The financial sector faced the highest number of cyberattacks among all industries for three years, until the end of 2018, according to a report by IBM X-Force Threat Intelligence Index. The financial sector alone was responsible for nearly a fifth of all cyberattacks around that period. Moreover, financial services also face the highest costs amongst all industries while dealing with cyber attacks and their repercussions. The 2019 Accenture report on the cost of cybercrime stated that the average cost of cybercrime per company in financial services was a whopping $18.5 million, much higher than any other vertical. 

The banking sector is especially vulnerable due to the value of the data it hosts. Hackers sell the stolen financial data and banking credentials to high bidders or use it to siphon off millions of dollars. The potential attack surface for banks has only grown in size owing to their larger digital footprint. Also, the digital transformation of this industry with mobile apps, net banking and other online services has left this industry exposed to future attacks. While these digital banking solutions have enabled easy access to financial services for customers, they have also created cybersecurity gaps that malicious hackers can easily exploit. Banking and cybersecurity need to go hand in hand to ensure data protection and safety.

Banking and cybersecurity: What are the biggest threats? 

One of the key components of building an effective cybersecurity plan is analyzing and identifying the top threat vectors. Identifying these vectors allows security personnel to pick out the best cybersecurity investments with the highest ROI. 

  • Malware

The malware-as-a-service model has made it very easy for malicious criminals to access top malware technology. Notably, malware was responsible for 75% of all data breaches in this sector in 2019. New threats such as file-less malware attacks have also surfaced, making it clear that banking institutions require top-notch cybersecurity programs. 

  • Social engineering 

Unlike conventional attacks that exploit system vulnerabilities, social engineering attacks capitalize on human weaknesses. By building elaborate phishing scams to trick top officials, hackers gain access to login credentials. Hackers can use these credentials to steal critical data or even encrypt data to lock users out of their systems. 

  • Data manipulation 

Many insidious cybercriminals manipulate data instead of stealing it outright. They make changes in the transactional data stored in the system. Since the changes appear legit, they’re almost impossible to identify. Even small, undetected changes can snowball into massive issues down the line. Data manipulation can also lead to non-compliance with data standards, resulting in substantial regulatory fines. 

  • Third-party services

Most banks rely on third-party service providers to fulfill their digital banking needs. Even if the bank itself has unimpeachable security systems in place, vulnerabilities in third-party systems can cascade down and affect the bank. So, banks need to ensure all their service providers are compliant with the latest industry standards in security protocols. 

  • Spoofing

Spoofing has become a leading cause of worry for financial institutions. In this method of attack, cybercriminals create fake websites that look very similar to the bank’s original website. Users are redirected to the fake website, where they’re asked to enter their login credentials. Since the website looks the same as the bank’s, most users do not suspect foul play. Once the users fill in their credentials, they are redirected to the original bank’s website. Hackers can cause massive monetary and reputational damage after stealing user credentials in this manner. 

  • Unencrypted data

Not encrypting data is particularly responsible for attacks on smaller regional and cooperative banks with fewer funds to invest in cybersecurity. Storing unencrypted data can make it much easier for hackers to exploit it. Encrypting all the stored data ensures that hackers will not be able to use the stolen information even after gaining access. 

What are the compliance requirements in the banking sector? 

Every Financially Regulated Financial Institution (FRFI) is subject to the supervisory framework of the OSFI. They’re also liable to ensure SOC2 compliance for all their third-party vendors. Apart from this, the NIST framework helps regulate cybersecurity and data protection protocols. Financial institutions also need to maintain ISO 27000 and GLBA compliance throughout. These standards work together to ensure that the institutions maintain the integrity of their customers’ data. One of the key steps to maintaining compliance is assessing the risks, which require a pen test by an external expert. 

The first step towards building a strong cybersecurity protection system is identifying the biggest threats and possible attack modes. Penetration testing is a great way to analyze weaknesses, strengthen defences and remain compliant. Through robust pentesting, officials can close down gaps and manage their cybersecurity investments optimally. Banking and cybersecurity need to come together to build robust protocols for continued protection from cybercriminals.