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Biggest Threats To Cyber Security In Banking: Safe Fintech Solutions

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#Software Development
#FinTech
May 12, 2021 9 min read

In 2019, Barclays analyst, Jason Goldberg, joined CNBC “Power Lunch” and reported malware, unencrypted data, insecure third-party services as the biggest banking cybersecurity threats. He specified that cyber attacks on banks had resulted in a decrease in their shares price on the market while trading.

Institutions in the banking and finance sector (BFIS) are searching for secure fintech solutions to spot and block fraudulent activities via predictive data methodologies. And they inform their clients about possible cyber threats more and more substantially as it is done on the website of one of the biggest and the most ancient banks in the world (Barclays in the UK).

Fraud and Privacy

Embroker calculated $1 trillion cumulative global spendings on cybersecurity products in 2017-2021 and expects a 71% bank information security spendings to increase in the next three years. That is why we decided to consider the biggest threats to cybersecurity in banking for the Innovecs’ blog readers to be aware of how fintech solutions can address banks’ IT security challenges.

What Is Cyber Security Threat: Important Issues In Banking

Upguard, the ready-made platform for the protection of your company’s sensitive data, defines cybersecurity threats as the series of fraudulent acts aiming at spoiling or theft of the data as well as interfering with the bank’s digital life as a whole.

The Global Treasurer emphasizes that banks come across such risks of stealing or damaging data on the web quite often, and mainly these are:

  • The increasing threat of reaching data via mobile apps: once more and more users use banking accounts through mobile apps having not always enough protection, banks should prevent identity thefts or other malicious activities.
  • Breaches through third-party institutions: hackers pay more attention now to the banking data shared on the third-party networks once it’s less protected.
  • The growing rate of threats in the ever-changing cryptocurrency sector because it’s still unsure in this field how to apply cybersecurity software thoroughly.

The annual cost of cyberattacks

The banking sector has to deal with the growing amount of threats daily because they not only affect the customers’ assets and banks’ reputation, but continuous cybercrimes make banks recover data continuously which brings huge financial spendings. Maintaining spoiled assets or reputation costs a fortune even under the existence of such security guaranteeing institutions in some countries as FDIC (Federal Deposits Insurance Corporation) created to support public confidence in the nation’s financial system.

IT specialists draw our attention to the fact that the threat of committing a cybercrime is not about computers, it’s about human behavior. The more banks adopt new technologies that translate to digital care, data protection via anti-fraudulent software the more efficiently they are able to address banking cyberattacks, Denial of Service attacks (DoS), computer viruses. So, most cyber threats are interconnected with the series of protective acts taken.

A plain and vivid example of how cybersecurity threats can be ignored via “thinking you are safe enough” is explained by an ex-NSA (National Security Agency) agent and IT specialist in TEDx Talk. He illustrated one of the most common mistakes of thinking something is safe while it’s not, with the help of funny examples from his childhood. He talked humorously with the audience describing the security issue:

“My brother and I traveled with our father. And he taught us how to urinate in a Pepsi can while driving for a long distance. We mastered this skill set and need no more parental approval to perform it. And once upon a time, we were driving and all of a sudden our van curved extremely and roughly to the right and we heard our father’s crying. He took the very can I used to execute my nature’s need in and it was unpleasant. Who’s guilty? Just dad has got an incorrect belief about his safety that moment. The same things happen to people performing online transactions and believing they are totally safe when they are not”.

Before assessing cyber risks and looking for the right solutions it’s worth knowing the range of threats to cybersecurity necessary to be prioritized in addressing.

Threats To Cyber Security Worth Addressing

Perforce (commercial solution to manage varied software versions) notices in its blog reasonably that a single cybersecurity vulnerability is able to leave the whole system defenseless to data theft and other cyber incidents. A possible variety of such incidents are outlined in the online Security Magazine being assessed as easier to prevent rather than catching and prosecuting cybercriminals after committing a crime. They estimated catching and prosecuting levels as coming to nil (0,05%). This fact proves the importance of knowing possible threats to prevent them.

Social Engineering

In accordance with the “2020 Data Breach Investigations Report”, a third of all the data breaches were performed using social engineering techniques with 90% of phishing. Cisco counted 43% of employees saying they have made mistakes compromising their company’s cybersecurity.

Social engineering is an activity manipulating people and prompting them to share confidential information. It can be:

  • Phishing emails: online scam aiming to impersonate authorized institutions via emails, text messages, advertisements.
  • Scareware (also known as fraudware): malicious software prompting users to visit malware-infected websites.
  • Quid Pro Quo involves critical data sharing in return for a service granted (it’s a popular way to gain user’s information).

Interesting Fact. Texas School lost $2.3 million because of criminals’ phishing activity. They sent an email on behalf of World Health Organizations demanding personal students’ data and gained private personal information in such a way.

Trendy method of tackling social engineering problems is educating users to identify fraudulent behavior and protecting themselves. Also, Zero Standing Privileges are used to prevent unauthorized access to any data. In this case, the user obtains limited access to perform certain tasks just for the period of time necessary to complete it. So, hackers even in case of stealing the access have no chances to utilize it.

