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Banking & Finance – Risk, Challenges and Cost of a data breach

Cybersecurity continues as a widely discussed and hot topic today for every business, irrespective of size or domain. Beyond that, we could also note that some sectors, such as healthcare and banking, require ultimate protection and security strategies. What differentiates these industries is the amount of critical information streaming every single second. For any particular industry, it’s not just financial data that remain at risk, but customer trust and the company reputation.

Let us walk through some sobering stats here. According to the McKinsey survey, no industry has ever achieved a minimum trust rating of 50% concerning data protection. Approximately, 87% of respondents said they’d refuse to do business with companies that does not have proper information security practices. The New York Federal Reserve has now reported that the financial firms are prone to cyber-attacks, 300 times more, than other industries – this clearly tells us how attractive this sector is to cyber criminals.

Top Threats to look out for in Banking & Finance

These are the top threats probable to continue causing grief for banks and other fintech companies over the course of 2022.

  • Ransomware attacks

Ransomware attacks is continuing its notoriously prosperous path without a cease. These attacks create a major headache for companies through the years and will stay as it is for a while. This method of cybercrime is when the critical files of an organization are encrypted, and their users get latched out by attackers who demand pay for re-accessing their critical data on their systems.

Ransomware attacks can incapacitate business systems for the long haul, especially when you have no backups. It is also hard to note that even if you pay the ransom amount, there is no assurance of regaining system access. And that makes this kind of attack an ever-growing and to flourish especially in this sector.

  • Remote working risks

While the pandemic hits the third-year mark, you can see that remote work culture is still on the favourite side for many industries. Similarly, hybrid workforces and cloud-based systems

have become nearly omnipresent. While the work culture expands beyond the security periphery, there can be additional loopholes & risks bordering on your business.

It clearly sounds like financial institutions would have to deal with more potential weaknesses than ever before. While employees are not within the security wrap of your organization, while they are working remotely, you would need to pay extra attention to address these risks. With much criticality surrounding this industry, remote work culture should also be ready to adapt to different security solutions that is going to help against all the different cyber attack vectors.

  • Cloud-based cyber attacks

Cloud computing is the on-demand availability of system resources, especially data storage, without direct active control by the user. It supports a more rapid and efficient response to the needs of banking customers. With on-demand availability, you need fewer infrastructure investments, saving initial set-up time.

However, cybercriminals have seized upon cloud storage options. Cloud-based attacks persist as one of the most dominant threats in the banking industry. Hence, it is critical to ensure that the cloud infrastructure goes configured securely to shield the industry from harmful breaches.

  • Supply chain attacks

Yet another attack wave we can witness in the banking and finance sector is the supply chain attacks. It is a malware distribution technique used by cybercriminals. The attack targets a software vendor and delivers malicious to the customer base and others involved in the supply chain.

The attack impacts the supply chain in the form of product updates that appear to be legitimate. These attacks compromise the distribution systems and allow the cybercriminals to penetrate the supplier’s customer networks.

  • Social Engineering

One of the most prevalent threats to banking and finance is social engineering. Typically, people are the weakest link in the security chain – and can get easily tricked into giving over sensitive data and credentials. This attack scenario equally impacts bank employees, their clients as well as their customers.

Social engineering can take many forms. It could be through phishing or whaling attacks or even by sending bogus invoices that disguises to be from a trusted source. Hence, it is a vital requirement to keep your employees informed about social engineering tactics, how to avoid them and the latest ways these threats evolve over time.

Critical Cybersecurity challenges that the industry faces

Pushing it to the cybersecurity mitigation phase can be challenging for the sector with the amount of criticality it holds. Some of the major cornerstones that banks need to alleviate include: –

  • The security talent gap rounding the industry – the number of trained professionals in cybersecurity is much lower than the actual demand.
  • The lack of security knowledge and awareness – Uninformed employees who have either not been given adequate security awareness training or are obsolete and doesn’t factor in new risks.
  • Shortage of security budget – Inadequate allocation of business budget to deal with cybersecurity threats is often a flaw utilized by bad actors.
  • Reliance on default or weak credentials – Customers using default passwords and employees relying on weak user credentials makes it easy-smooth for attackers.
  • Applications and mobile devices lacking security-first approach – Insecure mobile devices and applications developed for banking purpose fall prey to attacks due to weak security binding.

Solutions to cybersecurity challenges in banking

That does not mean you’d have to sit back and worry. There are actions that you as a bank or a financial institution can take, to ensure protection of your systems against all the different threats and challenges. You can: –

Overcome the talent gap by partnering with a cybersecurity company that offers security consulting services for the industry.

  • Implement continuous security awareness training programs
  • Evaluate current programs to ensure their relevance and to check if they are up to date with the current threat landscape.
  • Invest in managed security services that help proactively detect and prevent attacks.
  • Comply with the latest industry-specific regulations or laws that help align the best security practices to avoid breaches.
  • Carry out consumer awareness programs that help them identify and prevent leaking sensitive data to cybercriminals.

How much does a data breach in the financial sector cost?

The 2022 IBM “Cost of a Data Breach” Report states that the finance industry kept the second-highest average cost per breach, following the healthcare division. While the average healthcare breach costs marked a new record of $10.10 million (an increase of nearly 42% considering the 2020 report), financial institutions averaged $5.97 million per breach.

The only positive take away was that the average number of days to detect and contain a data breach has fallen from 287 to 277 in the one-year tenure. Likewise, the average number of days to control a breach fell from 75 days in 2021 to 70 days in 2022.

Bottomline

By planning ahead to deal with cybersecurity challenges and implementing relevant solutions, organizations can get at the forefront of cybersecurity. New challenges will evolve over time, and it is the sole responsibility of the organizations to set their posture upright to tackle these threats. As you already know, only if you have the foundations set and are well-prepared, will it help to ensure to gain the trust to help you sustain your continuous business growth.

ValueMentor is one of the star companies binding security in almost every sector, including the healthcare and financial industries. We have a full-fledged team of security experts, consultants, and subject matter specialists, ready to deliver cyber risk solutions to optimize your security. To know more about our offered line of services, hop on to our service pages or have a call with our consultants right away.

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