5 Security Risks That Affect Financial Institutions

Security breaches across the systems of banks and other financial institutions don’t just put the operations of the finance industry to a grinding halt.

When such issues affect the financial sector, a variety of businesses, public and private groups across different sectors and industries feel the consequences too.

Their activities can abruptly stop, causing them to lose hundreds to millions or even billions of dollars.

Security Risks by Numbers

The 2017 report from Forbes states that the losses of American financial organizations to malicious digital attacks amounted to a whopping $16.8 billion in that year alone.

Global trade has even raised the risks associated with information theft, artificial system freezes, and breakdowns.

These issues can transcend geographic boundaries, severely impacting the operations of companies, government offices, organizations and the regular activities of large populations of private citizens across various countries worldwide.

This 2018 report from Symantec says that Park Jin Hyok and his state-sponsored hacking group are responsible for some of recent history’s most costly security breaches.

This includes a run to steal more than $1 billion from a multitude of banks all around the world. This is just one of his career highlights that made him one of the FBI’s most wanted today.

That’s why a list of the top security risks today is crucial.

This can arm banks, other financial institutions, businesses and private citizens like you to identify ways for defending yourself against these malicious attacks and sophisticated social manipulation tactics.

Most Dangerous Security Attacks in The Global Finance Industry

Knowing what types of attacks are most prevalent helps groups in the global finance industry focus on the right security measures.

The most common ways cybercriminals are trying to get data from the financial institutions include:

1. Identity Theft

Cyber-criminal syndicates, independent hackers and scammers use various social manipulation tactics to steal the financial information of their targets.

They often pose as representatives of banks and government offices to trick unsuspecting online and phone banking customers to hand over their social security numbers, confidential data and financial details.

Over 16.7 million Americans were victims of these criminals in 2018. This is according to Javelin Strategy & Research’s 2018 Identity Fraud Study.

But there are also lots of groups that hack into the databases of banks, credit card companies and digital payment processors. They do this to steal the customer information that they need to perform illegitimate transactions.

These include cleaning out the balances of their victims, selling credit cards to other crooks in the Deep Web and so on.

Many of these criminals even use these details to set up merchant accounts where they can cash out stolen credit cards and online banking information.

The same report from Javelin Strategy & Research shows a 12% growth in these cases from 2016 to 2017.

2. Ransomware

Ransomware is malicious software that locks an infected system and displays a message asking you to pay a fee before being able to regain control over your compromised device.

In 2017, the finance industry was the second most targeted sector for ransomware attacks. Healthcare came first.

This was a 30% increase in the finance industry when compared to 2016.

Over 90% of all American banks and financial organizations were a target for these ransomware attacks over the last few years.

3. Web Application Breaches

Globally, almost all banks and financial institutions today offer mobile apps and online banking facilities to their clients.

But these are some of the most vulnerable entry points that cybercriminals are continuing to exploit for the last several years.

These apps and websites primarily depend on your inputs to serve its integrated features.

You’re granted access to these Web apps mostly over HTTPS (Port 443) or sometimes through HTTP (Port 80).

So this means hackers and cyber-criminal groups can use various tactics to exploit these vulnerabilities.

They’ve been doing this for the past couple of decades, anyway.

These include rogue websites, hijacked browser redirects, and SQL injections among others.

DDoS or distributed denial of service attacks can also render the digital systems of a bank or financial organization useless for days or even weeks.

Commonly, such efforts are bundled with sophisticated social manipulation tactics.

This is to lure unsuspecting mobile banking app and online or phone banking users to enter their details into these rogue apps and sites.

Their inputs are then captured and used without the user’s consent or knowledge.

4. Supply-Chain Attacks Through Backdoor Exploits

This is where cybercriminals and hackers distribute malicious applications that can lie dormant in the systems of banks, financial institutions, and your own devices.

This way, they can bypass initial filters and malware penetration-level detection programs.

Once ready, they can activate through pre-configured user input or activity.

A remote server that’s operated by the attacker gets a notification once these backdoor exploits are activated. So the hacker can then remotely access the data servers via the compromised machine.

Distribution strategies rely on the Web application or website level where user input is permitted.

These criminal groups often successfully take control of the entire network where the compromised machine is connected.

Connect-back tactics, port binding techniques, custom DNS (domain name server) lookups, and connection availability abuse are some of the most widely used (or abused) backdoor strategies today.

These enable hackers to access confidential data, financial information and to perform transactions without the knowledge or consent of the bank, financial organization or the users themselves.

5. External Vendor Security Breaches

Banks, financial institutions and various businesses across many industries often contract their data storage and Web application processing server setup and management need to third party technology companies.

Meanwhile, some of these third parties outsource their own requirements for fulfilling their services to external partner companies.

This process chain can go a long way, often reaching fourth and fifth-level parties.

This is where a major problem lies.

Lots of banks and businesses in the finance industry among others sometimes encounter security breaches in their externally managed data storage and Web application processing servers.

This also presents an example where the compromise of one level can affect many other sections in the entire process supply chain.

What Can be Done to Avoid These Security Risks?

Today, several banks and financial institutions among other companies and businesses are testing and improving newly formed solutions to fight off these security risks.

The main objective is to promote business continuity among these financial organizations, their partners and clients.

One proposed strategy is called Sheltered Harbor.

These financial organizations in the USA and other countries are participating in this aggressive initiative to ensure formidable business continuity.

This is where participating banks and finance companies deploy data backup systems that are shared across their networks.

Simply put, a bank that’s encountering downtimes and security breaches can access their securely backed up data in this storage network to continue with their regular operations.

They can do this while they’re resolving their data security issues and privacy concerns.

This is what makes Sheltered Harbor a really promising initiative.-

Ashley Wilson is a digital nomad writing about business and tech. She has been known to reference Harry Potter quotes in casual conversation and enjoys baking homemade treats for her husband and their two felines, Lady and Gaga. You can get in touch with Ashley via Twitter.

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