Cybersecurity in Banking: Trends & Threats in 2024

Compare Banks explores cybersecurity in banking.

Updated: May 18, 2024
Matt Crabtree

Written By

Matt Crabtree

CompareBanks is reader-supported. When you click through some links on our site, we may earn an affiliate commission. Learn more

Since more people are using Internet banking, hackers have increased their attacks on this sector of the economy. As a result, banks and other financial organisations need to spend extensively on cybersecurity.

The damage caused by a cyberattack extends well beyond the information lost. After a data breach, a bank's reputation might suffer as well. This is because customers have doubts about their security measures.

Threats in cyberspace are always evolving and growing more complex. There is a lot at risk in the banking and financial industry. Not only are vast sums of money at play, with more fintech innovation than ever, but if banks or other financial systems are hacked, it may have far-reaching effects on the economy as a whole.

Cybersecurity in online banking is more important than ever, and so is knowing how to avoid becoming a victim of a hack. Let's take a deep dive into cybersecurity and learn everything about the inner workings of hackers.

Banking cybersecurity: What is it?

It's hard to fathom modern life without access to any kind of digital technology, much less the Internet. However, these gadgets often include all of our accounts' and personal information, with the amount they impact our lives transforming exponentially.

Now, everything we need to function can fit into the palms of our hands. This is why it's so important to take precautions against data breaches and other forms of cybercrime. The ramifications might be disastrous if we don't.

The goal of cybersecurity is to keep computers and their data safe. It's a catchall word for a wide variety of methods that keep sensitive data out of the hands of hackers.

Achieving this transition is facilitated by enterprise digital transformation. Additional cybersecurity precautions are required in online areas like digital banking to secure personal data.

For what reason is cybersecurity necessary in the world of online banking?

Many customers' private information is stored in banks. If data is released or stolen, they have the means to pay a ransom. Because they care so much about their reputation, they often choose to pay the ransom rather than risk losing their customers' personal information.

That's because issues like consumer fraud can only snowball after a data leak. Furthermore, the cost to banks to restore data is substantial. This is why protecting data online is crucial.

In today's increasingly cashless culture, where more and more payments and transactions take place online, protecting client assets is the primary goal of cybersecurity in digital banking.

Cybercriminals target everyone who uses a credit or debit card. That's why it's crucial for your bank to use stringent security measures to safeguard your financial information.

The problems with bank cybersecurity

What does the face of a cyberattack on a digital bank look like?

Cyberattacks on financial institutions are a persistent concern. These might take many forms, but they all pose a threat to confidential information.

Cybercrime ranked third among the most often reported economic crimes, a few years ago in 2021, according to statistics.

A crucial task for financial institutions is to educate their staff on the importance of cybersecurity and to use cutting-edge communication solutions like DeskAlerts to guarantee that critical information is being received despite the constant barrage of digital distractions.

It might be difficult to put cybersecurity risk reduction methods into practice in the banking industry. When it comes to cybersecurity, banks face a number of formidable obstacles.

  • The demand for qualified cybersecurity specialists is not being met by the current supply.
  • Uninformed workers whose cybersecurity training is either inadequate or has become out of date and no longer accounts for modern threats.
  • Inadequate funds have been allocated to address cybersecurity risks.
  • Weak employee credentials make hacking easier.
  • Criminals are actively attempting to compromise banking-related mobile applications and gadgets.

Cybersecurity in banking: Protecting customer data — Trends

This year's leading cybersecurity developments are driven by the ever-increasing digital footprint of contemporary organisations.

As organisations increase their digital footprint and centralised cybersecurity management becomes outmoded, security and risk executives find themselves at a crossroads.

With the rise of hybrid workforces and cloud-based digital business operations, new dangers have emerged. Meanwhile, advanced ransomware, assaults on the digital supply chain, and deeply ingrained vulnerabilities have shown a lack of both technology and personnel.

These disturbances aren't little; instead, they add up over time. To deal with these threats, CISOs must evolve from breach prevention experts to business strategists who oversee cyber risk management.

Those who are familiar with these seven developments will be more equipped to handle emerging dangers and advance in their careers. However, doing so will need rethinking traditional approaches to security and modernising technological solutions.

