How To Mitigate Risk in Financial Services With Cybersecurity Strategies

We explore essential financial services cybersecurity insights, emphasizing evolving regulations and attack strategies and steps you can take to protect your organization.

Businesses in the financial services (FinServ) sector hold rich treasure chests of sensitive data that hackers would love to access. From payment information to personal identification data, attackers target a wide range of data. This makes it essential to have stringent FinServ cybersecurity measures in place.

At times, protecting data and systems in the FinServ space can be a challenge because the attack technologies — and network infrastructures — are always changing. This necessitates robust yet flexible risk mitigation strategies.

Unique Compliance Considerations in Financial Services Cybersecurity

In the early 2000s, the Gramm-Leach-Bliley Act (GLBA) focused on establishing data privacy to protect personal information. While that laid a solid foundation, it didn’t address some of the regulatory loopholes that led to the 2008 financial crisis.

The Dodd-Frank Act helped tighten regulations across the FinServ sector and introduced tighter cybersecurity requirements.

As a result, financial services cybersecurity has benefitted from the standardization introduced by several regulatory frameworks, including:

• General Data Protection Regulation (GDPR): This governs how organizations store and use the personal data of those in the European Union. It also controls how they collect data, as well as the rights of individuals to access, delete and transfer their information.
• Payment Services Directive 2 (PSD2): This governs the way electronic payment services function when it comes to keeping customer information secure. It also encourages safe innovation by promoting using APIs, strict customer authentication rules, and secure third-party access controls.
• New York Department of Financial Services (NYDFS) Cybersecurity Regulation: NYDFS applies to financial services companies, banks and insurance companies in the state of New York.

Each regulation details what cybersecurity for financial services should entail — at least at a high level — and represents a culmination of efforts to protect FinServ data and ecosystems.

However, for FinServ organizations that want to innovate, data protection regulations can sometimes present obstacles. Innovators typically aim to create systems that automate data-based processes. The data you need to manage to make automation work frequently falls under one or multiple categories of protected or sensitive information.

In the financial sector, as you decide where the data moves, which it moves to, how and why it’s stored, and how you protect it, you run into a list of challenges. For instance, it’s common to inadvertently introduce new attack vectors simply because you’re trying to make information accessible to an internet-based process or a new endpoint.

For this reason, even though financial regulatory compliance can play a pivotal role in preventing successful cyberattacks on banks and other institutions, it’s still important to understand the threat landscape. This streamlines the process of developing effective defense strategies.

Common and Emerging Attack Scenarios in Banking

The principle of “know thy enemy” introduced by Chinese military general Sun Tzu has direct implications in the FinServ cybersecurity space. Here’s a breakdown of some of the common and emerging attack scenarios you need to keep top of mind while formulating your defense system:

• Traditional attack vectors, including:
  • Phishing — an attempt to steal information by tricking the target into divulging sensitive data.
  • Malware — malicious software to compromise systems or directly steal or alter data.
  • Insider threats — a combination of purposeful and accidental threats in which people inside your organization compromise your cybersecurity.
• Advanced persistent threats (APTs): APTs come in different forms, but they all involve an attacker trying multiple ways of targeting a single organization over a considerable period. They may use a combination of phishing, malware, and data exfiltration to steal information. Often, an APT occurs in phases, with each subsequent phase set up by the preceding one.
• AI-powered attacks: AI has been helping attackers do everything from writing more convincing phishing emails to writing code to design more effective malware attacks.
• Quantum computing risks: Hackers can use quantum computers to solve complex computing problems faster than traditional computers to crack encryption. Attackers can also steal encrypted information now and then wait until quantum computing advances to the point of being able to decrypt it.

Knowing your enemy also hinges on your ability to understand their motivations. However, when it comes to cyber criminals who target the financial sector, this is often easier said than done. Some attackers do it simply to make money — by either selling data they steal or using it for an identity theft attack to withdraw or spend the target’s money.

Other criminals primarily aim to steal data and use it to extort an individual or an organization. In some attacks, stealing data is the first step in executing a ransomware attack.

Service disruption is another motivation often connected to a ransomware attack. Hackers disrupt services and essentially hold your system hostage until you pay a ransom. In other situations, the attacker disrupts your operations primarily to show off their hacking prowess and boost their reputation in the cybercriminal underworld.

Now that you know your enemy, the next step is to figure out how to stop them. Here’s what financial institutions can do to bolster their defenses against a range of cyber risks.

Real-World Strategies for Cybersecurity in Banking

While attackers can penetrate your systems in many ways, you have plenty of defensive tools and strategies to prevent successful attacks.

