Financial Services Cybersecurity – What are the threats
The frequency of cyberattacks targeting the financial and banking sectors has escalated substantially in recent times. As of December 2022, 566 breaches had been reported by finance and insurance institutions across the globe, which exposed an estimated 254 million records. The percentage of ransomware attacks against financial services increased from 34% in 2021 to 64% in 2023, a nearly twofold increase from 2022.
Today’s post intends to discuss the cyber security issue of financial services. It highlights the importance of cybersecurity for financial services and discusses some of the common cybersecurity threats in financial services.
Financial Services Cybersecurity
The increasing dependence of the financial services industry on technology and the interconnectivity of financial networks increase the vulnerability to cyberattacks. Financial services cybersecurity measures aid in the prevention of fraudulent activities and ensure seamless operations, enabling customers to obtain funds when required conveniently.
Although a common misconception is that cyberattacks only affect large banks and organizations, the reality is that businesses of any size can be targeted. Despite having a smaller workforce and fewer dedicated cybersecurity resources, smaller enterprises still face equivalent risks of loss in the event of an intrusion.
Importance of Cybersecurity for Financial Services
Cybersecurity is critical for financial services for various reasons.
Financial institutions manage a substantial volume of personal and financial data, including, but not limited to, client names, addresses, social security numbers, credit card information, and transaction histories. Not only do consumers find this information valuable, but cybercriminals also exploit it to commit fraudulent activities. Cybersecurity protects this sensitive information.
Financial services organizations utilize a variety of cybersecurity solutions to protect sensitive financial data. Effective authentication measures, such as encryption, ensure that data is accessible to authorized users and systems. Furthermore, they incorporate protocols for identifying and addressing unauthorized access or violations of data security, thus mitigating potential harm.
Cybercrime costs in the financial services industry continue to increase, necessitating cybersecurity measures. Cyberattacks can inflict significant financial harm. In addition to conducting fraudulent transactions using stolen credit card information or withdrawing funds directly from bank accounts, cybercriminals may also incur regulatory penalties, legal fees, and reputational damage because of data breaches. Cyberattacks can be prevented and mitigated through the implementation of network security, intrusion detection systems, malware prevention, and additional cybersecurity measures.
The financial services sector is extremely dependent on customer trust. Customers entrust financial institutions with their money and personal information with the expectation that it will be kept secure. A breach of confidence, such as a successful cyber-attack or a data breach, can significantly impair reputation and customer relationships. Protecting client information and financial transactions is one way in which cybersecurity enhances their trust and confidence.
Common Financial Services Cybersecurity Threats
Here are the five most common financial services cybersecurity threats:
1. Phishing & social engineering
Phishing and social engineering attacks are prevalent within the finance industry, presenting organizations and their clients with significant vulnerabilities. Phishing employs various techniques, such as SMS messages (smishing), phone calls (vishing), and forged emails, to fool victims into visiting malicious websites or divulging sensitive information.
A high incidence of business email compromise (BEC) incidents occurs frequently in the financial sector. In these incidents, malicious actors gain unlawful access to the organization’s email accounts. From that location, assailants are capable of committing a multitude of fraudulent activities.
2. Ransomware
Ransomware continues to pose a threat to financial institutions, as attackers hold data captive until the ransom is paid using encryption techniques or RaaS (ransomware-as-a-service) subscriptions. An accomplished ransomware or malware attack against a financial institution may result in severe repercussions, including financial deficits, regulatory sanctions, damage to reputation, and legal obligations.
Financial services are a particularly lucrative industry for ransomware operators, given the potential for substantial rewards and the imperative for businesses to minimize disruption. Consequently, the financial sector is experiencing a substantial surge in ransomware attacks.
3. Insider threats
Insider threats can manifest in different ways, including negligent behavior or the retaliatory intentions of a dissatisfied employee. They may also encompass a vendor or careless contractor who spills confidential information unintentionally. However, they frequently cause financial services organizations to suffer data breaches, fraud, and reputational damage.
4. Advanced persistent threats
Advanced persistent threats (APTs) are sophisticated, protracted attacks executed by proficient hackers. In contrast to routine attacks that may be opportunistic or transitory, APTs are meticulously orchestrated, encompassing infiltration and continuous surveillance of networks. It is done to gain unauthorized access to sensitive systems and information for an extended duration and extract a substantial amount of valuable data.
5. Supply chain attacks
Attacks on the supply chain represent an increasing and critical threat to the financial industry. These attacks specifically focus on the interconnected networks of third-party vendors, taking advantage of vulnerabilities in lesser suppliers and partners to infiltrate the systems of corporations. After successfully infiltrating the vendor’s infrastructure or network, the assailant may exploit that advantageous position to launch attacks against their intended targets.
In certain scenarios, supply chain breaches have the potential to propagate swiftly and impact thousands of organizations. Furthermore, their complexity in terms of detection and mitigation renders them a substantial threat to financial institutions.
The following financial service cybersecurity practices help in preventing cyberattacks:
– Build your defenses with firewalls, encryption, access restrictions, intrusion detection systems, advanced threat monitoring tools, and other cybersecurity solutions
– Educate staff about cybersecurity best practices and frequent risks
– Patch and update software, operating systems, and security solutions with automatic patch management systems
– Create an incident response strategy that includes reporting, communication, investigation, and recovery
Conclusion
Integrated cybersecurity risk management facilitates favorable business outcomes for financial institutions, including enhanced regulatory compliance, efficient risk mitigation, safeguarding of brand equity, and increased stakeholder value. At Arthur Lawrence, we are aware of the challenges and significance that cyber threats and information security pose to the financial services industry. Our cybersecurity experts work with you to enhance your security program. Reach out to us for your financial services cybersecurity needs.