Cyber Security for Financial Institutions: The Ultimate 2024 Handbook
For cybercriminals, their primary motive behind unleashing cyberattacks is money. Therefore, financial firms remain their first target. An IMF (International Monetary Fund) report shows that financial firms have lost $2.5 billion since 2020 as a result of cyberattacks. This blog investigates the dynamics of cyber security for financial institutions.
Role of Cyber Security for Financial Institutions
Financial institutions like credit unions, insurance firms, investment entities, etc. deal with highly sensitive financial data. Protecting their crucial data as well as that of their customers is critical for them to ensure their stability. Cybersecurity serves as their shield in this.
Here are a few reasons underlying the significance of cyber security for financial institutions
Ensuring Regulatory Compliance
Depending on the country it operates in, financial institutions are required to ensure their compliance with statutory regulations to safeguard the privacy of customer information, for instance, PCI DSS.
Safeguarding Sensitive Data:
The primary role of cyber security solutions for financial institutions is safeguarding sensitive data that these institutions handle. This includes crucial business data and confidential customer information.
Preventing Financial Losses
Proper cyber security in finance services prevents attempts by cybercriminals to target financial institutions with the covert motive of financial fraud. Cyberattacks cost financial service providers millions of dollars each year.
Upholding Consumer Trust
Customers are cautious about choosing financial services. They prioritize partnering with entities that have a good reputation for following cybersecurity best practices for financial institutions.
Common Threats Faced by Financial Industries
All the major threats reported in the cybersecurity landscape are reported to be affecting financial institutions too. This includes:
Phishing Attacks:
phishing threats often appear as legitimate emails from unmistakable senders with convincing reasons. However, upon receiving a suspicious email, it is important to verify the sender's authenticity before taking any significant action.
Ransomware Attacks:
Attackers gain access to a financial institution's systems and install malware, which in turn encrypts data, making its access difficult for the stakeholders. They will be asked for a payment, known as a ransom, for the decryption of the data.
Insider Threats:
Sometimes, individuals within the financial institution itself can pose a security challenge to it when they start to misuse their access on behalf of cybercriminals outside it. Regulated access is the solution.
API Vulnerabilities:
API vulnerabilities are loopholes in the application programming interfaces. Financial institutions that use APIs to establish their app's communication with other services, for instance, payment gateways, are often targeted and exploited by cybercriminals.
DDoS Attacks:
DDoS stands for Distributed Denial of Service attacks. It is the deliberate act of cybercriminals to overwhelm a target's online services. As a result of this, the rendering services of financial institutions remain unavailable to genuine users.
Supply Chain Attacks:
Supply chain attacks are another common tactic used by cybercriminals to compromise a financial institution's key software or hardware resources, which are used for supply chain activities such as vendor management, logistics, inventory management, etc.
Stay vigilant and secure your financial institution against all major cybersecurity threats, including phishing, insider threats, ransomware, DDoS, and more. Contact us for help today!
Who Targets Financial Institutions with Cyberattacks?
When talking about cyber security for financial services, it is essential to identify who the culprits are. The attacks come from various sources. Random cybercriminals seeking financial gains, terrorists looking to fund their activities, hacktivists with political agendas, and sometimes unhappy employees who want to take revenge on their employers.
How to Defend Financial Institutions Against Cyber Attacks?
With so many advances in cyber security solutions for financial institutions, curbing cyber threats has become increasingly effective. Financial institutions can mitigate these threats through various methods, including:
Managing Third-Party Risks
In their day-to-day operations, financial institutions use a series of third-party vendor services. All such services need to be assessed for their security posture to avoid any data breaches through them.
Implementing Multi-Factor Authentication
Financial institutions can prevent unauthorized access to their systems by requiring all stakeholders, including employees and customers, to use multi-factor authentication, integrating biometrics or other 2FA devices along with passwords.
Integrating Firewalls
Given the high scale of network infiltrations that cybercriminals can unleash, implementing advanced firewall protection for hardware and software resources to regulate network traffic is a proven strategy to reduce financial network security challenges.
