We live in an increasingly online world, and with the rise in digital banking, there’s also been a surge in attacks by cybercriminals. Financial institutions must thus invest heavily in their cybersecurity.
A cyberattack can have devastating consequences, and not just in terms of the data stolen. A bank can also lose credibility after a data breach. This is due to clients questioning their ability to keep their information and assets safe.
Now, more than ever, cybersecurity in digital banking is vital, as is having an awareness of what cyberattacks are and how to protect against them. So, let’s delve into the world of cybersecurity and examine everything you need to know about how cybercriminals operate.
What is Cybersecurity?
In today’s society, it’s difficult to imagine functioning without smartphones and computers, least of all without the internet. However, these devices are often filled with our private data and contain information on all of our accounts.
Our whole lives are thus contained in devices that fit in the palms of our hands. This is why taking the right steps to maintain privacy and prevent cybercriminals from gaining access to information is vital. If we don’t, the repercussions can be severe.
Enter cybersecurity. Cybersecurity revolves around protecting electronic systems and data. It acts as an umbrella term for a huge range of technologies and actions that shield information from the unwanted eyes of cybercriminals.
Enterprise digital transformation can help global corporations make that change. However, online spaces like digital banking also need extra cybersecurity measures in place to protect sensitive information.
Why Does the Digital Banking Sphere Need Cybersecurity?
Banks hold huge amounts of sensitive data belonging to clients. They also have the money to pay a ransom should data be leaked or stolen by cybercriminals. As they typically prioritize maintaining a good reputation, in many cases, agreeing to a ransom is seen as preferable to customer data being compromised.
That’s because data breaches can lead to several problems down the line, such as fraud against customers. Moreover, recovering data costs banks considerable sums in and of itself. This is why cybersecurity is so important.
Protecting client assets is the most fundamental purpose of cybersecurity in digital banking, especially in our increasingly cashless society, where more and more payments and transactions happen online.
If you own a credit or debit card, you’re at risk of cyberattacks. Therefore, your bank needs to ensure you’re protected by its cybersecurity practices.
What do Digital Banking Cyberattacks Look Like?
Banks are under constant threat from cyberattacks. These can take on several different forms, but all of them put sensitive data at risk.
Statistics show that in 2021, cybercrime was a top three most reported economic crime.
Let’s take a look at a few of the most common cyber-attack techniques.
Phishing is a form of cyberattack that attempts to gain sensitive information from victims. This is often banking details like their credit card digits, which cybercriminals then use to steal money.
This information is frequently obtained via email or phone call, although it can be discovered in many different ways. Online banking phishing scams are constantly evolving to trick customers.
Phishing, when done successfully, can look incredibly professional. This enables cybercriminals to fool a bank’s clients into thinking they’re being contacted by their actual bank. This persuades them to give away sensitive information.
This can have severe consequences, with cybercriminals convincing people to share details that can result in their money being taken or even their identity being stolen.
One of the most common phishing techniques is to create a sense of urgency. The victim is informed that they must act fast to prevent any number of bad things from happening. This causes people to be less diligent and act before they have time to think through what they’re doing.
Another common cyber threat is unencrypted data. Hackers can access unencrypted data easily. This can then cause serious problems for banks that have to deal with a data breach rather than preventing it from happening in the first place.
Data breaches are bad news for digital banks. They result in large amounts of money being put into recovering information and/or paying ransoms. Not to mention the loss of credibility that results from them.
Therefore, all digital banking data should be encrypted. This ensures that if data is stolen by a cybercriminal, it remains protected or at least harder to access. When data is properly encrypted – for example, by using an encryption algorithm like the advanced encryption standard – it becomes inaccessible even after a breach.
A bank might have excellent cybersecurity measures in place, but that doesn’t mean the vendors they collaborate with do.
Many banks use third-party services because these companies help them serve their customers more efficiently. However, banks can suffer badly if they partner with third-party vendors who have poor cybersecurity.
Cybercriminals often target these weaker, less protected third-party collaborators, causing damage to the bank as well.
