Cyber-attacks are almost always intended to forcefully obtain crucial information or to get financial gain. This 2020 Data Breach Investigations Report establishes that 86% of the breaches and cyber threats are financially motivated.
Financial institutions like banks are constantly targeted by Cyber Criminals and hackers, even if they have advanced Cyber Security measures.
Unless there comes to be a robust and foolproof system to fight against cyber-attacks (maybe not impossible, but extremely hard to develop and still some years away), hackers will continue to target and victimise banks and credit unions.
Awareness about Cyber Security threats is a critical first step to protect assets, customer data, and reputation.
Awareness needs an emphasis because some portion of employees of an organisation usually do not completely understand the probable threats to the organisation.
Unsurprisingly, 34% of data breaches have internal actors involved in some capacity, either knowingly or unknowingly (Source).
What does this mean for an enterprise?
Financial institutions like banks must continuously keep working at strengthening the internal system. They need to monitor internal variables and educate their employees regarding the usage of technology.
Not adopting such measures is equivalent to exposing sensitive company data to threats and risks.
In this blog, we discuss 5 emerging Cyber Security threats that financial institutions should be wary about.
5 emerging cyber security threats banks should know
#1 Unencrypted data
Definition: Unencrypted data simply means the data that is not encoded. It is plain text that humans or computers can read and is stored in an unprotected format without encryption. This makes it very vulnerable to attacks and lucrative for online breaches.
Stats: According to the 2020 Unit 42 IOT threat report, 98% of IoT devices are unencrypted, thereby increasing the risk of confidential data being exposed.
Impact: Unencrypted data is a dreadful lapse in the security configuration of an organisation, yet commonly found. For banks and other financial institutions, this is a huge problem as a security lapse violates customers’ privacy and affects trust. Eventually, it will severely damage the business.
Thus, banks need to think big in terms of data security; encryptions are an important measure that will give them the required control over their data.
Even if their system falls prey to an attack, data encryption can save crucial data from the prying eyes of the hackers and cybercriminals looking to gain financial favour.
#2 Malware
Definition: Malware or malicious software is a blanket term for numerous viruses, worms, Trojans, ransomware, spyware, and other computer programs. All these software and programs are intended to harm computers and systems.
Stats: In 2018, 90% of financial institutions were attacked by malware that majorly included Trojans, adware, worms, spyware, and ransomware.
Impact: Malware can impact the security of a financial institution or a bank and pose a serious threat. It causes systems to slow down and badly written codes cause computers to crash which can disrupt the entire banking activities wasting precious time.
Moreover, malware can also steal credentials from customers’ when they feed their card details or carry out an online financial transaction. This can result in illegal removal of balances from bank accounts and/or unauthorised access to customer data files.
Banks need to be extremely cautious and wary about malware because they expand quickly and infect entire systems.
Banks must ensure that they place uniquely tailored protection layers through each network. This goes a long way to help block attacks from malicious software.
#3 Synthetic identify fraud
Definition: Synthetic identity fraud is a Cyber Crime, where the fraudster doesn’t use stolen credit cards or IDs. Instead, they use a mix of real security numbers along with the fake ones with other crucial information to fabricate synthetic IDs to draw credit.
Stats: Around 85% of synthetic identity frauds easily slip risk detection systems. As a result, in 2018, more than 446 million consumers’ records were exposed to data breaches due to synthetic fraud (Source).
Impact: Synthetic identity frauds can be called the cyber-crime of the new age. Banks and financial institutions are forever on the radar of hackers and fraudsters because they can easily detect the vulnerabilities in their systems and earnings are large.
Such fraud aims to open illegitimate bank accounts to get credit. Here fraudsters tend to build a good rapport with their financial institution while using synthetic IDs. They target accounts relating to people who have no credit history, which reduces their chances to be flagged.
All this makes it challenging for financial institutions and banks to detect fraud. Deep data mining into data trails scattered across different systems can help reveal such fake IDs.
Moreover, banks should encourage customers to monitor their credit reports, keep security cards and crucial documents safe, and ask them to check documents thoroughly before discarding them.
Also, educating customers about phishing attempts that will prevent them from sharing personal and financial information over the phone or email is also an effective safeguarding measure.
#4 Phishing attacks
Definition: A phishing attack is a type of social engineering attack where hackers and scammers follow the practice of communicating fraudulently either through mails, messages, or calls.
Communication from these sources seems to be legitimate and appears reputable. However, they are aimed to steal sensitive information like credit cards, login information, or installing malware in the victim’s device.
Stats: 88% of organisations including banking and financial institutions have experienced phishing attacks. Phishing attacks cost a whopping loss of $17,700 every minute.
Impact: Phishing has always been and is still a growing challenge in the Cyber Security space for internet banking providers. Internal and external security systems provide protection; however, phishing attacks succeed due to human error. Humans fail to detect the scams that result in the theft of crucial data.
Hackers and scammers have started targeting banks instead of individual customers by implementing elaborate methods, like spear-phishing, whaling, and more.
The underlying aspect about these attacks is that the communication source from where the emails originate seems legitimate. They appear to be legitimate because official logos, names, and email addresses are used.
Banks can seek protection against such scams by questioning the authenticity of these communication sources and bring them to the notice of IT professionals and other security teams.
They also must invest in educating employees and customers about phishing scams, for e.g., through interactive learning modules, videos, and quizzes.
#5 Internet of Things (IoT) security exploitation
Definition: The exploitation of IoT device security is an evolved practice that scammers and fraudsters use not to attack the devices themselves but as a leveraging platform for malicious attacks and activities.
These include malware attacks, phishing, distributed denial-of-service attacks, credit card fraud, etc. IoT devices are vulnerable to security exploitation because they lack the necessary security hardening.
Most often, IoT devices operate without any supervision or monitoring which makes it easy for a hacker to tamper with them.
Stats: 61% of organisations surveyed have experienced IoT security incidents. Interestingly, IoT attacks tripled in the first half of 2019, and IoT devices experience an average of 5,200 attacks every month.
Impact: As people are experimenting with and relying increasingly on Internet-of-Things (IoT), it has evidently paved the way for Cyber Security issues.
Many IoT devices used in banking and other financial services are customer-facing. Customers are lured into signing up for financial services on mobile devices as it has improved the customer experience.
However, institutions need to be cognisant of the fact that most customers using these financial services through IoT devices haven’t fully understood every aspect.
Hackers and scammers target IoT in financial services easily because customers lack complete information about the usage. This leaves the personal and financial information protected.
Banks and financial institutions need to be wary of what data is being asked from the customers and what they intend to do with it. This is the first step towards protecting data and managing it efficiently.
We have looked at a few of the Cyber Security threats that financial institutions and banks are commonly plagued with, but these are by no means exhaustive.
Each institution must have a tailored approach to deal with different types of cyber threats. They must ensure safe, convenient, and technologically advanced options that can help mitigate the threats and keep customers safe.