The spike of cyber attacks in the financial sector

Nica San Juan
Nica San Juan | Staff writer
Last updated: January 5, 2021
The spike of cyber attacks in the financial sector

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For businesses and organizations in all sectors, cyber-related risks are a constant cause of concern. However, some sectors face more than their fair share of threats. One such sector is finance.

Among the key reasons for this is the fact that cybercriminals are too well aware of the high stakes involved. They know the extent to which a threat can disrupt normalcy and are always eager to exploit the opportunity.

A disturbing trend

According to a 2019 report by ThreatMetrix, the second half of 2018 saw the sector suffer an increase of 37% in account takeover attacks. During the same period, the rate of similar incidents in other industries had dipped by almost 50%. There was also a 107% increase in attacks that involved fraudsters trying to get control of user accounts in the course of mobile transactions.

Another 2019 report, this time by NTT Security, also concluded that the financial sector is among the most highly targeted. Of all the attacks that took place in 2018, the report said that 17% of them were on the financial industry, which was a tie with the tech sector. The report went on to show that finance has experienced the highest number of attacks over the past six years.

Giving credence to the alarming statistics is the fact that financial service companies are also reporting an increase in cyber-related incidents. For instance, 67% of finance companies that Carbon Black and Optiv surveyed reported a significant increase in attacks. A further 79% said that attacks are getting more sophisticated.

Constantly under fire

Constantly under fire

In 2018, a number of large retail banks in the UK, including Santander, Tesco Bank, Barclays and the Royal Bank of Scotland, had to shut systems down after sustained cyber attacks. They reported that remedying the attacks cost them thousands of dollars. Executives at these banks said that they were almost constantly under the attackers’ fire.

In the period between January and August 2018, attacks on the top global network for cash and security transfers, SWIFT, cost a total of $1.8 billion. Costs include fees for litigation, regulatory fines, protection against identity theft, and response to negative press, among other things.

The most costly types of attacks for actors in the sector include phishing, social engineering, and denial of service. Social engineering and phishing are attacks that manipulate individuals into revealing confidential information. Denial of service overloads an institution’s systems, rendering them unusable.

Defense strategies

With these statistics and trends in mind, it is imperative that players within the sector go out guns blazing and find ways to put the attackers in their place. But what can they do to change the odds that seem stacked against them? Consider some viable defense strategies that could put an end to the stalemate:

Strategic alliances

Strategic alliances

One of the best defenses would include partnering up with entities that specialize in staving off and reacting to cyber attacks. At the moment, it is illegal for organizations to hack back in pursuit of attackers.

But entities such as the military have both the resources and mandate to do so. Simply forging strong relationships with such entities could act as a deterrent against potential attackers.

Similarly, such institutions can hire former soldiers, government cyberspies and counterintelligence officials to strengthen their defense teams. They would provide invaluable services thanks to the know-how and tools in cyber warfare.

Fusion units

Another viable approach is the creation of intelligence hubs known as fusion centers. These units have the sole purpose of gathering intelligence and strategizing incidence response.

These hubs bring together cybersecurity specialists with the experience to join forces against the common enemy. A number of large banks, including Wells Fargo, Morgan Stanley, and Citigroup, as well as payment processors MasterCard and Visa, all have fusion centers.

Citigroup is also renowned for its military-inspired War Games which simulate cybersecurity to assist the bank in preparing for cyber threats.

Working as teams

Experts have always touted the benefits of players in the sector working together as teams to share ideas to help them safeguard their institutions from attacks. Through the aforementioned fusion units, various financial institutions collect, analyze and share data helping them in the fight against cyber-crime.

This is certainly a step in the right direction as cybercriminals often recycle the same kind of attacks with success. Sharing notes and tips could help participants build more effective defenses and keep up with changing times.

Notably, even cybercriminals seem to be working together in strong networks to perpetrate fraud globally. It would take nothing short of that to fight back successfully if the sector wants to stand a chance before the collective forces of evil.

Updating obsolete systems

Updating obsolete systems

One of the open secrets in the cybersecurity world has to do with the relationship between vulnerabilities and the age of equipment. The older the equipment an institution is using, the higher the vulnerability level.

As a testament to this, newer brands are subject to fewer attacks as they enjoy the advantage of modern equipment.

The use of AI

Another effective strategy that many institutions are uncovering is the use of Artificial Intelligence (AI) in the fight against cybercrime. AI has shown its worth in helping with fraud detection and deterrence, as well as putting a stop to cybersecurity breaches.

“When,” not “If”

It clearly emerges that institutions in the highly targeted financial sector cannot afford to be lax when it comes to fighting cybercrime. Attacks are increasing in diversity as well as frequency. With this in mind, institutions in the sector need to work with a “when” not “if” mentality. Clearly, it is just a matter of time before the next financial entity makes headlines for the wrong reasons yet again.

By putting the above measures in place and adopting a more proactive rather than reactive stance, they do stand a chance against the new crop of cybercriminals. It cannot be easy balancing the required levels of security, regulatory requirements, privacy, and the optimal customer experience. But it is also far from impossible.

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