For this reason, banks must select their partners with extreme care and caution. For example, by choosing the right enterprise eCommerce platforms, much of the danger can be averted.
The same is true if a bank is looking for the best personalization websites to improve the customer experience without sacrificing their security in the process.
Spoofing is a cyber threat that involves impersonating a bank’s website using a website similar to the original. This ‘spoof’ platform functions exactly like the legitimate one, tricking clients into entering their login details, which are then stolen and used by cybercriminals.
Here, users of the actual website are targeted, with URLs created that are similar to that of the real site. This is a popular cyberattack technique and one that has been and continues to be very dangerous for banks and their clients.
Strong cybersecurity, such as multi-factor authentication, can help to combat this. This creates a more secure system whereby your bank can ask for specific information that only the account holder will know during login. Such an approach ensures cybercriminals with stolen information can’t access your bank details in your place.
Why is this a Danger Now More than Ever?
As a result of COVID-19, far more people are opting to use digital banking and choosing to access their financial information online. This poses many of the same issues as hybrid working, with lots of companies introducing a bring your own device policy, for example.
Both offer greater flexibility and convenience than traditional approaches but also present increased security risks. Growing rates of cybercrime in turn propel demand for investment in cybersecurity.
Digitization, on the whole, has been dramatically fast-tracked by the pandemic. The rise in the adoption of certain technologies means, for instance, that companies are increasingly having to track essential SaaS metrics.
It’s no longer a question of merely preventing cyberattacks. This has become nearly impossible, especially for banks and other financial institutions. It’s about being prepared for when a cyberattack does happen and having a response already planned out.
A great way to do this, for instance, is by implementing a cloud-based contact center solution to make client reporting easier.
Banks must keep continually deploying new cybersecurity defenses to counteract the ever-evolving world of cybercrime and the rapidly developing threats they face.
How Do Banks Protect Themselves from Cyberattacks?
Banks typically have several tools in place to help them deal with cyberattacks. Below are three of the main methods they employ to protect their digital spaces from criminal actors.
One of the core ways criminals target banks is through their customers. They prey on the naivete and ignorance of those who don’t understand the dangers existing in the digital space and who they can trick into disclosing important information.
Bank clients need to be informed of what cyberattacks look like to prevent these scams from proving successful, which is why there’s lots of investment in educating people. This includes teaching them the dangers of revealing their credentials and how to respond if they suspect an attempted fraud is taking place.
Acting quickly is crucial to preventing damage.
The right applications
Banks also have a range of anti-malware and anti-virus applications on all their digital platforms.
Firewalls are a good start, but they won’t necessarily stop cyberattacks. If banks don’t employ the right applications, they can’t ensure their digital spaces will stay safe.
The right software can play a key role in preventing potentially damaging attacks from negatively impacting a bank’s digital system. Therefore, there’s usually heavy investment in various specialist cybersecurity measures.
A solid recovery plan
In this increasingly digitized world, cyberattacks are becoming nearly impossible to avoid. Therefore, banks need to have a good plan in place to deal with cybercrimes in the event they can’t be stopped. This minimizes how much data is lost and reduces disruption to online services.
A disaster recovery plan will ensure regular encrypted backups of data are stored in a secure cloud location. Digital banking systems will also be designed so they’re able to continue functioning with a reduced system in the event of a main system failure.
Having a plan ready in case of a cyberattack is a great way to minimize losses and limit any damage.
Cybersecurity is key to protecting data and preventing fraud from taking place in digital banking spaces. It’s no longer an option for online entities but a necessity.
Today, this is a priority for all those operating in the industry, as evidenced by the ever-increasing investment in solid security plans that protect both banks and their customers.
Author: Jessica Day is the Senior Director for Marketing Strategy at Dialpad, a modern business communications platform that takes every kind of conversation to the next level—turning conversations into opportunities. Jessica is an expert in collaborating with multifunctional teams to execute and optimize marketing efforts, for both company and client campaigns. Jessica has written for domains such as Plutio and ehotelier. Here is her LinkedIn.