Today, banks face a harsh reality when it comes to cybercrimes. Here’s what lenders need to know when it comes to cybersecurity for financial institutions.
Today, banks face a harsh reality when it comes to cybercrimes.
Financial institutions are prime candidates for internet attacks, and those who deploy insufficient cybersecurity methods could lose millions of dollars, as well as put their financial institution’s reputations at risk.
As these attacks improve in strength and sophistication, bankers and lenders must take steps to protect themselves. Here’s more on the state of cybersecurity in banking today, as well as strategies to mitigate risk for financial institutions.
What Is Financial Cybersecurity?
Cybersecurity in financial services (banking, lending, etc.) is the ongoing process of protecting financial institutions from hackers and online criminals.
Today, financial institutions must be flexible, efficient, and able to predict trends (or partner with an entity that is all of these things) to keep customers safe and prevent costly problems like network downtime or data breaches.
Why Is Cyber Security Becoming Such a Major Issue for Financial Institutions?
Unfortunately, cyberattacks against financial institutions have become quite a problem in recent years. It might seem obvious why banks are commonly attacked, but it goes beyond the financial incentive.
So, why are banks vulnerable to cyberattacks?
- Financial institutions shout “money” to would-be criminals, making them a popular target from the start. Extortion, theft, fraud, and reselling data are all prime money-making opportunities for cybercriminals.
- Banks do business with various customers and other companies who may more easily supply them with data (i.e., debit or credit card information).
- Regulations in banking change frequently, and hackers know that many financial institutions are stuck playing a chronic game of catch-up.
- Technology makes it less risky for criminals to attack banks without getting caught.
It’s a low-risk, high-reward proposition to target financial institutions. But, sadly, hackers’ efforts are often successful.
Financial Services Cybersecurity Statistics
Consider some of these statistics on recent banking cybersecurity threats:
- Research firm Ovum found that 40 percent of banks receive as many as 160,000 duplicate, irrelevant, or erroneous cybersecurity alerts per day.
- 67 percent of banks believe they need better cybersecurity features to protect from hackers.
- Another study found the average cost for a bank to deal with a successful cybercrime could be as much as $18.5 million.
- A significant spike in cyber crimes directed at banks took place during the 2020 pandemic.
To put a bow on it, consider this non-banking example: engineers now state that cybercrimes are more likely to take down an F-35 jet than a missile. That speaks to the sophistication of today’s crimes and the risk businesses may face if they don’t take steps to protect themselves.
4 Cybersecurity Strategies for Financial Services
While U.S. bank cyber security is a real issue, some strategies can help mitigate risk and protect financial institutions. Here are four to consider.
1. Acknowledge the Threat
The FDIC encourages banks of all sizes to lean heavily on third-party managed IT services to assess and mitigate new threats. As each state is different, it’s also recommended that banks educate themselves on local-level laws surrounding cybercrimes.
No matter the size of your financial institution, acknowledging the threat of hackers and data thieves is crucial.
Mom and pop lending services aren’t the only financial institutions at risk. For example, hackers successfully stole millions of dollars from Federal banks in Bangladesh and Russia in the last five years.
Criminals often target larger banks in hopes of a bigger payoff.
2. Adhere to Federal Cybersecurity Regulations
American financial institutions must adhere to strict regulations from the federal government when it comes to cybersecurity.
Several of the guidelines have been around for decades, while others are much newer.
Historically, the three principal Federal cybersecurity regulations have been:
- The Health Insurance Portability and Accountability Act (HIPAA)
- The 1999 Gramm-Leach-Bliley Act
- The 2002 Homeland Security Act
Currently, legislation being considered at the federal level encompasses a five-pronged approach to thwarting the enemies (governance, risk management, internal and external dependency management, and incident response) is likely to be passed sooner rather than later.
3. Act Swiftly
Here’s one example of newer legislation: financial institutions are now required to act swiftly when threats arise. Notifying the Office of the Comptroller of Currency (OCC) within 36 hours, “in good faith,” of a cyber breach ensures these attacks don’t spread and gives workers vital time to figure out the new threat.
Further, there’s now a minimum requirement to notify at least two customers at a bank if cybercriminal activity will cause issues or delays that last four or more hours.
A professional team can help you stay federally compliant, which reduces the stress and pressure placed on financial leaders.
4. Use a Dynamic Strategy
Banks and other financial institutions can’t slap a one-time fix on their cybersecurity strategy. The process is dynamic, which means constant monitoring and testing and adjusting to the latest trends.
Learn more about how Zivaro’s managed IT services help protect financial institutions today.
