Organizations can also be held back by issues such as limited resources for cybersecurity, difficulty striking the balance between security for digital systems and user experience, or legacy systems and infrastructure.
How, then, can financial services firms stay secure amid a landscape of ever-evolving cybersecurity threats, while also pushing ahead with digital innovation and transformation? What’s more, how can they do this while keeping pace with the changing regulatory compliance landscape?
Identifying the latest cybersecurity threats
Last year, 39% of UK businesses reported a cyber-attack, highlighting the significant and widespread challenge of this threat. Specifically, the cyber threats financial institutions face are constantly evolving as attackers continue to adopt more sophisticated tactics, including social engineering and data breaches to successfully hack into digital systems.
Indeed, the growing popularity of AI tools and language processing models such as ChatGPT present new threats for the industry as they are increasingly used by hackers for malevolent means such as the creation of malicious code and convincing phishing emails. This, coupled with the threat of attacks exploiting vulnerabilities in third-party systems typically relied on by financial institutions to assist with operational tasks, leaves firms at risk of serious financial damage.
In fact, IBM’s latest Cost of a Data Breach Report revealed that the average cost of a data breach reached a new record this year: USD 4.45 million. And while the financial costs of cyber-attacks can be substantial, firms must also consider their arguably more damaging and long-lasting serious reputational impact. Attacks can erode already fragile customer trust in the industry.
Making the mental leap
While firms are largely aware that they need round-the-clock defenses against cyber-attacks, many financial services companies can be reluctant to act. This is often the case for firms in highly regulated industries as they find themselves overwhelmed by the perceived scale of the cybersecurity challenge – especially as operations must remain compliant, and regulation doesn’t always marry well with best cybersecurity practices.
However, failing to pay proper attention to cybersecurity can leave businesses vulnerable. In the face of significant risk, it is vital that firms focus on pragmatic planning that identifies and mitigates real problems specific to their operations, such as whaling or spoofing attacks, rather than concentrating on hypothetical risks.
In short, to fully protect against cybersecurity attacks and the ensuing data loss, businesses must be sure to focus on solutions that prioritize cybersecurity as a key business function, ensuring a dynamic approach to cybersecurity that not only leans on the skills potential of internal departments but also relies on external resources to build resilience against potential attacks.
Banking on the cloud
Many sectors have embraced cloud technology, yet banks have arguably fallen behind due to the industry’s widespread hesitation about the security of cloud-based systems. However, with the regulation of the cloud loosening, the sector is beginning to catch up – and some firms such as Deutsche Bank are now starting to bank on the cloud.
Nevertheless, more needs to be done to overcome sector professionals’ hesitation to adopt cloud-based technologies. Indeed, it is vital that banks understand that cloud infrastructure is, in many cases, more secure than locally based digital architecture and storage; provided the skills, expertise and, where necessary, external support systems, are in place to create secure cloud infrastructure and manage and maintain it on an ongoing basis.
Rethinking your internal structure
Typically, financial services companies and banks are structured so that cybersecurity and IT departments report to a senior executive within their team and not to the broader boardroom or other managers. However, this can leave a disconnect between the wider firm and its individual departments, with knock-on effects for cohesive and secure firmwide cybersecurity defenses.
Firms must look at how cybersecurity defense fits into the wider business structure so that departments such as cybersecurity and fraud can work collaboratively, directly, and ultimately safely, to offer enhanced, holistic solutions for security against cyber-attacks.
Guarding the vault
Financial services firms face a difficult balancing act of needing to adopt innovative technologies to maintain their commercial advantage over competitors while also ensuring they implement strong cybersecurity measures to safeguard consumer data and critical business systems from any flaws of new technologies and evolving digital threats. This is all while operating within a highly complicated regulatory environment.
However, the future remains bright for the sector, and there are constructive steps businesses can take to ensure they are effectively tackling the cybersecurity challenges in front of them. Steps such as dedicating investment into capability build-up to achieve the needed maturity level and awareness of their staff, as well as establishing and maintaining UpToDate Security Operation Centres (SOCs) can lay a strong foundation to build cyber resilience. Businesses should also balance this investment with adequate recourse allocated to capacity build-up, ensuring they have reviewed and enhanced their cyber security protocols, playbooks, and procedures to the greatest extent possible.
By following these steps and seeking external expertise on how to achieve strong cybersecurity where needed, financial services firms can maintain and establish cybersecurity protocols that effectively mitigate against emerging threats and provide robust protections for businesses and customers alike.