The past decade has seen a rapid evolution in cyber threats in the financial services sector. Attackers have become more sophisticated by using advanced tactics such as implementing fileless attacks, that don’t leave a footprint, or targeting third-party vendors to gain access.
It’s important to remain vigilant to ensure your cyber security is robust to protect your business. According to the IBM Cost of Data Breach Report 2023, the financial sector experienced the highest data breach costing the sector $5.9 million, second to the healthcare sector.
Chris Blake, Director, and Principal Data Protection & Privacy Consultant, said: “One way hackers make their money is by acquiring customer data, like payment card numbers or account details. They steal sensitive personal data and open fake bank accounts or lines of credit using the information they’ve stolen.”
The Cyber Risk and the U.S. Financial System Report from the New York Federal Reserve states that financial institutions experience cyber attacks 300 times more than other industries. As a result, cyber security threats to financial institutions will continue as weak points are targeted, often at consumers and web applications.
With increasing regulation aimed at the financial sector, remaining in control of cyber security threats is essential.
Risks cyber attacks pose to financial services firms
The impact on financial institutions is not just about losing money, added Chris. “It’s a breach of trust and trust is the currency of money. Lose trust and you have the potential to lose everything.
“There is the sensitive information that’s been exposed and the extended downtime to contend with. All of which can impact the business’s reputation. And don’t forget the legal action or fines that may result from failing to comply with regulations.”
Top cyber security threats in the financial services industry
Phishing attacks trick individuals into divulging sensitive information, such as login credentials, credit card numbers, or other financial data, or to perform actions such as wire transfers. This information can then be used for fraudulent activities, identity theft, or to gain unauthorised access to financial systems.
This remains the highest cause of attack vectors across all industry sectors and the second costliest at $4.76 million, according to IBM’s Cost of Data Breach report.
Infosec states that over 90% of successful cyber attacks start with a phishing attack.
In its latest Anti-Phishing Trends Report the APWG (Anti-Phishing Working Group) found the financial sector continued to be the most attacked. It accounts for 23.5% of all phishing attacks. Attacks against online payment services contributed to another 5.8% of all attacks.
Successful phishing attacks can lead to regulatory scrutiny and potential legal consequences. Preventing such attacks requires a multi-faceted approach by investing in advanced email filtering technologies to detect and block phishing attempts. Regular training and awareness programmes for employees and customers are essential to recognise and respond appropriately to phishing attempts.
Implementing two-factor authentication (2FA) and regular password resets can mitigate the damage even if credentials are compromised. Continuous monitoring and analysis of transaction patterns can identify and generate responses to fraudulent activities stemming from phishing attacks.
Ransomware, a malicious software, encrypts the victim’s files, making them inaccessible, and demands ransom for the decryption key. This type of attack is attractive to hackers looking to access valuable client information. It directly threatens financial institutions' integrity and reliance on real-time data access. A successful ransomware attack can halt critical banking operations, leading to significant financial losses and erode customer trust.
Malware, a broader term encompassing various malicious software including viruses, trojans, and spyware can steal, delete, or corrupt data, disrupt operations, and provide unauthorised access to sensitive information. Malware can compromise sensitive customer information, leading to identity theft and fraud. These incidents can also result in regulatory penalties for failing to protect customer data.
Adopt a multi-layered security approach that includes regular updates and patches to their systems, employ controls such as EDR (Endpoint Detection and Response), and train employees to recognise and avoid potential threats.
Implementing robust backup strategies ensures data integrity and minimises disruptions in the event of an attack.
Data breaches involve unauthorised access to confidential data, often leading to theft, exposure, or misuse. This data includes customer personal information, account details, transaction histories, and proprietary business information. The methods for these breaches vary, ranging from hacking and malware attacks to internal threats and inadvertent data exposure.
These attacks can lead to substantial financial losses, both directly through fraud and indirectly through remediation costs, legal fees, and penalties. Customer confidence can be weakened, leading to long-term reputational harm, and there’s the risk of regulatory non-compliance.
Comprehensive cyber security measures including robust encryption of sensitive data, both in transit and at rest, and regular security audits to identify and rectify vulnerabilities are required. Employee training in data security best practices is essential, as human error often contributes to breaches.
Strong access controls and continuous monitoring of suspicious activities can help detect and prevent unauthorised access. Developing and regularly updating an incident response plan ensures that the institution can react swiftly and effectively in case a breach does occur.
Customers' cybersecurity practices can jeopardise their financial data's security. How customers interact with their financial accounts and services, can either contribute to or mitigate cybersecurity risks. Examples include how customers manage their passwords, respond to phishing emails, use public Wi-Fi for financial transactions, or share sensitive information online.
Insecure practices by customers can lead to compromised account information and unauthorised transactions. For instance, using weak or the same password across multiple sites increases the risk of account breaches. Falling prey to phishing emails can lead to the disclosure of sensitive information, like bank account details or login credentials, and how they respond to or report suspicious activities plays a crucial role in the early detection of security breaches.
As customers are often not technical or security savvy the best approach is to assume and build in the controls to cater for that. Controls can include customer-facing cyber security awareness and two-factor authentication.
Firesand has launched an account fraud detection and prevention platform. It detects and prevents various kinds of account fraud attacks, such as credential stuffing, dictionary attacks, brute force attacks, and username enumeration attacks, as well as assisting in the investigation of such events.