1. First, handling an increasing number of attack surfaces

At least 18% of today's knowledge workers say they have no plans to return to the workplace at all. With the rise of public cloud computing, increasingly interconnected supply chains, and cyber-physical systems, previously inaccessible attack “surfaces” are now wide open.

As a result, businesses are in a more precarious position than before. Security executives, according to Gartner, should expand their methods of risk management beyond the three pillars of monitoring, detection, and reaction.

2. Protecting our identity systems

With people relying on online services for everything from entertainment to robo-advice, consistent assaults on identity systems are occurring.

Credential stuffing has become a common way for hackers to gain access to networks and carry out their malicious plans. In the SolarWinds incident, for instance, hackers gained access to the system by exploiting a supplier's privileged access.

In order to protect identification systems, some have coined the phrase “identity threat detection and response” (ITDR). More comprehensive answers will materialise over time.

3. Dangers in the digital supply chain

Attacks on software supply chains are expected to rise threefold from 2021 to 2025, according to research from Gartner.

Leaders in security and risk management must collaborate with other divisions to elevate digital supply chain risk as a top priority and encourage suppliers to exhibit best practices in security.

4. Consolidation of vendors

There is a merging of security products. To make their bundled solutions more appealing, vendors are centralising security operations onto single platforms and offering pricing and licencing alternatives.

Gartner views consolidation as a positive development since it should reduce complexity, save costs, and increase efficiency, leading to greater overall security. However, it may create new issues, such as decreased bargaining leverage and possible single points of failure.

5. The rise of cybersecurity meshes

A dispersed company may deploy and integrate protection to assets whether they are located on-premises, in a data centre, or in the cloud thanks to the cybersecurity mesh, a contemporary conceptual approach to security architecture.

The average cost effect of individual security events may be reduced by 90% for organisations that use a cybersecurity mesh architecture by 2024.

6. Decentralised policymaking

To back up digital business initiatives, executives want a nimble and responsive cybersecurity department. However, the task is becoming too huge for a single CISO as more and more of the organisation gets digitised.

To facilitate decentralised cyber judgement, industry leaders are establishing chief information security officer (CISO) positions.

While the CISO and the centralised role will continue to establish policies, cybersecurity leaders will be distributed across the company.

7. Moving beyond awareness as a trend

The fact that most data breaches still involve human mistakes demonstrates the ineffectiveness of conventional methods of raising awareness about the need for security.

Companies that are serious about improving their security are investing in comprehensive behaviour and culture change programmes rather than relying on antiquated compliance-based awareness initiatives.

To sum up:

  • Complex new threats need a rethinking of the current security technology stack.
  • Distribute cybersecurity decision-making among departments to strengthen your organization's defences.
  • Change the way security is done and phrase it differently to handle cyber risk more effectively.

Banking cybersecurity: Protecting customer data — What are the threats?

In 2024, these are the most pressing cybersecurity concerns that financial institutions may expect to face.

Let's examine some of the most typical methods of cyber assault:

1. Human manipulation

You have a powerful computer in your pocket, which more and more individuals are using to do financial transactions online. 

Social engineering targets this; it’s one of the most significant emerging cyber dangers to the banking and financial sectors. People are the weakest link in the security chain because they might be duped into divulging confidential information. Both bank workers and clients are vulnerable to this.

There are several methods of social engineering, including but not limited to phishing, whaling, and the mailing of fake invoices purporting to come from reputable companies. It's crucial to educate your staff on the latest social engineering techniques and the ever-changing nature of online dangers.

2. Attacks on the supply chain

Attacking a software provider and then spreading malware to its clients and the rest of the supply chain via seemingly genuine products or upgrades is a common tactic used by hackers. Distribution systems are compromised in these assaults, allowing thieves access to supplier customers' networks.

3. Remote workers

As of March 2022, the average British household owed £33,410 in debt. The lockdowns did not help this. But there were more after-effects.

Due to the epidemic, there has been an increase in remote work and hybrid workforces, although many workers in the financial sector have continued to work from home out of personal preference. And, as of June 2022, the percentage of American workers who can do their duties from home, according to a Gallup poll, is:

  • 15% of all workers do some or all of their weekly duties from home.
  • Three out of ten people are solely telecommuting.
  • Workers were totally on-site for 20% of the time.