Implementing Zero-Trust Architecture

Zero-trust architecture presumes that every entity — human, software or network — trying to gain access to your system is a threat, and they can’t get in until they prove otherwise.

For example, suppose someone logged into your web application using their mobile phone and then they try to log in again a week later from the same device. A traditional architecture would allow them to connect because it detects that they’re using the same phone. But with zero trust, your system would “presume” that the person logging in had stolen the phone to use it to gain access to your web app. Therefore, the access control system would require additional verification, such as a security code sent via email.

Zero-trust has become more popular as cyberattacks have become more virulent. Google, for example, established BeyondCorp after hackers breached its systems in 2009. BeyondCorp presumes that all networks, including those within Google’s ecosystem, can’t be trusted. Even though BeyondCorp started as an internal tool, it’s now available to outsiders, providing zero-trust security to various organizations.

Using AI and ML Alongside Human Cybersecurity Experts

AI and machine learning (ML) can automate many cybersecurity activities, accomplishing tasks in seconds that would take a human days to do. For example, an AI-powered system can study the behavior of different data packets and tell you how likely they are to present a threat.

AI can also automatically quarantine network segments if it detects a threat, protecting the rest of your environment. After an attack, you can also use AI to better understand the programming of malware used against your system. AI can tell you what the code is designed to do, which is especially helpful if your IT team doesn’t know the coding language the hackers used.

Enhancing Employee Security Awareness and Skills

Do your employees know the difference between phishing and spear phishing? How about phishing vs. whaling? What’s step one if they suspect a ransomware attack?

By training your employees to be aware of the most common cybersecurity threats to your organization, you give yourself an additional line of defense.

Employee training can also be valuable when it comes to promoting good cybersecurity awareness. Teach your employees how to prevent creating vulnerabilities, sharing best practices like:

• Don’t use the same password they use for personal accounts.
• Never insert free or found USB drives into company computers.
• Double-check credit card machines to make sure it’s not a skimmer while using a company card.
• Never download attachments sent via email unless they’ve first verified the sender’s identity and the attachment’s contents.
• Log out of any open sessions or lock their computer if they leave their desks.
• Never make purchases using a hotel TV while on a business trip because a hacker connected to the hotel’s intranet can steal company payment data.

To learn more about reducing your cyber risk, check out our blog, Cybersecurity Awareness Tips for Employees.

Case Study: The Attack on Denmark’s Central Bank

Hackers were able to disrupt operations at Denmark’s central bank in early 2023. They used a distributed denial of service (DDoS) attack to prevent access to the central bank’s websites and Bankdata, a company that develops fintech solutions. As a result, the websites of seven private banks went offline, including Jyske Bank and Sydbank, two of the biggest financial institutions in the country.

While the attack was unfortunate, it provided some valuable lessons. A DDoS assault launches fake, malicious website or web app requests. It’s vital to set up protections that can automatically detect whether a series of requests are legitimate or likely part of a DDoS attack. In this way, you can prevent these kinds of assaults altogether, specifically because anti-DDoS software can prevent malicious requests from getting to your site’s server.

These strategies give you a solid foundation, but the following best practices can help all financial leaders tighten their cyber defenses further.

Best Practices and Takeaways for Banking Leaders

As a leader in the FinServ sector, here’s how you can greatly reduce the chances of disruptive attacks:

• Foster a cyber-aware culture across all departments. This involves regular training adapted to account for the most recent threats.
• Perform regular risk assessments. Your risk assessment process should include assessing your vulnerabilities and performing penetration tests to see how your network and employees perform under real-world conditions.
• Collaborate with others in your industry. It’s good to share and solicit information from others about the kinds of attacks you’re facing. You can also learn about the most effective tools and strategies for preventing or mitigating cyber assaults.
• Invest in cutting-edge cybersecurity technology. Security developers and researchers constantly update their technologies to counter the most dangerous attacks. It’s worth the investment to guarantee you have the most up-to-date tech protecting your systems.

Bolster Your FinServ Cybersecurity

Robust cybersecurity measures in the FinServ industry are vital for keeping customer and corporate data safe from attackers. The wealth of information in your computers and servers is a tantalizing target for hackers.

To stay a step ahead of them, you need to continuously adapt to threats as they evolve. This is why it’s important to invest in cybersecurity now. By establishing a strong, adaptable security system, you can prevent damaging attacks from impacting your operations or customers.

You know you need to protect your brand and financial stability by prioritizing cybersecurity. But do you know where to start? Our Cybersecurity team is ready to help you focus on everything from strategy development to penetration testing.

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