Cybersecurity For Financial Services: Latest Trends For Fraud Prevention
The dynamic cybersecurity challenges in financial services continue to stump the most seasoned experts. The financial industry landscape keeps evolving in a bid to provide better services to consumers. Yet, the security implications seem to grow disproportionately and possibilities for financial fraud multiply. Financial fraud has gone beyond obtaining an economic advantage via illegal means. Financial service companies, including banks, investment firms, and so forth, need customers' personally identifiable information to satisfy clients and customers. Such information covers everything from email addresses to Social Security numbers, bank details, income information and home address. It's data with high value and is always an attractive proposition for cyber criminals operating on the Dark Net.
Why does security matter in financial services? The industry alone held a $22 trillion value in 2019, and things keep looking up as financial inclusion initiatives continue to fuel growth in non-cash payments. These payments will grow for the foreseeable future as internet penetration, and mobile usage soars in developing countries. Globally, there's an inclination toward immediate payment schemes, offering seamless and instant payments in real-time.
The financial services sector is increasingly reliant on technology to solve many critical problems. Big data democratizes the ability of many financial companies to grow market share. However, there are significant costs to understanding the market and customers using technology. According to the University of San Diego, financial institutions are unaware of how and unprepared to tackle the technically sound fraudsters that rattle them day by day.
Cybersecurity In Financial Services
Financial services concerns are high-profile targets for criminals. The reason is simple: money attracts. Even though other business sectors face a shortage of skilled cybersecurity personnel, the financial services industry can only afford to have the best cybersecurity experts on board.
Personally, identifiable information is priceless, and as custodians of such information, financial institutions must adapt to an avalanche of cybersecurity rules and regulations. A burning desire to protect their brand and stock, plus regulatory pressure, ensure that financial services provide significant collaboration and investment to improve cybersecurity on three facets:
● Preparedness
● Response
● Resiliency
While others will probably experience it later, some financial services providers know what a cyber attack is. American Express, Capital One, Discover, and SunTrust are some of the biggest names in this industry, yet each saw no less than four breaches between 2009 and 2019. The cost of each breach? $5.86 million in 2019, according to the IBM Security Cost of a Data Breach Report.
Only the healthcare industry has it worse, but the figure represents one and half times that of the public sector.
Financial services represent critical economic infrastructure that cannot afford to give in to fraud. Accenture and the Ponemon Institute’s Cost of Cybercrime Study reveals that financial losses in the UK due to financial fraud stood at £705.7 million in the first half of 2018. That's only the tiniest fraction of the whole story. The Financial Conduct Authority (FCA) reports that cyber attacks against financial institutions grew by more than 80 percent in 2017.
Refine and Redefining Financial Processes
It’s urgent to question the current operating model for cybersecurity, fraud, and financial crime. But first, it's essential to identify the critical threats that are slippery slopes for security leaders.
Supply chains: It’s nearly impossible to completely track the complex and interdependent supply chains that financial institutions operate. Such a large surface area for attack is a goldmine for attackers. Cloud service providers (CSPs), managed service providers (MSPs), and technology service providers (TSPs) are the chief supply chain threats to financial firms. Recent ransomware incidents have disrupted services for some of their financial institution clients.
Credential and identity threat: COVID-19 has made remote work a necessity, effectively decentralizing the workforce. It has also broadened the attack surface for fraud.
Emerging vulnerabilities inspire data theft and data manipulation: Getting the data is only a starting point for threat actors to disrupt and destroy it. The Microsoft Azure vulnerability, BlackDirect, is a case in point.
Emerging technologies accelerate threats: Everyone likes new technology, yet it sometimes comes at a high price. 5G technology offers massive financial tech opportunities, but governments have highlighted risks including software vulnerabilities, espionage, organized crime, and supply chain threats.
Malware attacks can lead to multiparty and cross-sector targeting: Cyber criminals are increasingly relentless in attacking multiple related parties simultaneously, making concerted defensive efforts are essential in mitigating the impact of such attacks.
Misinformation: Disinformation and misinformation also impact the financial sector, and this could well be a tool in the attackers' arsenal as they seek to disrupt financial services for illicit gain.
Exploring Cybersecurity Solutions For Financial Services
Breaches at the biggest companies only show that a massive budget alone is inadequate in dealing with modern cybersecurity challenges. There are two broad factors to consider:
● The organization and governance of the cybersecurity program.
● The relative spend when compared with a company’s overall IT budget.
Even with a meager cybersecurity budget, some companies have managed to develop a high program maturity level. It could well be that the multinational financial services companies face unique challenges in advancing capabilities. So, what can financial services companies do?
- Ensure that accountability begins with top management.
- Delegate and share cybersecurity responsibilities while maintaining centralized functions.
- Engage multiple lines of defense, including front-line unit security and enterprise-wide cyber risk management operations.
- Distributing cyber risk exposure by purchasing insurance to cover cyber risks.
- Seeking outside help when necessary. This approach is essential to keep abreast of criminal practices and prevent losses from financial scams or fraud.
Conclusion
The financial services industry is a significant player in the global economy. However, it faces unrelenting technological threats that threaten to cripple and decimate it. Financial services companies must adopt proactive methods in anticipating and preventing financial fraud by unearthing and fixing loopholes faster than the bad guys.
David Lukić is an information privacy, security and compliance consultant at IDstrong.com and has a passion passion to make cyber security both accessible and interesting.
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