A bank is a financial institution that offers a variety of financial services in addition to taking deposits from the general public. They keep money safe by putting it in personal accounts, and one can conduct a transaction whenever they want. They also disburse loans that must be repaid with interest.
A bank’s main job is to support the economy of a nation. But physical theft and online fraud have done a significant amount of damage to the financial industry. Because hackers can access bank servers and steal customers’ personally identifiable information, banks are constantly vulnerable to cybercrime.
Today, the majority of banking by both individuals and businesses is done online, which has increased the potential of a data breach.
A cyber security threat is any malicious act that tries to access someone’s personal information and cause harm, theft, or disruption to their digital life. These threats could appear as malware, data breaches, or even denial-of-service attacks. Financial organizations deal with the same types of cyber security issues every day.
The market worth of cybersecurity in 2021 was USD 216.10 billion and will reach USD 478.68 billion by 2030 growing at a 9.5% CAGR.
Cyber Threats in The Banking
A bank faces numerous risks every day. Cyber security planners have devised a variety of strategies to safeguard their banks in light of technological innovation. Typical cyber security risks that banks confront regularly include:
Mobile Apps: As cellular technology advanced, banks released their own mobile apps. Although these apps may have saved time and effort, they have also put banking at risk. Every time a consumer uses the app, the bank is exposed to a cyber-security risk. Any malicious software present on the device or a lack of strict security measures taken when using the app can result in data theft.
Digital payments: Everything has become digital with the internet, making life simpler. Online shopping is one of them and has contributed to the continued use of mobile payment apps. But banks have yet to benefit at all from this technology.
Cybercriminals have attempted to imitate these businesses to obtain valuable information like passwords. This is a practice called spoofing. These risks might seriously impact banks, users, and their personal information if cyber security is not strengthened.
Customer Data: Safeguarding a bank’s customers’ information is the top priority for its cyber security staff. Addresses, names, and credit card information are all held by banks about their customers, which can be problematic and hurt both the customer and the bank.
In addition to stealing data, thieves can occasionally modify it. Cyber security experts are in high demand to address this issue, stop attackers from stealing and manipulating data and protect the bank and its clients.
Information that isn’t encrypted is a basic yet crucial aspect of effective cyber security. The data kept in your bank’s computers and online should all be encrypted.
Malware: End-user-owned computers and mobile devices infected with malware put the bank’s cyber security at risk each time they connect to your network. Sensitive data passes across this connection, and if there isn’t enough security, malware on the end user’s device could attack the bank’s networks.
Unsecure third-party services: Many banks and financial institutions use third-party services from other sources to better serve their consumers. Before utilizing a security solution provided by a third party, one should consider how to guard against the security threats they present.
The Responsibility Gap
Despite the growing reliance of the global financial system on digital infrastructure, it is not apparent who is in charge of guarding the institution against cyberattacks. Without focused action, the digital revolution will make the global financial system more exposed as innovation, competition, and the epidemic spread.
Improving global financial system security is an organizational task. Although more efforts to strengthen regulations and fortify defenses are needed to keep up with the rising hazards. Unlike in many other industries, most financial services community has the resources and technical know-how necessary to execute solutions. A major concern is how to most effectively structure the system’s protection among governments, financial authorities, and industry, as well as how to most effectively and efficiently utilize these resources.
The gap between the financial, national security, and diplomatic groups is very acute. Financial authorities face specific risks from cyber threats, but their relationships with national security agencies, whose assistance is required to combat those threats successfully, remain strained. This vacuum exacerbates risks in accountability and ongoing ambiguity regarding mandates and tasks in defending the global financial system. . The current geopolitical environment and high levels of mistrust, which impede international cooperation, contribute to some of this uncertainty.
Because it involves sensitive national security concerns, cybersecurity cooperation has been impeded, fragmented, and frequently restricted to the smallest circles of trust. International and multi-stakeholder collaboration is a “must-have,” not a “nice-to-have.”
Strategies to Combat the Threats
The Carnegie Endowment for International Peace published a paper titled “International Strategy to Better Protect the Global Financial System against Cyber Threats” in November 2020 to achieve more effective security of the global financial system against cyber threats. The paper, which was created in partnership with the World Economic Forum, makes specific recommendations for encouraging greater international cooperation between governmental organizations, financial institutions, and technology businesses to eliminate fragmentation.
The plan is built on four guiding concepts. First, there needs to be more clarity regarding roles and duties. Only some nations have successfully established connections between their financial regulators, law enforcement, diplomats, other key government players, and business. International collaboration is hampered by the current fragmentation, which also reduces the capacity for response, recovery, and resilience of the entire international system.
Second, there is a critical need for international cooperation. Individual governments, financial institutions, and tech corporations cannot properly prevent cyber threats if they operate alone due to the scope of the threat and the system’s worldwide interdependence.
Third, minimizing fragmentation will allow resources to address the issue. The efforts to help safeguard financial institutions are numerous, but they are still fragmented. Some of these initiatives overlap, raising transaction expenses. A few of these projects are developed enough to be merged, better organized, and further globalized.
Fourth, safeguarding the global financial system might serve as an example for other industries. One of the few arenas where nations are interested in collaboration is the financial system, even when regional tensions are high. Emphasis on the financial industry offers a place to start and might pave the path for future improvements in other sectors’ security.
The research suggests that the FSB creates a fundamental framework for overseeing cyber risk management at financial institutions as one step toward enhancing cyber resilience. Governments and businesses should improve security by exchanging threat data and setting up CERTs for financial computers, modeled after Israel’s FinCERT.
The financial sector’s resilience to attacks aimed at data and algorithms should be a top priority for financial authorities. This should feature a safe, encrypted data vault where members can safely store their regular backups of customer account information. It is important to regularly practice simulating cyberattacks to find vulnerabilities and create attack plans.
The research suggests that countries clarify how they would implement international law in cyberspace and improve rules to protect the financial system’s integrity to strengthen international norms.
Cyber resilience and enhanced international rules can aid in collective response via law enforcement operations or multilateral responses with industry. Sanctions, arrests, and asset confiscation are all possible responses.
Governments can aid in these efforts by setting up organizations to help with threat assessment and response coordination. Threats to the financial system should be a primary priority of intelligence gathering, and governments should share this information with friends and other like-minded nations.