By Gabriel Schild, Executive Director Digital Business Transformation at Verizon Enterprise
Banks and financial institutions are responsible for customer’s money and sensitive financial information and are held to a higher standard for security. Data breaches can have severe consequences and cost a bank much more than just stolen information or funds. A cyberattack can significantly damage a company’s reputation, tarnishing its image for years and costing it customers over time. A successful data breach also diverts time and resources from a bank’s usual operations to fixing the problem. Banks have a lot to loose from a breach but fortunately there is also a lot they can do to protect their data and the data of their customers. To do so, they must understand the nature of cyberattacks in the financial services industry and what security measures will most effectively reduce their risks.
According to Verizon’s 2019 Data Breach Investigations Report (DBIR), 88 percent of all cyber incidents within the financial services and insurance industries were financially motivated. Cyber attackers look for the easiest path possible to financial gain and the financial services industry can be a cash cow. Within the space, many cyberattacks target web applications (like cloud-based email) with the use of phishing and stolen credentials. Threat actors send phishing scams to trick users into sharing their email credentials and then use these stolen credentials to access the email account and other company systems. From there, the attacker can send fraudulent emails to customers and request funds from other employees.
Phishing has been a security concern for years but the threat continues to evolve. It’s not just rank-and-file employees who get caught in these scams – C-level executives are increasingly the target in phishing attacks. The DBIR found that senior executives were twelve times more likely to be the target of a phishing attempt than in previous years. Click-through rates on phishing links are declining (in test simulations, rates fell from 24 percent to 3 percent in the past seven years) but research shows that mobile users are more susceptible to phishing.
Cyber attackers also steal credentials or compromise financial accounts via banking Trojan botnets – malware designed to capture login details and steal information. Denial of Service (DoS) attacks are now common and are used by attackers to disrupt services by flooding the bandwidth of a system to overload it. These kinds of attacks are pervasive – data shows over 40,000 breaches in the financial sector associated with botnets and 575 DoS incidents.
While the majority of breaches in the financial services industry are perpetrated by external actors (72 percent of threat actors are external), privilege misuse and miscellaneous errors by internal actors are also common. Misuse is characterized as the unapproved or malicious use of organizational resources. Employees may misuse their access for personal gain – either to steal money directly or to take sensitive information to give them an advantage at another company. Internal actor involvement in a data breach, however, does not necessarily indicate malicious intentions. Miscellaneous errors include incidents in which unintentional actions result in a security compromise, such as misconfiguring servers to allow for unwanted access or publishing data to a server that should not have been accessible by all site viewers.
Physical attacks against ATMs and card-present breaches involving point-of-sale environments continue to decline, at least in part because of the progress made in the implementation of chip and pin payment technology. While it is much less common for cards to be skimmed a cash registers, banks and retailers must now combat malware attacks on e-commerce applications that gather users’ payment information.
The good news is financial service organizations can take several steps to lower their risk of a data breach and defend against different means of attack common in their industry. The cybersecurity measures and methods that financial companies should consider include:
- Phishing prevention: Hold frequent employee trainings so they can recognize and avoid phishing scams and give employees an easy way to report phishing attempts. The majority of phishing emails are most successful in the first hour, so a good reporting system can prevent future clicks by alerting the entire organization of a phishing attempt early on. Looking beyond employees, banks can also spread security awareness to customers on the prevalence and danger of phishing.
- Two factor authentication (2FA): Financial companies should use two-factor authentication on customer-facing applications and any cloud-based email accounts. With 2FA, even if bad actors steal a set of credentials, they can’t easily access the system because it requires additional information to authorize access.
- Monitor system access: To avoid and detect privilege misuse, banks should monitor and log employee access to sensitive financial data. They should make it clear to employees that system activities are supervised for fraudulent transactions.
- Malware monitoring and protection: Financial services organizations should monitor their systems for suspicious behaviors that indicate a botnet or DoS attack or presence of malware. Additionally, they should ensure that they have adequate protection against these attacks by implementing anti-malware defenses.
Companies can reduce their risk of cyberattack by remaining vigilant about system activity and access, implementing authentication safeguards and by training employees to be aware of phishing attempts. These security measures can help financial services companies from falling victim to data breaches and keep their customers – and their money – safe from cyberattacks.
HOW TO MANAGE YOUR CASH FLOW IN UNCERTAIN TIMES
While the world is constantly changing, probably at a faster pace now than ever before, businesses need to manage cash flow and costs to drive success in uncertain times, says Matthew Thorpe, partner at Haines Watts Essex.
Managing people and expenses
There are certain costs that you just can’t avoid as a business – to keep your operation running seamlessly, but scrutinise the detail and cut down on any non-essential expenses. Check things like your SaaS subscriptions and look out for costs that auto-renew and if you do cancel, remember to also cancel your direct debits too.
You might want to put a freeze on hiring new people, but ensure that other roles and responsibilities are clearly and efficiently assigned across your team. The Coronavirus Job Retention Scheme (CJRS) has been introduced by the Government to help UK employers access support to continue paying part of their employees’ salary to avoid redundancies. Affected employees are classed as “furloughed workers”.