Social Engineering Via Phishing Phone Calls

 

Unencrypted And Manipulated Data

Critical business data can be sent or stored being not secured and encrypted. This means anybody from anywhere can have access to this data without a specified key. This simplifies the access to private information for criminals and makes unencrypted data one of the leading bank cybersecurity threats.

Otava, a cloud solutions provider, reports three leading industries accounting for 55% of all the unencrypted data stored. These are hospitality, financial, and retail. And they are estimated also as the most targeted by criminals.

Card Data Discovered Per Industry

Both social engineering and unencrypted data storage are focused on the information asset. Manipulated data issue concerns information access as well. Manipulated data activity is altering or modifying valuable digital documents to use them for damaging an organization’s digital life. Usually, it’s a challenge to distinguish altered and true genuine data or documents. The difference is not on the surface.

SQN banking systems consider access controls and data activity monitoring the most efficient methods to prevent data manipulations. Video issued by the Bank of Ireland also focuses on the data-centered bank concept as the way to a user-friendly bank but at the same time specify the challenge of data control to prevent manipulations as we spoke above.

Criminals try to gain data via social engineering, obtaining access to unencrypted data, and manipulating data they’ve got. But if these methods do not work, they could use malware to reach confidential data.

Malware

Malware is a powerful fraudulent tool and huge cybersecurity threat aimed at damaging banks’ smooth functioning and causing financial losses. A lot of malware security samples are issued every month. And they cause about $115,4 billion financial losses every week worldwide.

Malware is a common term for a variety of computer viruses like Trojan, worms, and other harmful PC software. It steals sensitive users’ data especially while utilizing mobile apps. It’s a substantial cybersecurity threat because banks can hardly control what programs people use on their devices. The only possibility to prevent damage possibly caused by malware is to educate users, secure their software providing enough authentication stages.

Top Attack Vectors

Third-Party Unsecured Services: The Cost Of The Data Breaches

Users quite often deal not only with the bank’s services and apps but come across third-party services as well to perform transactions online. They сan share private information, which is not protected enough and that is the issue to be discussed because nobody is sure of the quality level of the third-party services (even in case the bank itself outsourced them to deal with).

Ponemon Institute notices outstanding dynamic data breaches due to third-party unsecured services utilization. They calculated 35% attacks increase in the sectors using software provided by the third party.

Let’s enumerate substantial losses of the market leaders which happened because of the third-party software usage:

  • In 2020 Amazon suffered because data of some third-party vendors working with it was stolen and a series of fake deals’ payments were performed. In this case, bank data security may be on high-level, but the transactions took place on the third-party platform and it was harder to manage the risks.
  • In 2019 Atrium experienced a huge and loud data breach, the reason for which was the use of the third-party billing service (AccuDoc Solutions software). The case resulted in 2,65 million users’ data pieces stolen.
  • Megacraft case is known as the attack performed by a group of cybercriminals to steal retailers’ data. Credit card information was gained out of the British Airways’ and Magento Store’s selling platforms.
  • In General Electric case spoofing was used: an email demanding personal financial information was sent via GE’s third-party provider (Canon Business Process Services). Criminals gained access to a burden of financial data including credit cards information.

The last case illustrates the spoofing phenomenon quite vividly. Let’s learn a little bit more about this type of cyberthreat.

Spoofing As A Newer Type Of Cyber Threats To Banking Industry

Spoofing attack is depicted in Audiopedia video and explained as an activity when criminals pretend to be the representatives of the company and get access to confidential information. Spoofing can also be performed by the software masking to be another trusted one.

Companies do their best to struggle with spoofing. Thus, for example, JP Morgan paid a record settlement to resolve a “spoofing” case against 15 traders. In 2020 they paid $920 million in accordance with the US authorities’ claim to cover the damage from the manipulation involving two banks’ trading desks via spoofing. That is an example of how cybersecurity issues can cost much to market giants and even spoil their reputations.

Bottom Line Concerning Cyber Security In Banking

After we have shed some light on the data breaches issue and some outstanding cases how it can damage the business itself or its daily functioning and transactions, cybersecurity for banks seems not so plain and easy to manage. The cost of the data breaches performed due to malware, social engineering activities, spoofing, or utilizing third-party services is high.

The real cost of a data breach for financial services

Cybersecurity is important and companies should take digital care of sensitive data, PII (personally identifiable information), PHI (protected health information) as well as of intellectual property.

While speaking about such cybersecurity threats as malware, spoofing, phishing or third-party data breaches risks one should remember the basic principles of cybersecurity management: not equating small and safe, paying enough attention to security employees’ training and education, controlling physical access to your digital data, in-time updates for the software; making proper backups of the information, and secure your Internet connection.

It’s quite a solution as well to outsource the development of your custom fintech software to design robust and secure solutions with enough QA testing applied, which assists in preventing future cybersecurity breaches.

Innovecs has proven high-level expertise in Fintech and if you are ready to become a more technology-powered company with secuhttps://innovecs.com/portfolio/optimizing-trading-platform-for-scalability/re and efficiently operating software, you are welcome to get in touch just for the initial consultation concerning your company’s tech case.

 

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