The global finance industry has been experiencing rising cyber-attacks. For instance, as per the World Economic Forum, in the past two decades, almost one-fifth of reported cyber incidents have impacted the global financial sector, resulting in a loss of $12 billion. While the numbers might seem a bit impossible, the tendency of cyber attackers to be inclined toward the finance sector is not surprising. After all, the majority of cyber attacks are carried out for financial gains, thereby indicating an urgent need to integrate cybersecurity within the finance industry. In this blog, we’ll explore the role of cybersecurity in the financial industry, common cybersecurity threats faced by the industry, and key strategies to manage the cyber landscape.

Role Of Cyber Security Within The Finance Industry

The finance sector is continuously evolving. The introduction of emerging technologies like applied AI, web3, and cloud/edge computing has made the industry more efficient and innovative. It has also arrived with its own set of cyber risks which must be reduced using the current cybersecurity capabilities. Let’s understand the role that cybersecurity service provider plays in securing the finance sector:

Maintaining Transaction Integrity

Cyber Security plays a significant role in ensuring the authenticity of financial transactions. With huge amounts of sensitive data being processed regularly, this becomes a need rather than a want. Features like encryption, real-time monitoring, regular audits, and incident response systems can enhance the authenticity and integrity of the transaction at hand.

Awareness Regarding Emerging Threats

Given the recent advancements in the kind of cyber-attacks being carried out, financial institutions need to adopt the latest cybersecurity technologies like cloud security solutions and blockchain. This will not only ensure an effective security infrastructure at present but will also prepare the organizations for any unforeseen attack.

Maintaining Customer Trust

With millions of individuals putting their trust in the financial sector, it becomes imperative to ensure that the business-client relationship is maintained with sincerity. When individuals and businesses choose to trust financial institutions with their money, they need to be given the assurance that their data and money will be safe and secure. Effective cybersecurity can enhance client interaction thereby generating additional revenue streams. 

 Common Cybersecurity risks to the financial sector 

With the cyber landscape continually evolving, new techniques are being used by attackers to target organizations. However, a few risks have emerged that are consistent across the globe. Let’s analyze these scenarios:

Insider Threats

An insider threat refers to a cyber threat originating from inside the organization, usually involving employees or business associates. It usually poses a major risk because the individual involved is more aware of the company’s data as compared to an external threat.
For instance, according to IBM, data breaches carried out by insiders ended up being the most costly at around USD 4.99 Million. This calls for appropriate cybersecurity measures like user behavior analytics and regular security training programs. 

Data Breaches

Data breaches usually happen when unauthorized people get access to sensitive company data. While poor security protocol is a major reason for this, other factors like insufficient employee training can also lead to cyber-attacks. This not only results in financial losses but also reputational harm.

According to ABA Banking Journal, the approximate cost of a data breach in the financial industry in 2023 was $6.08 million, which is a 3% increase from 2023. When it comes to financial institutions like banks, breaches can result in consequences like financial losses and legal actions. 

Distributed Denial of Service Attack

DDoS attacks are usually performed to disrupt the normal functioning of a particular targeted network by flooding it with unnecessary traffic. Usually, more than one device is used to generate illegitimate traffic and flood the target website by the same. Cyber security can combat DDoS attacks by making use of traffic filtering systems. Let’s take a quick look at the intensity of DDoS attacks to better understand the need for cybersecurity in the finance sector.

According to Hacker News, the number of DDoS attacks in 2024 increased by 465 when compared to 2023.  

Malware

Malware is harmful software intended to infiltrate systems and devices. The program can take the shape of a virus, trojan, adware, and others to corrupt the normal functioning of a targeted device. Malware in the financial industry can hamper client credentials and even financial transactions. 

According to stationx.net, almost 81% of organizations faced some form of malware attack in 2023. Deploying appropriate cyber security mechanisms can reduce the extent of malware attacks to a large extent, if not completely.

Key Strategies for Cyber Security

 The current cyber landscape demands a proactive approach to ensuring that the risk assessment is conducted appropriately. To ensure the overall security of an organization’s data. Here are a few tips to ensure the same:

Multi-Factor Authentication

MFA is a cybersecurity measure that requires a user to submit two or more verification types. This is done to access a particular system. This is particularly helpful as usernames and passwords can be easily stolen by brute force attacks. Whereas MFA ensures enhanced data security and reduces the probability of a cyber attack. While the most commonly used MFA is OTP and biometric, other forms include hardware tokens, etc. For instance, MFA systems like Cisco Duo offer varied authentication mechanisms like tokens and passcodes.

Software Updates

Continually updating software ensures system integrity and reduces the probability of cyber threats. Not only this, updated software provides a hassle-free user experience by introducing new features and applications. Regular software updates usually include interface enhancement and the addition of features that help to operate the system smoothly.

Data Encryption

Data Encryption is a cybersecurity technique that can convert sensitive data into unreadable text. The data can then be decrypted using the correct decryption keys. This ensures data security both at rest and in transit. However, effective data encryption depends on proper maintenance of encryption keys, as the overall data security depends on them. For instance, google cloud platform uses encryption to protect data from being compromised.

Also Read: Cybersecurity Companies In India

Future Of Cybersecurity In the Financial Market

As the financial sector continues to evolve, the integration of cybersecurity as a major part of the industry will take place at a much faster pace. Let’s dive into some anticipated projected trends that are most likely to shape the scope of cybersecurity in the financial industry.

Zero Trust Security Models

A zero-trust security model operates on the principle of, “ 0 trust & 100% verification”. This basically means that no user, whether inside or outside the organization, should be trusted when it comes to data security. This is usually done by adopting techniques like micro segmentations and continuous monitoring and response plans. 

Effective Collaboration

With rising incidents of cyber-attacks across the globe, it is important to create an effective information network. This will strengthen data security and ensure that the intensity of cyber threats is reduced. Organizations can also collaborate with government organizations that are more alert and possess access to a larger information base. 

Investing in Cybersecurity Training

Financial Institutions can invest in appropriate cyber security training to make their employees aware of evolving cyber threats. This can be done by preparing cybersecurity modules or having an expert session on maintaining a security-first environment.  

For The Finance Sector, Cybersecurity Is More Than Just A Want Now!

At a time when cyber threats are becoming a norm, financial institutions are almost regularly becoming prone to cyber threats including insider threats and DDoS attacks. Regular monitoring and strong security protocols are therefore becoming the need of the hour. This can easily be done by adopting strategies like multi-factor authentication, regular software updates, and others. Additionally, when we talk about business client relationships in the finance industry, the foundation is based on the trust and authenticity of the institution and its data security measures. This in turn must also motivate institutions to adopt proper data handling solutions which will serve the rapidly evolving nature of cyber threats.