5 Reasons Why Cyber Security Is Important in Banking

Oct 01, 2020

Cybersecurity is not limited to IT industries; it is crucial for every business, including profit and
non-profit organizations. But, for banks, it holds critical value. Banks and other financial
institutions deal in millions of transactions on a daily basis. Most of these transactions are done
via digital payment transfer platforms. That’s why banks have become a primary target of
cyberattacks.

Thus, it’s of high importance for banks to take preventive security measures to prevent their data
against cyber attacks. Here are five reasons that show why cybersecurity is essential for banks and
financial institutions.

1. DATA BREACHES CAN IMPACT BANK’S REPUTATION

Data breaches are a critical issue for banks, as it leads to losing customers data and trust. If the
customers’ data of a bank is compromised, it makes it difficult for customers to trust the bank.
Data breaches usually happen due to weak cybersecurity strategies.
Therefore, it is required to have cybersecurity essentials for banks and financial institutions to
upfront the existing security parameters and protect crucial data.

2. FINANCIAL LOSS TO THE CUSTOMERS

When a bank faces a data breach, it not only impacts the bank’s reputation but also causes
financial loss to its customers. Generally, when a customer loses money due to card fraud, it can
be recovered from the bank. But, in situations like data breaches, it takes time to recover the
funds, which could be very stressful for customers.
So, to keep customers happy, every bank needs to implement cybersecurity measures that can
protect their customers’ assets.

3. CONSEQUENCES AND PENALTIES FOR FDIC NON-COMPLIANCE

No bank wants to face penalties for non-compliance, as it could be tough to come out of it.
Compliance standards ask banks to take adequate cybersecurity measures to prevent cyber attacks.
And if any bank doesn’t follow the rules and become a victim of cyber threats in banks, they need
to face FDIC penalties.

4. CUSTOMER’S DATA IS SENSITIVE

It is very hard for customers to handle data breaches knowing that their private information has
been compromised. Besides, even if the consumers block their cards, their personal information
can be used by any cybercriminal.
Once a user’s personal information gets stolen, it becomes hard for banks to win their trust and
bring them back. Thus, it is advisable to plan ahead and take cybersecurity for banks seriously.

5. THE WAVE OF DIGITIZATION

As you know, almost everything has been digitized now. From ordering food to making
appointments and transferring money, we rely on various digital platforms. This makes it highly
critical for banks to upgrade their banking applications used by customers, as hackers can quickly
access banking apps if proper cybersecurity measures are not implemented.
These reasons clearly show why cybersecurity for banks is essential, and how neglecting it can
impact the entire banking industry.

Thus, to avoid cyber threats, it’s crucial to implement cybersecurity frameworks for banks.
Besides, it will also help if banks and financial institutions consult cybersecurity service providers
to get the best advice and solution for cyber attacks.

CYBER SECURITYINTRODUCTION TO CYBERSECURITY

What Are Cyber Threats and What to Do About Them
From infiltrations on infrastructure and data breaches to spear phishing and brute force. Online
threats are varied and they don’t discriminate organizations from individuals when looking for a
target.

laptop with code

You’ve likely heard the term “cyber threat” thrown around in the media. But what exactly are
these cyber threats?

A cyber or cybersecurity threat is a malicious act that seeks to damage data, steal data, or disrupt
digital life in general. Cyber attacks include threats like computer viruses, data breaches, and
Denial of Service (DoS) attacks. However, to truly understand this concept, let’s go a bit further
into the background of cybersecurity.

Table of Contents
What are cyber threats?
Types of cybersecurity threats
Sources of cybersecurity threats
Best practices for cyber defense and protection
Takeaways

What are Cyber Threats?

In the 1950s, the word “cyber” used to refer to cybernetics – the science of understanding the
control and movement of machines and animals. This was followed by “cyber” standing for
“computerized.”

The 1990s brought around a new cyber-related term. The word “cyberspace” emerged to define an
invented physical space that some people wanted to believe existed behind the electronic activities
of computing devices.
Cyber threats in the modern day
Today, the term is almost exclusively used to describe information security matters. Because it’s
hard to visualize how digital signals traveling across a wire can represent an attack, we’ve taken to
visualizing the digital phenomenon as a physical one.