The percentage of hybrid employees in the United Kingdom increased from 13% in early February 2022 to 24% in May of the same year. During the same time period, the percentage of those who intended to mostly work from home increased by 12%.

That implies millions of workers are making use of their own gadgets, Internet connections, and IT systems at home. Sometimes they are using public Wi-Fi in a place like a coffee shop or an office building, some even use it to access crypto data. It's possible that any of these settings are incorrect. 

When a bank's systems and networks are no longer under its direct control, it becomes much simpler for malicious actors to compromise them and cause havoc. This has resulted in a dramatic increase in the financial sector's exposure to cybersecurity risks.

There has to be heightened awareness. Workers who do their duties from home should be aware of potential dangers and how to avoid them. In the third year of the epidemic, remote work, hybrid workforces, and cloud-based software solutions have become practically indispensable.

This also implies that there are more potential cyber threats facing financial institutions than ever before. Because employees are no longer exclusively using the company's owned and operated systems and networks, heightened security measures are required.

4. Phishing

Phishing is a sort of cyberattack in which the target is duped into giving out personal information. This information is often financial, such as credit card numbers, which may be used by thieves to make unauthorised purchases.

Although there are several methods to get this data, the most common are emails and phone calls. Phishing attacks targeting users of online banking are continually adapting.

When done properly, phishing may give off an air of extreme professionalism. Customers of a bank may be duped into believing they are receiving communication from the bank itself if hackers use this tactic. Because of this, they are convinced to reveal private data.

Cybercriminals may take advantage of this by enticing victims to provide personal information that can be used to steal their money or even their identity.

The use of urgency is a prevalent tactic in phishing emails. The victim is warned that they must take immediate action or else a variety of terrible things would occur. As a result, individuals become less conscientious and take decisive action before giving it any thought.

5. Unencrypted data

Data that is not encrypted is another potential cyber hazard. Unencrypted information is a soft target for hackers. Instead of focusing on prevention, this may lead to major issues for financial institutions that suffer a data breach. 

Cyberattacks on online banks are quite concerning. As a consequence, substantial resources must be allocated towards data recovery and/or ransom payments. The subsequent loss of trustworthiness is another unfortunate consequence.

That's why it's crucial to encrypt your online financial information. This makes it so that even if information is taken, it will be difficult for cybercriminals to use. Using an encryption technique like the advanced encryption standard, for instance, renders data unreadable even if it has been compromised.

6. External integrations

While a bank may have robust cybersecurity protections in place, it doesn't ensure the third-party companies it works with also have.

In order to better serve their clients, many banks turn to third-party services. However, if banks work with third-party contractors with inadequate cybersecurity, the financial institution might suffer severely.

It is common for cybercriminals to attack banks through their less secure third-party partners.

Because of this, financial institutions need to be very selective when choosing business partners. For instance, substantial risk may be avoided by using reliable corporate eCommerce systems.

The same holds true if a financial institution were to search for the finest customization websites to enhance the client experience without jeopardising data security. 

7. Spoofing

A surge in cloud-based assaults has emerged as one of the most widespread cyber risks to the banking sector, capitalising on the fact that more and more software systems and data are being housed on the cloud. Financial institutions must safeguard the security of their cloud infrastructure to prevent damaging hacks.

Spoofing is a kind of cyberattack in which a malicious website masquerades as a legitimate one, such as a bank's. The'spoof' platform mimics the original in every way, leading users to believe they are logging into the real service. However, their credentials are being stolen and utilised by hackers.

Here, actual website visitors are spied upon by generating URLs that sound and seem like the genuine article. This is a common kind of cybercrime, and it has been and will continue to pose serious risks to financial institutions and their customers.

Multi-factor authentication and other forms of robust cybersecurity may help prevent this. This makes for a safer system since it allows your bank to request information that only you would know in order to access your account. This method prevents identity theft by making it impossible for thieves to use stolen information to access your bank account.

8. Ransomware

For years, ransomware has been a huge problem for businesses all around the globe, and it shows no signs of going away. Cybercriminals utilise this tactic to encrypt data and lock users out of their systems before asking for ransom.

