• article
27/06/2024

Cybersecurity in Banking: Threats and Mitigation Strategies

Cybersecurity is critical, especially in the banking sector. How can banks protect customer data and what threats do they face?

Dorota Jasińska

Content Specialist

Undoubtedly, cybersecurity is critical, especially in the banking sector. We face evolving cyber threats and attacks from bad actors who try to seal our data. That’s why protecting it must be the top priority for financial institutions.

According to the Financial Stability Board (FSB), “a major cyber incident, if not properly contained, could seriously disrupt financial systems, including critical financial infrastructure, leading to broader financial stability implications.” To prevent such situations, financial institutions must implement proper protection and risk management. How can banks protect customer data? And what threats do they face?

Evolution of cyber risks for financial institutions

With the rise of digital banking, financial institutions have faced various types of security threats. The rapid development of technology has opened new methods of security breaches. Every advancement has brought new challenges into the financial landscape. The progress in the financial sector was accompanied by the increased complexity of cyber threats and attacks.

New technologies, such as cloud computing or mobile banking, have to face expansive attack attempts from different agents on many levels. The attackers target vulnerabilities that can be exploited to steal customer data. That’s why it’s so important for financial institutions to constantly adapt their strategies to ensure the security of their customers, their assets, and their data.

The Acronis Mid-Year Cyberthreats Report from 2023 included a summary of cybersecurity threats. According to the report, 30.3% of all emails received were spam, and 1.3% contained malware or phishing links. Moreover, ransomware continues to be the main threat to businesses, government, healthcare, and other critical organizations. There were 809 publicly mentioned ransomware cases in Q1 2023.

The report also included information that data stealers are the second most prevalent threat, causing a majority of data breaches along with traditional usage of stolen credentials. This is especially worrying for the banking sector. What’s more, ChatGPT and similar generative AI systems are used for cyberattacks and to create malicious content. The number of email attacks is surging and reached 464% compared to the first half of 2022.

The report’s data proves that data threats are on the rise and that attackers are already using the newest technologies to target different industries, including the banking sector.

Preventive measures, mitigation strategies, and the introduction of new protection technologies are just a few of the methods used to deal with such threats. What are the most popular cybersecurity threats in banking?

Top cybersecurity threats in banking

Nowadays, customers are exposed to many types of cybersecurity threats, especially in the banking sector. These include attackers gaining access to customers’ personal information, compromising bank systems, or manipulating people into revealing sensitive information.

Phishing attacks

Such social engineering attacks involve, for example, messages or emails that aim to trick users into revealing their sensitive data, such as login credentials or credit card numbers. Attackers keep improving their messages to make them appear legitimate and forge emails or texts from banks. They may also impersonate a bank employee or a friend to request sensitive information to access one’s account.

Phishing attacks are extremely dangerous. They can target anyone and become increasingly sophisticated. Now, with the use of AI, attackers have gained another way of evolving their phishing methods. Attackers try to convince their targets to click a malicious link or provide financial details over a phone, enabling them to steal their information or break into the account.

Malware: Ransomware

Malware means malicious software, and these attacks infect devices and networks for various criminal purposes. Ransomware is one of the popular malware types. In this case, attackers aim to encrypt people’s devices and block access unless a ransom is paid. Ransomware can corrupt files through phishing messages, malicious downloads, network spread, and other sources.

Ransomware has changed and evolved over the years. Users can be targeted through their emails by, for example, malspam (malicious spam), which includes malware or links to malicious websites. Another infection method is malvertising (malicious advertising), which directs users to malicious servers.

Distributed denial of service (DDoS) attacks

Such attacks attempt to impact the normal traffic of a server, service, or network. They overwhelm the bank’s online system with traffic and block users from accessing banking services. DDoS attacks utilize botnets, a collection of hijacked connected devices that perform the cyber attack.

DDoSing is popular among hacktivists and cyber vandals. Sometimes, such attacks are used as a means to weaken one’s competition or disrupt their services. In the case of banking, this means people can’t access their accounts or make transactions. This can result in customer dissatisfaction.