A cyber attack is an attack that is mounted against us (meaning our digital devices) by means of
cyberspace. Cyberspace, a virtual space that doesn’t exist, has become the metaphor to help us
understand digital weaponry that intends to harm us.

What is real, however, is the intent of the attacker as well as the potential impact. While many
cyber attacks are merely nuisances, some are quite serious, even potentially threatening human
lives.

Why is it necessary to protect from cyber threats?

Cyber threats are a big deal. Cyber attacks can cause electrical blackouts, failure of military
equipment and breaches of national security secrets. They can result in the theft of valuable,
sensitive data like medical records. They can disrupt phone and computer networks or paralyze
systems, making data unavailable. It’s not an exaggeration to say that cyber threats may affect the
functioning of life as we know it.

The threats are growing more serious, too. Gartner explains, “Cybersecurity risks pervade every
organization and aren’t always under IT’s direct control. Business leaders are forging ahead with
their digital business initiatives, and those leaders are making technology-related risk choices
every day. Increased cyber risk is real — but so are the data security solutions.”

The US government is taking cyber threats seriously but appears to be moving too slowly to
mitigate them. The White House’s Office of Management and Budget revealed that, of 96 federal
agencies it assessed, 74 percent were either “At Risk” or “High Risk” for cyber attacks. They
needed immediate security improvements.

The US government has experienced numerous crippling data breaches in the last few years.
Examples include the massive breach of the Federal Office of Personnel Management and the
theft of secret US Naval codes. Both attacks have been attributed to Chinese state intelligence
agencies.

Types of Cybersecurity Threats

Cybersecurity threats come in three broad categories of intent. Attackers are after financial gain or
disruption espionage (including corporate espionage – the theft of patents or state espionage).

Virtually every cyber threat falls into one of these three modes. In terms of attack techniques,
malicious actors have an abundance of options.

There are ten common types of cyber threats:

Malware. Software that performs a malicious task on a target device or network, e.g. corrupting
data or taking over a system.
Phishing. An email-borne attack that involves tricking the email recipient into disclosing
confidential information or downloading malware by clicking on a hyperlink in the message.
Spear Phishing. A more sophisticated form of phishing where the attacker learns about the victim
and impersonates someone he or she knows and trusts.
“Man in the Middle” (MitM) attack. Where an attacker establishes a position between the sender
and recipient of electronic messages and intercepts them, perhaps changing them in transit. The
sender and recipient believe they are communicating directly with one another. A MitM attack
might be used in the military to confuse an enemy.
Trojans. Named after the Trojan Horse of ancient Greek history, the Trojan is a type of malware
that enters a target system looking like one thing, e.g. a standard piece of software, but then lets
out the malicious code once inside the host system.
Ransomware. An attack that involves encrypting data on the target system and demanding a
ransom in exchange for letting the user have access to the data again. These attacks range from
low-level nuisances to serious incidents like the locking down of the entire city of Atlanta’s
municipal government data in 2018.
Denial of Service attack or Distributed Denial of Service Attack (DDoS). Where an attacker takes
over many (perhaps thousands) of devices and uses them to invoke the functions of a target
system, e.g. a website, causing it to crash from an overload of demand.
Attacks on IoT Devices. IoT devices like industrial sensors are vulnerable to multiple types of
cyber threats. These include hackers taking over the device to make it part of a DDoS attack and
unauthorized access to data being collected by the device. Given their numbers, geographic
distribution and frequently out-of-date operating systems, IoT devices are a prime target for
malicious actors.
Data Breaches. A data breach is a theft of data by a malicious actor. Motives for data breaches
include crime (i.e. identity theft), a desire to embarrass an institution (e.g. Edward Snowden or the
DNC hack) and espionage.
Malware on Mobile Apps. Mobile devices are vulnerable to malware attacks just like other
computing hardware. Attackers may embed malware in app downloads, mobile websites or
phishing emails and text messages. Once compromised, a mobile device can give the malicious
actor access to personal information, location data, financial accounts and more.