When businesses fall victim to ransomware attacks, they may be unable to access their data for weeks or months if they haven't backed it up. There is no assurance that paying the ransom would restore access to your computers if you are held hostage.

It's enough to make even the most seasoned IT professionals quake in their boots. Suddenly, spyware encrypts a company's important information, locking off users and rendering the system inoperable for weeks while crooks demand payment to decrypt the contents. They demand payment by threatening to release portions of the material on underground forums.

According to Verizon's Data Breach Investigations Report, 25% of all cyber breaches in 2022 were caused by ransomware attacks. 

According to the Australian government, ransomware is “the most serious cybercrime threat to Australia, creating significant risks for both governments, businesses, and individuals”. More than 487 reports of malware and ransomware attacks were made to the Australian Competition and Consumer Commission in just January 2022.

For years, ransomware has been used to break into businesses across industries, from finance to healthcare. Attacks are becoming more sophisticated and vicious, with victims and ransom demands growing in size and severity.

Once again, banks are a prime target for ransomware because of the sensitive information they handle. Even if you pay the ransom, there's no assurance that the data will be restored. The personal and financial information of bank clients might be leaked if this happens.

Banks are required to demonstrate exceptional cyber breach resilience since financial organisations are subject to stringent regulation.

The most cutting-edge cybersecurity defences are needed against such sophisticated attacks. As the security requirements of online banking change, more and more reliance is placed on behavioural analysis, AI, and machine learning.

Instances of cyberattacks against banks

Banks and other financial organisations have been frequent targets of cyber assaults in recent years. Among the most devastating cyberattacks are:

  • In 2020, hackers in the United States attempted to extort money from Flagstar Bank by posting the personal information of the bank's clients online as part of a ransomware assault.
  • In 2020, a prolonged Distributed Denial of Service (DDoS) assault on a network provider caused the New Zealand Stock Exchange to go down.
  • Seven million users had their personal information stolen from the online stock trading site Robinhood in 2021 due to a data breach.
  • In 2021, a cyber assault on the Pichincha Bank in Ecuador caused disruptions in the bank's clients' access to financial services.

Cybersecurity in banking: Protecting customer data — Best practices & solutions

As Open Banking grows in use, granting more accessibility to more people, cybersecurity leaders need to keep sharp.

Still, there are measures that banks and financial institutions may take to safeguard their systems against the most widespread threats to financial cybersecurity.

Some examples are:

  • Getting around the lack of available talent by enlisting the aid of security-focused organisations and managed service providers.
  • Some of the largest cyber assaults may be avoided by implementing ongoing security awareness training programmes or by analysing existing programmes to ensure they are relevant and up-to-date with the current threat environment.
  • Investing in detection and response systems that may help thwart attacks before they happen.
  • Educating clients so they will not willingly give over personal information to hackers.

1. The value of open dialogue

Raising awareness of banking cybersecurity and averting financial cybersecurity problems need open lines of communication inside banks and other financial organisations. 

Develop effective methods of internal communication to remind staff of their responsibilities in maintaining data security, reporting breaches, and being alert to emerging dangers, and make sure you have the resources you need to convey the message in a manner that will resonate with them.

The following are examples of internal financial communications that banks might use to this end:

  • 📑 Reminding workers about security measures through desktop wallpapers and screen savers.
  • 📑 Make sure your staff has received enough security training, and test their understanding of banking-specific cybersecurity on a regular basis.
  • 📑 Get the word out about new dangers so your staff can be on guard.
  • 📑 Don't bombard them with a tonne of information all at once, but do provide frequent suggestions and advice on recommended practices for cybersecurity.
  • 📑 Spread your thoughts out over a few different mediums for maximum impact.

2. An aware appetite for technology and cyber risk

Cascaded from the risk taxonomy to control goals and metric thresholds should be risk appetite frameworks constructed in accordance with the technological risk and cyber risk taxonomies.

All possible technological and cyber threats should be accounted for in the taxonomy. It is standard practice for businesses to organise taxonomies in light of the likelihood that various effects of technology risk or cyber risk may materialise.

Loss of system availability, breaches of privacy or data integrity, threats to project management, and so on are all possible categories in the tech and cyber taxonomy.