Third-party risk and remote workforce

Banks often use third-party vendors who provide them with different services, like access to new technologies, risk-management tools, cloud services, and more. Each vendor can be a target of cyber attacks. If the attack is successful, the bank may be cut off from the service, and as a result, customers may be impacted. More vendors mean more possibilities for attacks.

A very similar problem refers to a remote workforce. Each remote employee may introduce a new security challenge. These include working outside the organization network or using public unsecured networks. The oversight of how employees handle data security procedures or software updates is also harder to handle for the organization.

Mobile vulnerabilities

As the use of mobile devices is increasing, they are also becoming more vulnerable to cyber security threats. Attackers can target mobile banking apps with flawed code to infect the device with malware or gain access to user accounts.

Mobile devices are also targeted with phishing to convince users to download malicious apps or click fraudulent links. Attackers try to steal one’s bank login credentials or intercept financial transactions. Moreover, mobile devices can be lost or stolen and used by unauthorized actors to access one’s sensitive information.

Conclusion

With the advancement of technology, we must face the advancement of cyber attacks. That’s why there’s a need for constant adaptation to possible threats and the implementation of strong security measures to protect bank systems and customer information.

Cybersecurity risk management in the financial sector

Cybersecurity risk management in the financial sector is extremely important, as financial institutions handle lots of sensitive data. That’s why it’s necessary to identify, analyze, and mitigate such threats. Combining a few security measures to ensure the highest data protection is the best option. How can banks manage cybersecurity risks?

Regulatory compliance and risk assessment

The banking sector must strictly comply with regulations to ensure the proper protection of customer data and financial systems. Depending on the market, financial institutions must follow specific regulatory requirements, such as GLBA (Gramm-Leach-Bliley Act), a US law requiring the implementation of security measures and customer data privacy practices.

In the European Union, GDPR (General Data Protection Regulation) must be implemented. This regulation requires businesses to protect the personal data of EU residents. Moreover, every jurisdiction may have a specific regulation that addresses the issue of data privacy.

Risk assessment is another important measure that helps ensure data protection. It involves identifying all systems and applications with sensitive data to mitigate risks more easily. Financial institutions must also be aware of existing threats and follow their evolution to be able to evaluate their impact on the organization. Regular risk assessments are necessary to prevent possible cyber threats.

Cybersecurity solutions for efficient protection

There are many solutions that can be implemented to protect customer data and banking systems. They can help prevent data breaches, financial losses, or disrupted access to the banking service.

Data encryption and multi-factor authentication

One solution to secure user information is data encryption. This allows the data to be protected even if someone gets access to it, as no one can read it without a decryption key. This way, account numbers, login credentials, and other sensitive information cannot be used by hackers.

Another method of protection is multi-factor authentication (MFA), which adds an additional layer of security to basic authentication. MFA introduces an extra verification step to prevent unauthorized access to one’s account. This may be, for example, a code sent to the user’s e-mail or phone or a fingerprint scan.

Combining the two methods significantly increases the security of clients’ data and makes it more difficult for hackers to steal financial and personal information.

AI-driven threat detection and response

AI is a powerful tool for cybersecurity in banking institutions. It allows for the analysis of huge amounts of data to find patterns or anomalies that might suggest fraudulent activity or cyberattacks. This helps in discovering hidden threats. AI can also help automate threat detection and response and speed up the mitigation process to minimize damage.

What’s more, AI can learn and adapt to the changing environment regarding cybersecurity. Over time, it would be able to detect new and emerging threats. Such use of AI might be very helpful for safeguarding cloud environments with sensitive data.

Network and system security

Network and system security are significant parts of banking cybersecurity. Banks need to rely on robust security to properly protect their internal systems and data from unauthorized access. Secure configurations, firewalls, and intrusion detection systems are used to identify and block any suspicious activity.

