As financial institutions continue to digitize their services and expand online, they are increasingly becoming attractive targets for cybercriminals. With vast amounts of sensitive data and financial assets at stake, the industry constantly battles to stay ahead of evolving threats.
Cyber threats have grown in complexity, putting financial institutions at risk of significant financial losses and reputational damage. Regulatory bodies the world over are also taking cognizance of the risk individuals face to their sensitive data while banking online. Regulations like the upcoming EU DORA, therefore, emphasize the need for financial institutions to protect confidential financial data with greater vigour.
That said, let’s explore the top five cyber threats facing financial institutions today. Understanding the threats builds awareness and allows financial entities to address them better and protect their systems, customers, and assets from cyber-attacks.
Phishing attacks are one of the most significant cyber threats facing financial institutions today. These attacks involve cybercriminals sending deceptive emails, messages, or even phone calls that appear to be from legitimate sources, such as trusted online lenders, banks, and credit unions.
Sometimes, sources can also look like they came from government agencies, such as the federal financial institution regulatory agencies. The goal of phishing is to trick individuals into revealing sensitive information like login credentials, account numbers, or personal identification.
Financial institutions are prime targets of these cybercriminals due to the wealth of valuable data they handle and the high potential for financial gain.
Prevention is critical to combating phishing attacks. Financial institutions can protect themselves by implementing multi-factor authentication, which adds an extra layer of security to user accounts. Regular cyber security training and awareness programmes for employees and customers can also reduce the likelihood of falling victim to phishing scams.
Furthermore, as a customer, you should also ask yourself: is a payday loan variable or fixed rate? Keep in mind that payday loans are fixed-rate loans. When getting a loan, remember that fixed-rate loans are better for preventing phishing because they offer consistent payments and fewer rate changes, reducing the need for frequent lender communication.
This predictability makes it harder for scammers to impersonate lenders with fake “rate adjustments,” lowering the risk of failing victims to phishing attacks.
Insider threats account for 31% of security breaches, posing significant risks to financial institutions. In the financial sector, insider breaches can erode customer trust and lead to severe financial losses, averaging $4.45 million per breach in the US.
Malicious insiders deliberately exploit their access, while negligent insiders unknowingly cause breaches through carelessness. Compromised insiders, whose credentials are hijacked by external attackers, also pose a substantial risk.
Financial institutions should implement strong detection tools and preventive measures like Data Loss Prevention or DLP and Data Detection and Response or DDR technologies to protect sensitive data while complying with privacy regulations.
Privacy and legal concerns complicate monitoring insider activity, especially in highly regulated sectors like finance. Preventing insider threats is essential for maintaining security and customer trust.
This is a particularly dangerous type of cyber threat in financial institutions today as it comes from within the organisation, making it harder to detect and prevent. This cyber threat may involve employees, contractors, or other trusted individuals who have access to sensitive systems and data.
This kind of threat can be either intentional, such as data theft or fraud, or accidental, where negligence leads to security breaches. Financial institutions should implement strict access controls, monitor employee activities, and conduct regular security training to mitigate these risks.
Addressing insider threats is essential for safeguarding customer data and maintaining operational security.
Between 2021 and 2024, the percentage of financial institutions globally affected by ransomware attacks has risen dramatically. In 2024, approximately 65% of financial organisations reported being targeted by ransomware, an increase from 64% and 34% in 2021.
Ransomware attacks involve cybercriminals encrypting a financial institution’s data and demanding payment in exchange for restoring access. These attacks have become increasingly common, and the financial sector is particularly vulnerable due to the valuable data it holds.
Ransomware can cause significant operational disruptions and financial losses. Regularly backing up data, implementing strong endpoint protection, and conducting frequent security audits help minimize the risk of ransomware attacks.
APTs pose a significant risk because of their covert and long-lasting nature. These targeted attacks aim to establish unauthorized access within an organisation, allowing attackers to extract data over an extended timeframe quietly.
Notable examples, like Carbanak and FIN7, have specifically targeted the financial sector. To combat APTs, constant monitoring, robust security measures, and behavioral analytics are essential.
Cloud computing has transformed the financial services industry by providing greater scalability, cost-effectiveness, and flexibility.
However, this shift also brings new security risks. As financial institutions increasingly rely on cloud services for data storage, processing, and application hosting, concerns around data breaches, loss of control over sensitive information, and compliance issues grow.
Strengthening cloud security is essential, and measures such as multi-factor authentication, encryption, and regular security audits can help mitigate these risks.
Due to the high value of the data they handle, financial institutions are prime targets for cybercriminals.
Institutions can better safeguard their operations and protect their customers by understanding and addressing the top cyber threats. Proactive measures, continuous monitoring, and strong cybersecurity practices are key to mitigating these ever-evolving threats.