Once the most significant risks have been identified, the organisation must determine its tolerance for those risks. The enterprise risk appetite statement must be aligned with the technology risk and cyber risk taxonomies and be both business-focused and quantifiable.

These numerical reports also need to be prioritised according to their value to the company. To illustrate, an organization's tolerance for system outages could be stated as “X target minutes of unscheduled downtime for critical business system services” and “no greater than Y target minutes of unscheduled downtime”.

These risk appetite declarations should inform the development of the organization's control standards and control processes.

The control goals should span the gamut of technological and cyber controls (preferably mapping to industry standards) and be prioritised according to their impact on the company's operations. They should also be quantifiable, so that businesses may monitor how well they're doing in meeting their control goals.

Last but not least, businesses must establish cutoffs for KRIs (to determine if risks are acceptable) and KCIs (to evaluate whether controls are accomplishing their goals).

A key performance indicator (KPI) for multifactor authentication management, for instance, may be the proportion of apps using multifactor authentication to protect mission-critical data from fiat banking to digital crypto wallets.

The frequency with which sensitive company information is accessed inappropriately due to security flaws might be considered a key performance indicator (KPI).

Statements of risk appetite made at the business unit level should take into account the unique set of threats and motivating factors faced by each unit. Statements of this kind should often flow down from enterprise-level risk appetite statements, although specialised departments with distinct requirements or selling points may need their own.

How do financial institutions defend against cyberattacks: The Verdict

The best way to be ahead of the curve in cybersecurity in 2024 is to start preparing for it now, helping disadvantaged people who are already struggling from a lack of money. There will always be new cybersecurity dangers to banks, but if you lay the groundwork correctly, you'll be ready for whatever the future brings.

Several methods exist that banks use to counteract cybercrime. Here are three of the primary strategies they use to keep criminals out of their virtual environments.

#1 — Education of the public

Customers of financial institutions are a primary target for criminals. They take advantage of people's trusting natures and their lack of awareness of the risks that lurk online in order to steal sensitive data.

Lots of resources are put into educating the public so that bank customers can recognise malicious cyber activity and avoid falling for these scams. The risks of disclosing their credentials and what to do if they detect a fraud attempt are also topics that need to be covered.

In order to minimise losses, prompt action is required.

#2 — Appropriate software

All of the digital platforms that banks use are protected by a wide variety of anti-malware and anti-virus software.

While firewalls are helpful, they are not a failsafe against cyberattacks. Banks cannot guarantee the security of their digital environments if they do not use the appropriate software.

With the correct programme, a bank's digital system may be protected against assaults that might cause significant damage. As a result, plenty of money is often poured into different forms of specialised cybersecurity solutions.

#3 — Recovery efforts

Cyberattacks are getting more difficult to prevent in today's increasingly digital society. As a result, financial institutions must have a solid strategy for responding to cybercrimes in the event that they cannot be prevented. This decreases the amount of data lost and the downtime of internet services.

Data should be encrypted and saved in a safe cloud location on a regular basis as part of a disaster recovery strategy. In the case of a major system breakdown, digital banking infrastructure will be built to continue operating with a reduced system.

Preparedness is key in reducing costs and limiting harm from cyberattacks.

FAQs

Exactly what is the value of creating a risk tolerance framework?

What are ways for developing a strategy for measuring and managing exposure to risk?

What do you think is the greatest danger to cyber safety?

What does financial cybersecurity entail?

What can financial institutions do to strengthen their cybersecurity?

How necessary is cyber defence in financial institutions?

How do banks guarantee safety?

In 2024, what is the potential threat to cyber safety?

What do you think is the greatest danger facing the banking sector?

How vulnerable are banks to cyberattacks?

What general dangers do banks face because of fin-technology?

Related Articles

What Bank Details Are Needed to Receive Money?
You must always check with the sender what bank details are needed. But you can...
Interest-Only Buy-To-Let Mortgage Calculator - Estimate Your Monthly Profits
Investing in a buy-to-let property can be a smart move, but it does require sharp...
Mortgage Calculator – Estimate Your Monthly Payments
Taking the plunge on purchasing a home requires precise financial planning. This...
Best Business Current Accounts
If you own a small company, whether it's just starting out or is well-established,...