Network security also encrypts communication channels to protect sensitive information, such as account information of a banking session. System security allows the implementation of controls restricting access to critical systems and data. Only authorized users can get access through proper user authentication and authorization procedures.

Identity and access management

Identity and Access Management (IAM) is another solution to ensure cybersecurity in banking. Thanks to IAM, only authorized users can access bank systems or specific data, minimizing the risk of unauthorized access or data breaches. Right access management helps efficiently manage access rights within an organization.

IAM is often combined with multi-factor authentication to add another layer of security, especially in the case of logging in. IAM is definitely a great method of securing bank data by controlling access to resources to the right users.

Top cybersecurity framework for banks

A few frameworks guiding banks in cybersecurity are worth mentioning. These are, for example, the NIST, CBEST, and CIPHER frameworks.

NIST cybersecurity framework

The National Institute of Standards and Technology has prepared a voluntary cybersecurity framework. It provides guidance to manage cybersecurity risks. It was made to fit organizations of any size, sector, and maturity. The framework includes guidance on practices and controls to achieve cybersecurity efforts.

The framework defines core functions to govern, identify, protect, detect, respond, and recover. These functions relate to one another and should be addressed concurrently. Some are continuous, and the rest act when a cybersecurity incident happens.

The NIST CSF is a complex document with helpful guidance regarding cybersecurity measures. The newest framework is available here.

CBEST vulnerability testing framework

The Cybersecurity Baseline Expectations for Systemically Important Banks (CBEST) framework was created by the Bank of England and focuses on cybersecurity controls for large banks. This framework promotes a testing approach that corresponds to attacks aimed at compromising and disrupting business services.

CBEST is an intelligence-led security testing framework. It’s designed to help regulators and organizations understand weaknesses and vulnerabilities in their systems and take remedial measures.

Cybersecurity and privacy framework for Privately Held Information Systems (the CIPHER framework)

The CIPHER framework is a set of methods and best practices for the cybersecurity of Privately Held Information Systems (PHIS). PHISs are computer systems owned by organizations that contain private data collected from customers. The CIPHER framework focuses on digitalized data and electronic systems. The main points of CIPHER include versatility, practicality, as well as user-friendly and user-centric approach.

Versatility means that the methodology should apply to every organization and be independent of technology. This means it can work well even if technology becomes outdated. The practical feature involves a list of guidelines and controls to follow that are set to enhance or check data protection. CIPHER focuses on key users, PHIS owners, developers, and citizens.

Challenges in implementing cybersecurity in banking

Implementing proper security controls and measures in the banking sector is a complex task. Financial institutions face many challenges that can weaken their cybersecurity defenses. What are these challenges, and how can they be overcome?

Security awareness gap

One challenge is the lack of employee awareness about cybersecurity threats. Attackers often target employees and trick them into giving up access or sensitive information. Organizations can help decrease that problem with regular training of people who can be attacked. They should be informed about possible threats and how to react to mitigate any cybersecurity risks.

Insufficient resources

Proper protection of the organization requires investment in technology and expertise. Apart from organization-wide security measures that can be implemented, there’s also a need to find experts who can deal with cybersecurity to introduce controls and mitigate risks. It’s often hard to find qualified cybersecurity specialists who can take responsibility for data security and effective risk mitigation.

Evolving threats

Even though employees are trained to recognize attacks and know how to react when an incident occurs, cybercriminals keep devising new methods to trick people into revealing sensitive information. Adapting to the changing cybersecurity environment is necessary to implement effective cybersecurity measures.

Conclusion and the future outlook

Looking at the evolving threat landscape, it’s critical to implement proper cybersecurity measures in the financial sector. Finance services are at the top of cybercriminals’ target lists, and new threats are emerging that need to be addressed.

The development of AI gives us a glimpse of new possible threats that need to be faced. That’s why it’s crucial for banks to invest in cybersecurity solutions to safeguard their systems and data. It’s necessary to adopt robust security measures to mitigate cyber risks arising from different sources.

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