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Cybersecurity is practice of protecting information technology (IT) infrastructure assets such as computers, networks, mobile devices, servers, hardware, software, and data (personal & financial) against attacks, breaches and unauthorised access. Due to bloom of technology, most of all businesses rely on IT services, making cybersecurity a critical part of IT infrastructure in any business.
The role of cybersecurity in financial institutions is very vital as the number and severity of cyber threats continues to rise by each day. With the widespread use of technology and the increasing amount of data being stored and shared electronically, financial institutions must ensure that they have robust cybersecurity measures in place to protect against evolving threats.
Financial institutions face a range of cybersecurity threats, including phishing attacks, malware, ransomware, and denial of service (DDoS) attacks. These threats can result in the theft of sensitive customer data (PII), financial fraud, and reputational damage. Sometimes theft of PII can lead to identity theft too.
Cybersecurity measures are designed to protect the confidentiality, integrity, and availability of data and systems. Confidentiality refers to protection of sensitive information from unauthorised disclosure using measures like encryption, access control etc., to protect sensitive data. Integrity refers to accuracy and completeness of data to ensure data is not manipulated or corrupted using cybersecurity measures like data backups, system monitoring. Availability refers to the ability of authorised users to access the systems and data when needed under any circumstances using measures like disaster recovery plans.
Before we go further and discuss about various threats faced by financial institutions, let’s look at the regulatory requirements and industry standards in financial institutions.
There are mainly two standards which financial institutions must comply with:
PCI-DSS: Payment Card Industry Data Security Standard is a set of security and compliance requirements designed to protect the cardholder data which defines how the financial data (card data) will be processed, stored and transmitted in a safe manner. This standard requires use of encryption, masking, hashing and other secure mechanisms to safeguard the customer data. PCI-DSS is widely accepted globally.
GLBA: Gramm-Leach-Bliley Act, also known as Financial Modernisation Act of 1999 is a federal law in the United states which requires financial institutions to explain their information sharing practices to their customers and to safeguard sensitive data.
Apart from PCI-DSS, GLBA some countries have their own privacy laws which also requires compliance from financial institutions to operate. Non-adherence to regulatory compliance can sometimes attract penalties to financial institutions.
Top Cybersecurity threats faced by banks are:
• Malware- Malware, or malicious software, is any program or file that is intentionally harmful to a computer, network or server. It is very important to secure customer devices such as computers and mobile devices that are used for digital transactions. Malware on these devices can pose a significant risk to a bank's cybersecurity when they connect to the network. Confidential data passes through the network and if the user's device has malware without proper security, it can create a serious danger to the bank's network.
• Phishing- Phishing means to get confidential, classified data such as credit, debit card details etc. for malicious actions by hiding as a reliable person in electronic interaction. Online banking phishing scams have advanced constantly. They seem real and genuine, but they trick you into providing away your access data.
• Spoofing- Spoofing can be used to gain access to a target’s PII (Personally Identifiable Information), spread malware through infected links or attachments, bypass network access controls, or redistribute traffic to conduct a denial-of-service attack. Spoofing is often the way a bad actor gains access in order to execute a larger cyber-attack such as an advanced persistent threat or a man-in-the-middle attack.
• Unencrypted data- unencrypted data is a significant threat to financial institutions, as hackers can use it immediately if they seize it. Therefore, all data should be encrypted, even if stolen by potential thieves, they would face the challenge of decrypting it.
• Cloud-based cybersecurity theft- There is an increased risk of cloud-based attacks as more software systems and data are stored in the cloud. Attackers have taken advantage of this, leading to a rise in cloud-based attacks.
• Insider theft- An insider threat refers to when someone with authorized access to an organization's information or systems misuses that access to harm the organization. This can be intentional or unintentional and can come from employees, third-party vendors, contractors, or partners. Insider threats can include data theft, corporate espionage, or data destruction. People are the root cause of insider threats, and it's important to recognize that anyone with access to proprietary data can pose a threat. 25% of security incidents involve insiders. Many security tools only analyse computer, network, or system data, but it's crucial to consider the human element in preventing insider threats.
Financial institutions can take several steps to improve their cybersecurity posture and protect against evolving threats. Some best practices for cybersecurity in financial institutions include:
- Regular risk assessments: Financial institutions should conduct regular risk assessments to identify potential vulnerabilities in their systems and networks. Risk assessments should include both technical and non-technical factors such as employee training and physical security.
- Implementing strong access controls: Financial institutions should implement strong access controls to protect against unauthorized access to systems and data. Access controls should include strong passwords, multi-factor authentication, and role-based access controls.
- Awareness programs: Financial institutions should educate employees on cybersecurity best practices and provide regular training to help them recognize and respond to potential threats. Employees should be trained on topics such as phishing, malware, and password security. They can also simulate phishing campaigns to make employees aware.
- Encrypting sensitive data: Financial institutions should encrypt sensitive data such as customer information and financial transactions to protect against unauthorized disclosure.
Financial institutions must manage third-party risks by conducting due diligence on third-party vendors and ensuring that they have robust cybersecurity measures in place. This includes regular monitoring and auditing of third-party vendors to ensure that they are complying with cybersecurity standards and regulations.
Cybersecurity is a critical issue for financial institutions, given the sensitive information and valuable assets they handle. Financial institutions must prioritize cybersecurity measures to protect themselves and their customers from cyber-attacks. The evolving cyber threat landscape and the challenges financial institutions face in implementing effective cybersecurity measures make it crucial for them to stay up-to-date with evolving threats, invest more resources in cybersecurity, prioritize employee training and education, and manage third-party risks.