Top 5 Cyber Threats Facing Banks and Financial Institutions Today!

As financial institutions expand their digital services, they become more appealing to cybercriminals, given the large volumes of sensitive data and financial assets they handle. To combat this, the industry must continuously adapt to emerging threats.

With cyber risks becoming increasingly complex, financial institutions face potential financial losses and reputational harm. Regulatory authorities worldwide are also recognizing the threats to individuals' sensitive information during online banking. As a result, regulations like the forthcoming EU DORA are focusing on stronger protections for confidential financial data.

Now, let's look at the top five cyber threats currently impacting banks and financial institutions.

By recognizing these threats, financial organizations can increase awareness and take more effective measures to safeguard their systems, customers, and assets from cyber-attacks.

1. Phishing Attacks

Phishing is one of the biggest cyber threats targeting financial institutions today. These attacks involve cybercriminals posing as legitimate entities—like trusted banks, credit unions, or online lenders—through deceptive emails, messages, or calls.

Sometimes, the attackers impersonate government agencies, such as financial regulatory bodies, aiming to trick individuals into disclosing sensitive information like login credentials, account numbers, or personal details.

Financial institutions are major targets because they manage extensive amounts of valuable data and offer significant financial incentives for attackers.

Preventing phishing attacks is crucial. Financial institutions can enhance protection by using multi-factor authentication, which adds an extra security layer to accounts. Regular cybersecurity training and awareness programs for employees and customers can also help reduce phishing risks.

For customers, understanding your loan terms is also important. For instance, payday loans are fixed-rate loans, which offer consistent payments. This predictability reduces the need for frequent communication with lenders, making it harder for scammers to impersonate them with fake "rate adjustment" schemes, thereby lowering the phishing risk.

2. Insider Threats

Insider threats make up 31% of security breaches and pose a serious risk to financial institutions. These breaches can severely damage customer trust and result in significant financial losses, averaging $4.45 million per breach in the US.

Insider threats come in three forms: malicious insiders who intentionally misuse their access, negligent insiders who unintentionally cause breaches through carelessness, and compromised insiders whose credentials are stolen by external attackers.

To safeguard sensitive data, financial institutions should use robust detection tools and preventive measures like Data Loss Prevention (DLP) and Data Detection and Response (DDR) technologies, while staying compliant with privacy regulations.

Monitoring insider activity is challenging due to privacy and legal concerns, especially in the highly regulated financial sector. However, preventing insider threats is vital for ensuring security and maintaining customer trust.

This threat is particularly dangerous because it originates from within the organization, making it harder to detect. It can involve employees, contractors, or other trusted individuals with access to sensitive data and systems. These threats can be intentional, such as theft or fraud, or accidental, resulting from negligence. Financial institutions should enforce strict access controls, monitor employee actions, and provide regular security training to reduce these risks and protect customer data.

3. Ransomware Attacks

From 2021 to 2024, the number of financial institutions impacted by ransomware attacks has surged. By 2024, around 65% of financial organizations reported being targeted by ransomware, up from 64% and 34% in 2021.

Ransomware attacks occur when cybercriminals encrypt a financial institution's data and demand payment to restore access. These attacks are becoming more frequent, and the financial sector is particularly vulnerable due to the high value of the data it holds.

Ransomware can lead to major operational disruptions and financial losses. To mitigate the risk, financial institutions should regularly back up data, implement robust endpoint protection, and conduct frequent security audits.

4. APTs or Advanced Persistent Threats

Advanced Persistent Threats (APTs) are particularly dangerous due to their stealthy and prolonged presence. These targeted attacks aim to gain unauthorized access to an organization's systems, enabling attackers to quietly extract data over a long period.

High-profile examples, such as Carbanak and FIN7, have specifically targeted the financial sector. To defend against APTs, financial institutions must employ continuous monitoring, strong security protocols, and behavioral analytics to detect suspicious activity.

5. Exploitation of Vulnerabilities in Cloud Security Systems

Cloud computing has revolutionized the financial services sector by offering enhanced scalability, cost efficiency, and flexibility.

However, this transition also introduces new security challenges. As financial institutions increasingly depend on cloud services for data storage, processing, and application hosting, worries about data breaches, loss of control over sensitive information, and compliance issues become more pronounced.

To bolster cloud security, it's crucial to implement measures such as multi-factor authentication, encryption, and regular security audits to mitigate these risks.

Proactive Cybersecurity Practices for Financial Institutions

To effectively counter these threats, financial institutions need to adopt proactive cybersecurity measures, such as implementing advanced threat detection systems, conducting regular security training, and updating security protocols. Ongoing education for staff and investment in the latest technologies are crucial for staying ahead of emerging risks

As we navigate the cybersecurity landscape in 2024, it’s essential for financial institutions to remain vigilant and proactive. Preventive and detective measures should be established to mitigate risks associated with cloud security vulnerabilities, APTs, insider threats, phishing scams, and ransomware attacks.

Given the dynamic nature of cybersecurity, financial institutions must continually assess and enhance their cybersecurity frameworks.

By recognizing these threats and implementing strong cybersecurity practices, financial institutions can better safeguard their assets and maintain customer trust.

About Ardent Privacy

At Ardent Privacy, our mission is to help enterprises implement meaningful security and privacy programs aligned to their business mission, building trust and protecting data assets. Ardent’s technology “TurtleShield” is a holistic software platform that empowers enterprise security, legal, and data teams to implement and manage data privacy within the organizations with rapid data asset visibility and actions to enable privacy compliance, govern AI risk, meaningful data protection, and reduce cost of compliance and data breaches. Our unique and patented ML/AI-powered technology helps organizations comply with evolving privacy and AI regulations and accelerates adoption of AI technologies. Ardent offers a low code platform to automate Privacy & AI governance, rapid discovery of data assets and consent management with regional focus for global regulations.