Over the years, many banks have digitally transformed to include more online capabilities. While this makes operations and processes efficient and effective, it also invites potential suspicious activity and cybersecurity risk. A report by Bloomberg found that 74% of financial institutions have experienced some form of cyber attack since the COVID-19 pandemic began.
How can the banking industry prepare itself to protect sensitive information for its clients? The answer is knowing common cybersecurity trends and having a solid risk management plan.
If you’re curious about what cyber risks your financial services institution needs to be aware of, use this blog as your guide. We’ll cover why understanding suspicious activity is vital for success and what data security threats to watch out for.
Before discussing the various risks to be aware of, it’s vital to have a complete understanding of what cybersecurity is. By definition, cybersecurity is the technologies, protocols, and methods that are designed to protect organizations against attacks, damage, malware, viruses, hacking, data threats, and unauthorized access. For financial services institutions, cybersecurity is put in place to safeguard against cyber criminals accessing personal data and sensitive financial information.
Clients trust banks to keep their assets safe. This confidence and credibility are essential to successfully building lasting relationships and flourishing business practices in the financial sector. When that trust is broken or taken advantage of by not fully protecting a client’s banking information, that relationship can be broken and even severed permanently.
The importance of cybersecurity for banks can’t be overstated. Here are just a few reasons why protective measures are paramount for financial institutions:
Banks store and manage large sums of money and financial assets for individual clients and businesses. Without the proper safety measures, cyberattacks can lead to unauthorized access to accounts, fund transfers, and even the theft of funds. When adequate cybersecurity measures are enacted, a wall of protection is placed between hackers and the important data.
Financial institutions rely heavily on relationships with their clients, and a breach of security can lead to compromised client data and lost confidence in the bank. According to Forbes, the topic of trust can be broken down into two separate categories: delivering customized and consistent client experiences and protecting people and their data from cyberattacks.
The banking industry is subject to strict regulatory frameworks and compliance requirements that mandate specific cybersecurity measures. These regulations are put in place to ensure software and systems are updated consistently and to give financial institutions guidelines on the proper security measures (such as personal verification questions – how to ensure a client is who they say they are) that will effectively keep users from harm. Bank regulatory compliance includes applicable local, national, and international government rules and legislation from financial regulatory agencies.
Whether a bank already has extensive cybersecurity measures implemented into its processes or is building up a protective arsenal, looking into possible cybersecurity measures can help a risk management team complete an audit of the company’s current level of protection. This can help discover possible gaps in care and determine a plan to help fill those missing spaces. Without a complete picture of how the security measures fit side-by-side and work together, the financial institution may be missing some key places for common smishing (text message sent with an exploitable link) and phishing (email sent with an exploitable link) attacks.
It’s beneficial to know what common cybersecurity trends are being flagged nationwide and to understand how banks and their clients can protect clients’ financial data.
Let’s look at the top banking trends in cybersecurity and protection:
Most people use debit cards, bank transfers, and digital wallets to pay for goods and services. This calls for safety measures like encryption, two-factor authentication, tokenization, and other beneficial actions to keep sensitive information out of the wrong hands. Utilizing payment processing service providers that understand the various cybersecurity threats the banking industry faces can help reduce incidents.
AI is used to make investment decisions, read documents, and deduce conclusions from content and other beneficial tasks that banks complete on a daily basis. While AI and chatbots make work more efficient, there are potential risks associated with them. Privacy breaches, cyberattacks, and impersonation are all made easier with advanced technology in cyber criminals’ hands. To decrease the number of AI- or chatbot-related crimes, avoiding using unauthorized AI technology is vital.
Ransomware is a type of malware designed to deny a user or organization access to their files or data held on internal systems until a certain amount of money or assets are paid to the hacker. While simple ransomware can lock a user or organization out of a system without causing any long-term harm, advanced malware can use methods to intercept and extort financial institutions, which can have lasting negative impacts. By encrypting files, cyberattackers can demand a ransom payment for the decryption key, placing businesses in a difficult and dangerous position.
Cloud-based systems are more efficient, but they can have issues with insufficient access verification controls, credentials, access, and key management, leading to unstable organizational security. Without up-to-date knowledge on cloud technologies and the cyber threat possibilities associated with them, an organization may struggle to bolster user awareness and protection.
Blockchain and cryptocurrency technology are composed of several built-in security features, but that doesn’t mean they’re entirely safe. New technologies have found ways to exploit blockchains and hijack cryptocurrency. Risks like cryptojacking (the process of hijacking computational devices, such as laptops, desktops, and smartphones, to 'mine' or calculate new cryptocurrencies) and rug pulls (a scam where a new company or developer hypes a new project to attract investor money, then abruptly disappears with all funds invested - hence pulling the rug out), are serious problems related to cryptocurrency that can prevent transactions, halt payments, and steal access to computers to mine cryptocurrencies.
Phishing and smishing (as defined above), and quishing (using a QR code to get you to follow a link), ultimately are all intended to get you to do one thing – give up your credentials – your username, your password, passphrases, or pin codes. Protecting this information is critical. Be suspicious of anyone who’s asking you for your secret sensitive information. Get into the habit of using biometrics (such as your face or fingerprint) wherever possible, and don’t re-use passwords across multiple websites.
Credential stuffing is a cyber attack in which credentials obtained from a data breach on one service are used to attempt to log in to another unrelated service. This is possible because utilizing the same username and password combination among different websites is very common. When one of them suffers a data breach, the disclosed password will be used to access your other accounts.
Identity theft can occur when an unauthorized person uses another’s personal information to obtain their credit card and loan information or conduct financial transactions in their name. This can ruin that person’s credit ratings and finances if their financial institution isn’t able to get it under control immediately. And it’s costly to financial institutions, as well. Regula found that 31% of banks that dealt with identity theft incidents had to pay an average of $479,000 or more.
We know you’re focused on accomplishing your business goals. Still, it can be challenging to do so when cyber attacks and threats hang around every corner. At Cathay Bank, protecting you is our top priority. That’s why we’re driven to help you navigate changing industry trends and are committed to keeping our clients’ data out of harm’s way.
If you’re curious about safe personal and business accounts or want to learn more about cybersecurity measures, contact Cathay Bank today.
This article does not constitute legal, accounting or other professional advice. Although the information contained herein is intended to be accurate, Cathay Bank does not assume liability for loss or damage due to reliance on such information.