Once furloughed, the employee cannot work or they will not qualify for the scheme. For businesses that perhaps need to go further, there may be some roles they don’t need any more, but businesses should work sensitively with people to manage this.
Cash is king
In uncertain times, owner managers will need to keep operations going to ensure financial stability. You should look to manage debt more efficiently by negotiating extended payment terms with creditors. You could also renegotiate loans for longer repayment terms to give yourself a lower monthly payment, helping the business to set some cash aside each month.
As a business owner, you need to create a cash flow projection and update this regularly if you are to improve things. You can do this using financial information to create a picture of how the business will look in the next 12 months. The forecast needs to show revenue sources and expenses, which will show the ups and downs of business income and can be used to make sure that enough finance is in place.
While banks and other finance providers recognise that the cashflow of a business may be disrupted by the impact of Covid-19, they are still going to want to see that you are viable and continue to trade in these uncertain times. Make sure your business is organised and don’t let disorganisation cause unnecessary issues. You can evidence this by having detailed forecasts; current order books and projections (as best as possible).
Having instantly accessible, accurate financial information allows you to plan effectively, spot issues before they become problems and manage your money in the most efficient and rewarding way.
Software is now incredibly user-friendly and accessible from anywhere. For a business owner embracing the technology, this means:
- Invoicing can be done instantly when a job is complete, emailed to the customer with an easy to use link to a payment platform.
- Comparison websites can automatically monitor and help maintain lowest cost for things such as light & heat, insurance etc.
- Technology can be used in place of face-to-face meetings. It can also enable them to adapt production lines to different demands.
All of these things and more, used properly, can make managing your business finances quicker, easier and often cheaper. You will also be able to bring clarity to where your business stands and prepare for the next steps.
HOW FINANCIAL SERVICES CAN GET TO GRIPS WITH RISING SUPPLY CHAIN RISK
By Alex Saric, smart procurement expert, Ivalua
UK businesses have never been more dependent on their suppliers to help them deliver goods and services to their customers. Be it retail, manufacturing or financial services, suppliers have a vital role to play when it comes to innovation and meeting customer expectations. However, as supply chains become increasingly global, businesses are potentially exposing themselves to more risk than ever before.
This is especially true in financial services. Whether it’s the impact of geopolitical events like Brexit or global tariff wars, supply shortages, security or the businesses impact on the environment, an organisation’s failure to identify and mitigate risk could see millions wiped off its share price, and its corporate reputation left in tatters. Risk can present itself anywhere and at any time, so financial services firms must be ready to address it. However, many simply don’t have the ability to evaluate suppliers for risk factors, leaving them wide open to business operations being hindered, or being slapped with financial penalties.
More suppliers, increasing risk
One reason why financial services firms aren’t able to evaluate suppliers is the breadth and scale of today’s supply chains. For example, French oil company Total said in in a recent human rights briefing paper that they work with over 150,000 direct suppliers worldwide. This is just one example of how large and varied the roster of partners has become. Research from Ivalua has found that financial services businesses on average are working with around 3,600 suppliers annually, which is evenly split between UK-based and international partners. That number is expected to rise, with 60% expecting the number of suppliers they work with to rise.
The expanding nature of suppliers is only going to expose financial services firms to more potential risk than ever before, yet 78% say they face challenges gaining complete visibility into suppliers and their activities.
A lack of supplier visibility leaves businesses unable to identify and mitigate against supply chain risk. In fact, almost three-quarters (73%) of financial services firms have experienced some type of risk during the last 12 months. These include; supplier failure (43%), environmental impact, such as pollution or waste (35%) and supply shortages (45%). Supply shortages can be among the most damaging to a business, as seen by both the KFC chicken shortage which closed stores, and the summer 2018 CO2 shortage which caused companies such as Heineken and Coca-Cola to pause production, impacting supply across Europe during the World Cup.
Businesses unprepared for the worst
One way financial services firms can better prepare for risk is to ensure they know what to plan for to reduce the impact. However, whilst some say they have a contingency plan in place to deal with risk, many of them are unprepared. Financial services firms admitted to not having comprehensive and deployed contingency plans in place to prepare the supply chain for risk such as; natural disasters (68%), supply shortages (67%), geopolitical changes (65%), environmental impact (63%), supplier failure (62%) and modern slavery (50%).
In order to effectively prepare for these types of risks, it’s vital that financial services businesses fully understand their suppliers, their business environment, global variations in regulations, geopolitics, and a host of other factors. But for many, there are multiple challenges when it comes to gaining this understanding. A prevailing factor is an inability to gain visibility into all suppliers and activity because supplier management data is stored in multiple locations and formats, making insights difficult to access. This leaves teams unable to review supplier activity and assess compliance.
Making supplier management smarter
It’s imperative that financial services businesses are able to respond or prepare for supply chain risk. Clearly, much more needs to be done to ensure they have complete visibility of suppliers, especially in an era where regulators can levy heavy fines for GDPR breaches and scandals spread in minutes over social media. These types of risks can be reduced in the future if procurement teams have a 360-degree view of suppliers which will help with contingency planning and risk management.