Managing Attack Surfaces
Planned vulnerability assessment and penetration testing help financial institutions identify common threat interfaces and implement proactive threat detection and mitigation strategies.
Utilizing Security Ratings
In the context of using third-party vendor services, their security rating and compliance practices must be evaluated. Make it a point to associate with only vendors that follow strict security standards.
Conducting Regular Data Backups
By creating and storing copies of important data, stakeholders can build a strong framework in cyber security for financial institutions. This prevents them from panicking and causing damage in the event of data loss due to cyberattacks.
Best Frameworks In Cyber Security For Financial Institutions
Frameworks in Cyber Security for financial institutions are sets of best practices and guidelines designed to help them manage and address threats effectively. Some of the best frameworks include:
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SOX:
Sarbanes-Oxley Act. It recommends transparent and accurate financial reporting so customers can be aware of fraudulent activities. -
PCI DSS:
Payment Card Industry Data Security Standard recommends standards practices for ISO/IEC 27002:2022: International Organization for Standardization/International Electrotechnical Commission and offers directions with regard to information security controls. -
C2M2:
Cybersecurity Capability Maturity Model offers a standard framework of practices to improve the security posture of entities in alignment with evolving threats. -
NIST CSF :
stands for the National Institute of Standards and Technology Cybersecurity Framework. It offers a standard approach to assessing risks and addressing them. The Gramm-Leach-Bliley Act (GLBA) recommends measures ranging from administrative, technical, and physical to protect customers' financial data.
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FINRA:
Financial Industry Regulatory Authority: It controls exchange markets and brokerage firms and directs them to safeguard investors' credentials. -
CIS Critical Security Controls:
The Center for Internet Security Critical Security Controls provides guidelines to safeguard organizations against common cyber threats. -
NIST SP 800-53:
National Institute of Standards and Technology Special Publication 800-53 provides a set of guidelines for privacy and security monitoring for federal financial institutions. -
List ItemGramm-Leach-Bliley Act (GLBA) :
The Gramm-Leach-Bliley Act (GLBA) recommends measures ranging from administrative, technical, and physical to protect customers' financial data.
What Role Do Cybersecurity Companies Play in Safeguarding Finance Institutions?
Frequent cyber threats plague a growing number of financial institutions worldwide. In this context, cybersecurity companies play a significant role in safeguarding the digital resources and assets of financial institutions.
- Cyber security for financial institutions include steps to ensure compliance with regulatory standards.
- Cybersecurity companies conduct meticulous risk assessments and audits using standard methods and automated tools to identify covert threat surfaces and mitigate them.
- They tailor effective security strategies for financial institutions in accordance with their unique requirements.
- Through ongoing monitoring of networks and systems, cybersecurity companies help take proactive measures to mitigate emerging threats.
- Cybersecurity companies extend their offerings with advisory services and training for financial institution staff on evolving cyber threats and trends.
Conclusion
Cyber threats targeting financial institutions are growing everywhere. Besides educating staff and maintaining compliance, financial institutions must proactively conduct audits, vulnerability assessments, and penetration testing to mitigate unforeseen attacks effectively. By taking the right step at the right time, it is possible to navigate the complex landscape of cyberattacks and cyber Security for financial institutions.
Frequently Asked Questions
Cyber security for financial institutions has numerous applications. From protecting customers’ personal information to safeguarding institutions’ digital assets to ensuring statutory compliance, cybersecurity plays a crucial role in the stability of financial institutions.
Financial institutions appear as lucrative targets for cybercriminals due to their higher potential for monetary gains. While this is the case for random attackers, high-profile criminals like hacktivists and terrorists target financial institutions because doing so can even destabilize the financial system of a country.
Financial cybercrime refers to all types of criminal activities in the cyber realm that target financial institutions or their customers. This includes theft of financial data, ransomware attacks, phishing scams, unauthorized access to financial systems for malicious purposes, and more.
Ensuring effective cyber security for financial institutions requires close collaboration with reputed cybersecurity service providers. Cyber Guard, for instance, is a popular service that specializes in tailoring cybersecurity solutions for financial institutions. They are up-to-date on all emerging threats, specifically targeting financial institutions.