Cyber security is an arrangement of technologies, protocols, and methods that guard against damage, malware, viruses, hacking, theft, and unauthorized access to networks, devices, programs, or data. It is an essential part of the financial industry.
Many financial services companies use third-party vendors, which adds a layer of complexity to cybersecurity efforts. This can increase the risk of attacks on infrastructure.
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So, how is cybersecurity in the financial industry? Cybersecurity is a vital aspect of any business, especially in banking. Banks deal with millions of daily transactions and must secure their data against cyber attacks. Their customer data is critical and a criminal’s primary target. In a security breach, financial institutions can lose customer trust and money, which can be challenging to regain. This is why they must ensure that their security measures are up-to-date and effective.
Hacking is becoming increasingly common in the financial sector, particularly as low- and middle-income countries leapfrog traditional banks to adopt digital payment systems that promote financial inclusion. However, these technological advances also allow hackers to steal funds and personal information. The recent $101 million Bangladesh central bank heist was one such example.
A comprehensive strategy for safeguarding the global financial system requires collaboration between governments, international organizations, and private sector companies. First, it is necessary to strengthen cyber resilience through intelligence sharing and to foster collaborative responses with industry. Governments can support these efforts by establishing entities to assess threats and coordinate responses. Additionally, investing in expanding the cybersecurity workforce and developing cybersecurity capacity for the financial sector is essential. This includes establishing a finance-focused CERT, modeled on Israel’s FinCERT, to address the current shortage of qualified cyber professionals.
Resilience refers to the ability of individuals and organizations to rebound from adversity and continue with their objectives. It is a multifaceted attribute that varies among individuals and depends on various factors, including their genetic predisposition, cognitive resources, and early environments. It also includes an individual’s reliance on inner strengths and external supports.
Financial services companies need resilience at every stage of their digital transformation efforts. They must rely on flexible cybersecurity solutions that accommodate new and emerging threats. This is especially important as they expand into new areas of business, which can introduce new vulnerabilities.
Many initiatives to improve cybersecurity have been launched, but they still need to be more cohesive. This is partly because different communities operate in silos and address cyber risks through their respective mandates. While financial supervisory authorities focus on resilience, diplomats address norms of behavior, and national security agencies work to deter malicious activities.
Banks are vital to the economy and must be resilient against cyberattacks. They must recover from operational disruptions, protect consumers, and stabilize the global financial system. They can achieve this by building resilient systems and processes, implementing a security culture, and ensuring their employees know the risks they face. In addition, they must establish clear rules for customer protection and create a system of accountability for breaches.
Keeping customer data safe and private is a top priority for financial industry companies. They must protect their systems from cyberattacks that could erode consumer trust and impact their bottom line. This is especially critical as the world moves to cashless payment methods.
Cyber attacks against banks can take many forms, from stealing PII (personally identifiable information) to hijacking bank servers and demanding ransom payments. These attacks can cripple a company’s operations and lead to massive losses. The good news is that a well-thought-out cybersecurity strategy can help minimize risk and ensure the safety of sensitive information.
In addition to strengthening internal security systems, companies should work with third-party vendors with a solid track record in the sector. Moreover, they should implement continuous vulnerability testing and provide regular simulation exercises for employees to test their defenses.
Lastly, it is essential to increase international collaboration on cybersecurity. The global financial system is interdependent, and individual governments, financial institutions, and tech companies cannot adequately fight cyber threats alone. A comprehensive response is needed to address the growing threat and create more resilient banking infrastructures. The global economic system can only thrive if it remains stable and secure. Until that happens, the financial sector will remain a prime target for cybercriminals looking to make money or cause disruptions.
Cybercriminals quickly exploit these advancements as we become more dependent on technology and demand instant responses. This is why financial institutions need to maintain a holistic approach to cybersecurity. This means incorporating security tools that can protect against new threats and continually updating practices to prevent vulnerabilities from emerging.
This includes developing the necessary staff to understand and use these tools properly. Training employees to recognize phishing attacks and other malicious activity is also essential to cybersecurity. This helps to reduce the likelihood that sensitive information will be exposed to cybercriminals.
While it’s impossible to protect against cyberattacks completely, financial organizations can improve their internal security by implementing complex IT solutions designed to help protect data and become operationally efficient. This frees internal IT teams to focus on promoting innovation and avoiding disruptions in business processes.
While most cyber solutions are geared toward large enterprises, there is an untapped market for small to mid-sized businesses that can provide these products at more affordable prices. These smaller providers can help FIs to protect their systems against evolving threats and keep up with changing security risks. They can also assist with achieving and maintaining compliance. This is particularly important for FIs focused on meeting the needs of unbanked or underbanked populations.