For example, in the instance of supply shortages, plans could be put in place that identify alternative suppliers to ensure any shortages do not impact end users. This type of supplier collaboration is paramount when it comes to managing and mitigating against supplier shortages. When it comes to regulations, financial services firms can’t allow a lack of visibility to limit their ability to ensure all suppliers are compliant.
To do this, teams must take a smarter approach to procurement that gives complete visibility into suppliers throughout the supply chain. This will allow financial services firms to identify and plan for risk, reducing the potential damage, and ensuring they are working with and awarding business to low-risk suppliers. Supply chain risk is rapidly becoming an overarching concern for financial services firms, but by providing the ability to assess suppliers, they will have all the insights they need to mitigate the impact on business operations.
CUSTOMER CARE TODAY WILL BUILD RESILIENCE FOR FUTURE CRISES
Cathal McGloin, CEO of ServisBOT writes, “The COVID-19 pandemic has created major spikes in calls to financial sector helplines dealing with customers...
THE CO-BRAND CREDIT CARD MARKET – SINK OR SWIM
By Chris Vinnicombe, VP Financial Services at Acxiom The co-brand credit card market is the result of the partnerships between...
HOW TO MANAGE YOUR CASH FLOW IN UNCERTAIN TIMES
While the world is constantly changing, probably at a faster pace now than ever before, businesses need to manage cash...
NEW IVALUA STUDY SHOWS TECHNOLOGY CHALLENGES ARE HINDERING PROCUREMENT TEAMS FROM ACHIEVING BUSINESS OBJECTIVES
Lack of system integrations and actionable insights are stopping organisations from accurately measuring performance Ivalua, a leading provider of global...
WHY DIGITAL TRANSFORMATION IN FINANCIAL SERVICES IS ABOUT CULTURE FIRST, TECH SECOND
Stuart Templeton, Head of UK at Slack In today’s world, there’s no such thing as a ‘non-tech fin’. Every...
STOP THE CONFUSION: HOW TO KNOW IF YOUR BUSINESS MAY BE INSURED AGAINST COVID-19
By Alex Balcombe, Partner at Harris Balcombe The last few weeks has seen businesses in hospitality, tourism, retail, leisure...
BRAVE NEW WORLD: A FUTURISTIC VISION OF PAYMENTS
James Booth, VP, Head of Partnerships in EMEA for PPRO Over the last ten years, the retail e-commerce ecosystem...
A PROPTECH FOUNDER’S BEGINNING, THE START OF KLEVIO AND HOW ACCESS-TECH IMPROVES FACILITIES MANAGEMENT
An interview with Klevio’s CEO and Co-Founder, Aleš Špetič What is Klevio? Klevio is a smart intercom that allows...
HERE’S HOW YOU CAN LEARN TO TRADE RISK-FREE DURING THE COVID-19 MARKET CRASH
Trading app BullBear has launched new features to support budding investors looking to hone their skills against the backdrop of...
ENTERPRISE BLOCKCHAIN: DRAGGING INSURANCE OUT OF THE DARK AGES
Ryan Rugg, Global Head of The Industry Business Unit at R3 The history of insurance traces back to the development...
DISPELLING BIOMETRIC MYTHS AND MISCONCEPTIONS
By Lina Andolf-Orup, Head of Marketing at Fingerprints Gangsters cutting off enemies’ fingers to access secret locations and spies lifting...
FUTURE FX PROMO
FOUR WAYS OPEN BANKING AND AI WILL REVOLUTIONISE ACCOUNTANCY
Ed Molyneux, CEO and co-founder of cloud accounting software company, FreeAgent It’s been just over two years since the...
HOW FINANCIAL SERVICES CAN GET TO GRIPS WITH RISING SUPPLY CHAIN RISK
By Alex Saric, smart procurement expert, Ivalua UK businesses have never been more dependent on their suppliers to help...
TWO TO TANGO? MARKET DATA AND OPINIONS IN INVESTMENT MANAGEMENT
Sebastien Lleo is Associate Professor of Finance at NEOMA Business School (France) Analyst views and expert opinions matter. They...
AN ULTIMATE GUIDE TO TURNING YOUR EARLY RETIREMENT DREAM INTO A REALITY
Rick Pendykoski is the owner of Self Directed Retirement Plans LLC, a retirement planning firm based in Goodyear, AZ. ...
WHAT EVOLUTIONARY AI MEANS FOR FINANCIAL SERVICES
by Babak Hodjat, VP of Evolutionary AI at Cognizant Many banks and other financial services institutions (FIs) are beginning...
HARNESSING ANALYTICS IN THE FIGHT AGAINST FRAUD
By Anna Lykourina, EMEA Fraud Analytics Expert at SAS In the past, the fight against fraud has been a...
ERSTE BANK HUNGARY IMPROVES AND SECURES THE REMOTE BANKING EXPERIENCE WITH ONESPAN MOBILE SECURITY
Leading Hungarian bank deploys OneSpan’s Mobile Security Suite to one million customers to make mobile banking convenient while fighting fraud...