Cybersecurity in BFSI (Banking, Financial Services, and Insurance) Industry is a serious broad topic nowadays as these industries are the main target for cybercriminals all over the world. Even though every industry is prone to cyber-attacks, the tsunami of the digital revolution in the BFSI sector, especially during the last decade and during the pandemic in particular has attracted cybercriminals to target these industries. In meeting the demands of the customers, these BFSI industries have transformed rapidly leveraging emerging technologies and though this has improved the customer experience and ease of doing business a lot, the digital transformation has also come with baggage. Cybersecurity in the BFSI industry has been threatened by several attacks of late which range from phishing attacks, Distributed Denial of Service DDoS attacks, ransomware, and malware attacks.
Importance of Cybersecurity in BFSI
Gone are the days when bank robberies are done at gunpoint by masked thugs with armed weapons like the ones we usually see in Hollywood westerners and action thrillers of the 90s. Now the scenario has completely changed. These cybercrooks are highly educated technocrats. Instead of relying on weapons and bloodshed, they depend on their expertise in current technologies to rob money and information – which is considered more valuable than money. Let’s take a look at why Cybersecurity is important, especially in the BFSI sector.
There are around 4000 to 5000 cyber-attacks / attempts every day and this figure is rising continuously. Some of the reasons for cyber-attacks are they are cheap, fast, highly profitable, and less risky when compared to other types of crime. The only investment these guys have to put in is their technical expertise and remember, they need not be successful every time. So, unless you are having a good enterprise cybersecurity solutions provider who envisages every possible move of a cyber attack, you are prone to one at any point!
The second reason why Cybersecurity is important is that once attacked, the damage to a business can run into millions of dollars. But it’s just not the money alone. Apart from the heavy monetary loss, these cyberattacks can also damage the reputation of a business, and its ability to continue in business, and sometimes, even compromise the data of all the parties involved.
Cybersecurity helps organizations build trust with customers and employees. Customers tend to do business with a company where their data is secure, has strong IT security services, and provides good enterprise cybersecurity solutions that envisage every possible move of a cyber attack. This trust attracts more customers. This trust in your brand, product, and services can be achieved only by making them aware that your company’s cybersecurity is robust, well in place, and is ever-ready for any eventualities.
User identities contain critical information and this is the data that a user transmits during various types of interactions with the system – whether it is thru work, from IoT devices, or online transactions. Building consumer trust is essential for organizations that want users to give them the privilege of access to the most vulnerable personal data. Securing these user identities is very important and this can be achieved only through proper IT security services and data security services in place lest they are prone to the risk of cyberattacks.
Cyberattacks in BFSI
With every innovation comes the opportunity for exploitation. If there is a vulnerability, it will be exploited and everything is vulnerable in some way or the other! The more reliance we have on technology, the greater the cyber risk is. The following are the biggest threats to the BFSI sector in recent times.
Phishing is a method of tricking the end-users into divulging their personal login data to gain access to a network. The most common form of phishing is email phishing where an email is sent to victims posing as legitimate communication.
Opening the email and interacting with any of the links or attachments therein could initiate the installation of malware on the victim’s computer system or load a counterfeit web page that collects login credentials. In just the first six months of 2021, phishing attacks in the BFSI sector increased by 22% since the same period in 2020. Attacks targeting financial apps increased by 38% for the same comparative period. The bottom line is that these attacks continue to increase and pose a constant threat and stress the need for more advanced IT security services and Data security services, leading to advanced Cybersecurity in BFSI industries.
Ransomware is a type of malware that encrypts the data of the victim and demands a ransom to decrypt the same. ransomware is yet another critical cyber risk to BFSI industries. During a ransomware attack, cybercriminals freeze the victim/organization’s data until a ransom is paid, usually in untraceable cryptocurrency. Financial institutions when attacked with ransomware have to oblige to the extortion tactics because their heavy regulations expect exemplary cyberattacks and data security breach resilience. The covid-19 pandemic accelerated the surge in ransomware attacks.
As organizations rapidly moved to remote work, cybercriminals used the gaps thus created in the cyber defenses to attack businesses with ransomware. The BFSI industry is very luring to ransomware gangs as these industries contain valuable customer information and the threat of leaking this data on the dark web and the resulting damage to the reputation of the company compels many financial organizations to comply with the ransom demands. The ransomware turns uglier when it is combined with data theft. With more and more variants of ransomware being designed, the threat, especially to the BFSI industry has only increased manifolds which raises the requirement for data security services and IT security services.
DDoS stands for Distributed Denial of Service. During a DDoS attack, the victim’s server is overwhelmed with fake connection requests, forcing it to crash and go offline. These DDoS attacks are a popular threat to financial service industries because their range of attacks is diverse, comprising banking IT infrastructures, customer accounts, payment portals, etc. Also, additional cyberattack campaigns can be launched while security teams are distracted by a DDoS attack which acts as a smokescreen.
Supply Chain Attack
During a supply chain attack, a victim is breached through a compromised third-party vendor in an organization’s supply chain. Usually, the vendors don’t take cybersecurity as seriously as their clients, and breaching a vendor is much easier because third-party vendors store sensitive data pertaining to all of their clients, a single breach could impact dozens of companies.
BFSI Cybersecurity Trends
In any large financial services organization, thousands of events occur every second, typically where cybercriminals will try to get in and strike. This is where AI can come in handy and can counteract cybercrime by identifying patterns of behavior that signify something out of the very ordinary may be taking place. AI is necessary for identifying and countering cybersecurity threats and nearly three-quarters of businesses are using or testing AI for this purpose. More and more financial organizations are now believing that AI-powered cybersecurity is the best bargain when it comes to handling huge volumes of data and transactions.
Advanced Blockchain Systems
Every financial organization maintains a centralized system to store its huge customer information and transaction files. This centralized data is prone to tampering, corruption, and theft by cyber attackers. This BFSI sector requires a decentralized tamper-proof solution and blockchain technology is a potential solution against security issues. As the decentralized ledgers in blockchain are immutable, the records can’t be changed or modified later. The network stores each transaction as history data and supports an append-only ledger of records that are added to the chain. This allows storing customers’ details and transaction records on a decentralized network easier and more securely to share information among different parties involved.
Along with many conveniences, ease of doing business, and comfort the digital revolution has brought to the public, it has also brought in some potential threats like data breaches, cyber hacks, and fraudulent transactions. This has forced the Governments to enforce more strict regulations in financial industries and the cost of complying with these regulations has been increasing day by day. To counter the challenges that are associated with a technology-driven economy through automation, Regulatory Technologies or Regtech was introduced. Since monitoring huge traffic of financial transactions online and identifying any issues and irregularities is a tedious task for financial institutions, Regtech offers to help them in monitoring, reporting, and complying with all regulatory processes. Regtech is a group of companies that help financial services industries by using evolving technologies like AI, machine learning, and big data to not only mitigate regulatory risks but also reduce compliance costs and improve customer confidence.