed the most important cyber security threats in the banking sector.
Phishing attacks
In this case, hackers create clone websites that any user can easily access via third-party messaging services. Since there is a credible multi-factor authentication there and it generally looks like a real website, users do not even realize that they have already given their credentials to hackers.
Distributed Denial of Service (DDoS)
A DDoS attack uses a botnet – a collection of connected online devices – to flood a target website with spoofed traffic. Unlike other cyberattacks, a DDoS attack does not attempt to compromise security. Instead, the goal is to exhaust network, server or application resources so that they become unavailable to the targeted audience. A DDoS attack can also be used to mask other malicious activity and disable security devices to compromise the target’s security. It is also interesting to note that during the pandemic, the number of DDoS attacks increased by 30% in the financial services industry.
Unencrypted data
As cybercriminals have become more creative, data threats have not diminished over time. It’s no longer enough to just protect data access points – the data itself must be encrypted. Our partner, IBM , reports that the average cost of a data breach is $4.35 million. The price tag is sure to rise in the future as cyberattacks occur daily, causing tremendous damage to businesses and users. However, with robust encryption methods, these costs can be reduced or avoided altogether.
The Ransomware
Ransomware is used by cybercriminals to encrypt important data and deny its owners access to it unless they pay a ransom. This cyberattack is unfortunately a serious threat to banks, 90% of which have already been hit. In the age of cryptocurrencies, fraudsters are particularly interested in finding vulnerabilities in the decentralized system. If these vulnerabilities are present, they can easily steal money from the trading system.
Data manipulation
Altering digital documents and information is known as data tampering. Cybercriminals use arbitrary attack vectors to penetrate networks, gain access to software or applications, and alter data. By manipulating data rather than stealing it, hackers can be more successful and cause catastrophic consequences for organizations or individuals. It is a sophisticated cyberattack because it can take a long time for a user to realize that their sensitive and confidential data has been irrevocably altered.
Spoofing
Spoofing is a form of cyberattack in which criminals disguise their identity as a trusted and known source in order to steal confidential information or money. Banks face a constant threat of spoofing attacks that can have serious consequences for their customers and operations. In addition, a man-in-the-middle attack is gaining traction, where a hacker intercepts communications between a customer and the bank to gain access to personal information, redirect payments or even launch a denial-of-service attack. Therefore, it is important that banks remain on guard and take measures to protect themselves from these threats.
Cybersecurity regulations for banks impacting FinTech
Financial institutions should consider the following FinTech regulations to maintain strong security and prevent data breaches. Security managers can use these regulations to evaluate their security measures and those of their suppliers. In addition, your organization can easily identify the processes and procedures needed to mitigate cybersecurity risks. Below are the three most common financial compliance requirements related to financial cybersecurity in banking.
NIST
NIST has become the No. 1 standard for cybersecurity assessment, security vulnerability identification and compliance with cybersecurity laws, even if compliance is not mandatory. NIST has developed 110 requirements covering various aspects of an organization’s IT procedures, policies and technology. These requirements address access control, system configuration, and authentication methods. In addition, cybersecurity and incident response protocols are defined. Meeting all of these requirements ensures that an organization’s network, systems, and people are efficiently prepared to securely manage all controlled unclassified information (CUI).
GDPR
The General Data Protection Regulation (EU GDPR) is a security framework designed to protect citizens‘ personal data. Any company that processes private data of EU citizens, whether manually or automatically, must comply with the GDPR. This regulation highlights a set of security guidelines for data processors and data controllers to ensure the security of all user data throughout its lifecycle.
ISO/IEC 27001
The globally recognized ISO/IEC 27001 standard minimizes security risks and protects information systems. It is a set of internationally recognized security policies and procedures designed to help organizations improve their security posture across a wide range of industries.
Because of its reputation as an international standard for cybersecurity and data protection, financial institutions that want to demonstrate their outstanding cybersecurity practices to stakeholders should obtain ISO/IEC 27001 certification.
The security of an organization’s data is a major concern. For banks that store large amounts of personal data and transaction lists, cybersecurity solutions and procedures are critical. Nowadays, the importance of cybersecurity in banking cannot be ignored. As a result of technological development, cyber attacks on banking systems have become more frequent.