Inconsistent security measures across home networks and devices can expose financial systems to cyber threats. Remote work involves employees accessing company networks and sensitive financial data from outside the traditional office environment. This often means using personal devices or unsecured Wi-Fi networks, which may not have the same level of security as in-office systems.
Phishing and social engineering attacks also become more prevalent, as remote workers might not have immediate access to IT support for verifying suspicious activities. The physical security of devices and documents can be compromised outside the controlled office environment.
Implement comprehensive remote work policies and security measures. This includes controls such as ensuring that all remote devices are equipped with up-to-date antivirus software, firewalls, and encryption tools. Employing Virtual Private Networks (VPNs) for secure remote access to company networks is essential.
For a comprehensive way of managing this risk, you could consider a Zero Trust strategy. This is based on the principle of "Never Trust, Always Verify," requiring strict identity verification for every person and device trying to access resources on a private network, regardless of whether they are within or outside the network's perimeter.
This approach is designed to adapt to the modern digital landscape, where remote working, cloud computing, and mobile device usage have become increasingly common.
Regular cybersecurity training tailored to remote work scenarios can equip employees with the knowledge to identify and respond to threats effectively. Enforce strict access controls and multi-factor authentication to help secure sensitive data.
An increasing reliance on cloud-based solutions brings with it the risk of cloud-based attacks. These target data stored in the cloud, including customer information, transaction records, and financial assets. Unlike traditional on-premise systems, cloud environments are often accessible via the internet, increasing the vulnerability to a wider range of cyber threats, including unauthorised access, data breaches, and service disruptions.
A successful attack can lead to data loss, theft of sensitive customer information, and significant financial and reputational damage. Cloud environments can be complex and multi-tenanted, leading to challenges in ensuring comprehensive security and the risk of operational disruption, especially if critical business functions are cloud-dependent.
Choose cloud service providers with strong security track records and ensure proper security configurations. Encryption of data, both in transit and at rest, protects sensitive information. Regular security assessments and audits of cloud environments can identify and address vulnerabilities and implementing strong access controls and monitoring user activities can prevent unauthorised access. Include cloud security best practices, such as the AWS Security pillar of its Well-Architected Framework in any employee training.
Transmitting unencrypted data over networks makes it an easy target for interception and misuse by cyber criminals. When data is unencrypted, it remains in a readable format, making it vulnerable to interception and misuse during transmission or storage. This includes sensitive financial information like customer account details, transaction history, credit card numbers, and personal identification information.
This data can be used for fraudulent activities, identity theft, or sold on the dark web if intercepted. Additionally, it can be used to perform account hijacking and other similar attacks. A breach involving unencrypted data can lead to significant financial losses, legal liabilities, regulatory fines, and a loss of customer trust.
Implement robust encryption protocols. Data should be encrypted both in transit (as it moves across networks) and at rest (when stored on servers or databases). Utilise strong, industry-standard encryption algorithms with properly implemented key management and regularly update and patch encryption software to guard against emerging threats. Employee training on the importance of encryption and secure data handling practices is vital.
Distributed Denial of Service (DDoS) attacks occur when multiple compromised systems, often part of a botnet, are used to target a single system, causing a denial of service (DoS) to users. These attacks aim to overwhelm online banking platforms, trading platforms, or other digital financial services, rendering them inaccessible to legitimate users.
Service outages, disrupting customer access to online banking, can result in a drain on resources as efforts are directed toward mitigating the attack. In some cases, they are also used as a smokescreen for more malicious activities, such as data breaches or fraud.
Employing advanced network monitoring and traffic analysis to detect and respond to unusual traffic patterns quickly should be employed. Implementation of DDoS prevention tools, such as Akamai, Imperva, Radware, or Cloudflare can be beneficial. Redundant infrastructure and scalable cloud-based solutions can help absorb the increased traffic load during an attack.
Regular stress testing of systems can also prepare institutions to respond effectively under attack conditions. Collaboration with industry peers and cybersecurity experts can provide insights into emerging DDoS threats and defense strategies.
Nation-state threats in cybersecurity refer to co-ordinated cyber attacks conducted or sponsored by national governments. These attacks are often part of broader geopolitical strategies and can target critical infrastructure, including the financial sector. Such threats are typically sophisticated, well-funded, and aimed at espionage, disruption, or gaining strategic advantages.
For the financial sector, the implications of nation-state threats are particularly grave. These attacks can lead to large-scale theft of sensitive financial data, disruption of financial markets, and undermining of the integrity of financial institutions.
The sophistication of nation-state actors means they can exploit vulnerabilities that are less apparent and more difficult to defend against. The fallout from such attacks can extend beyond the immediate financial losses to include long-term reputational damage, erosion of customer trust, and potential political ramifications.
Financial institutions should collaborate with government cybersecurity agencies for intelligence sharing and threat analysis. Implement cutting-edge cybersecurity technologies, including advanced threat detection systems and robust encryption, and conduct regular security audits and stress tests to identify vulnerabilities.
Run employee training and create a strong culture of security awareness as human error can often be a weak link. Participating in national and international cybersecurity initiatives can provide valuable insights and support in countering these sophisticated threats.
Firesand has been working with customers in the financial sector and can help keep your systems secure. If you’d like to find out more about our account fraud detection and prevention platform visit: firesand.co.uk.
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