Key Threats Faced by Financial Services and Banking Firms and Ways to Respond to them

Cyber Risks posing threat to financial services and banking firms: How they can respond?

Cybercriminals grow both in number and sophistication. Nowadays, every business is a potential victim of cybercrime. Cyber attackers generally target based on two parameters: maximum revenue and maximum impact. With the accumulating data on global cybercrime, the financial services industry has gained the position as a preferred target by cybercriminals. Organizations in the financial sector including banks maintain highly critical and valuable data electronically, ranging from credit cards, deposit details etc. There is lot of efforts taken by banks for digital transformation. The complicated regulatory environment, the intricate supply chain ecosystem, and the hybrid workplace practices triggered by COVID-19 are giving enough opportunities for cybercriminals to make revenue from the data.

Cyber threats facing the banking and financial sector

Phishing

Phishing is a way of tricking users into revealing login credentials to gain access to an internal network. Email phishing is the most common type of phishing; an email showing as legitimate communication is sent to victims. Nowadays, phishing is a big business, letting criminals to utilize Phishing-as-a-Service (PhaaS) developments by means of a hosted solution. PhaaS comprises products ranging from single toolkits to orchestrated campaigns. Comprehensive campaigns are utilized for a completely developed PhaaS attack. According to a recent report, almost 50% of observed phishing attacks were associated with the financial services sector.

Ransomware and other extortion methods

Ransomware is another major cyber risk to financial services. Ransomware is a form of malware that prevents users from accessing their system or data and intimidates to publish or sell the stolen data unless a ransom is paid. As per a recent report, the banking industry faced a 1318 percent rise in ransomware attacks in 2021. Besides encryption and data exfiltration, cybercriminals use other extortion methods including intimidating to hinder operations with denial of service (DDoS) attacks etc. For example, attackers utilize DDoS attacks to crash a website by overloading it with traffic. Attackers generate attack traffic from several compromised computer systems, comprising computers and other network-connected services. As a consequence of new extortion methods, ransomware attacks have a substantial impact on financial firms, comprising downtime, reputational loss, revenue loss, and public release of sensitive data.

Artificial Intelligence

Artificial Intelligence can be a double-edge sword. Though financial institutions widely use AI technologies that help in the fight for cybersecurity, AI can also help criminals who attempt to attack financial institutions. Cybercriminals utilize AI to enhance the effectiveness of their attacks. AI can be used to comprehend patterns in human behavior, and then make them to compromise networks and share sensitive financial information.

Advanced Persistence Tests

Because of the sensitive nature of the data, Advanced Persistent Threats (APTs) are a massive threat to banking systems and financial firms. These actors gain access to a computer network and are not found out for a prolonged period. By doing so, they will mine highly sensitive data. These threat actors make use of many of the same attack strategies as less capable threat actors, including phishing and ransomware, but they do it with more technical competency and funding.

Insider Threats

With regard to insiders, front-line staff and customers act as the biggest cyberesecurity concerns for financial services. Remote access and cloud-driven services work in favor for these employees. Though in several cases staff threats are accidental, the consequences are damaging to financial sectors’ reputation and revenue.

Cybersecurity Impact of Russia’s Invasion of Ukranine

The invasion of the Ukraine highlights the present danger of state-sponsored cyberattacks that has the objective of disrupting and disabling IT systems. The financial industry is the most targeted sector by cybercriminals, specifically in the form of ransomware attacks and APTs as discussed above. These are generally associated with nation state-backed groups. IT outages, cyber attacks or service disruptions can lead to hefty operating expenses through a number of causes, including consultancy costs, customer redress etc.

How the financial services can respond to cyber threats?

Here are some ways financial institutions can secure themselves from cyberattacks:

Devise a formal cybersecurity framework

Financial institutions can handle cybersecurity risk with a sound cyber risk management framework. Some tried-and-tested frameworks include:

NIST Cybersecurity framework

This framework is a powerful tool to organize and enhance your financial institution’s cybersecurity programs. It consists of a set of guidelines and practices to assist organizations develop and enhance their cybersecurity posture.

ISO 27001

As per its documentation, ISO 27001 was formed to “provide a model for establishing, implementing, operating, monitoring, reviewing, maintaining and improving an information security management system.”

Evaluate and manage vulnerabilities

Nowadays, with the introduction of several vulnerabilities, the risk surface will increase. Financial institutions experience this problem due to their managing of huge amounts of data and money. Growing number of apps in enterprise IT, advancement of shadow IT (i.e. usage of information technology systems, applications software, and services without explicit approval from IT department), remote work, embracing Internet of Things (IoT) technology, etc are other key advancements that create substantial cybersecurity vulnerabilities.

Have continuous security monitoring in place

Hackers will leave no stone unturned to access a financial institution network. Hence continuous security monitoring should take place. Financial institutions should continuously monitor their attack surface for cyber threats. These can include vulnerabilities in mobile application code, misconfigured software, unpatched systems etc.

Manage third-party risks

Banks generally have to grant third parties access to sensitive data, essential systems, and other major resources. Hackers may target your subcontractors to gain access to your essential systems and sensitive data. Third-party risk management should be an essential element of the cybersecurity policy for financial institutions. These institutions find out and mitigate security risks caused by third-party vendors, partners, and suppliers.

Incorporate employee cybersecurity training

Human errors can lead to cybersecurity breaches in the financial sector. It is important to build a workforce that is well-equipped in cybersecurity practices. Encourage your employees to tell their concern if they feel something is wrong.

IT and security leaders in the financial services must invest in the appropriate combination of technology and expertise to combat cyber risks. Cybersecurity is a comprehensive thing, and a continuous security control can substantially and rapidly enhance a company’s security posture.