As a financial firm, you know better than anyone how vital it is to keep your clients’ and customers’ sensitive information secure. From monetary transactions to personal and financial data, you handle a lot of valuable information on a daily basis – and that makes you a prime target for cyber criminals.
But here’s the thing: many people assume that only large corporate finance firms are at risk of cyber-attacks. After all, they have the most robust security measures in place, right? While that’s certainly true to an extent, it’s also a bit of a misconception.
In reality, cyber criminals tend to focus their efforts on smaller, independent finance firms. These firms may not have the same level of investment in cyber security as their larger counterparts, and they often lack dedicated internal teams to oversee security strategy. As a result, they’re much more vulnerable to attacks – and the consequences can be devastating.
In fact, according to Accenture’s Ninth Annual Cost of Cybercrime report, the financial services industry incurs the highest costs for cybercrime. So if are a small firm, operating within the financial industry, it’s essential to take cyber security seriously. In this blog post, we’ll explore some of the reasons why smaller firms are at greater risk, as well as some steps you can take to protect your valuable data.
In this article, we cover:
But first let’s cover the most important reason why cybersecurity is paramount in the financial industry, especially small firms and boutiques – the reputational damage.
Why is cyber security important for financial firms?
Reputational damage is a significant risk for financial firms in today’s digital age. It refers to the harm done to a company’s reputation or image as a result of negative publicity, feedback, or reviews. For financial firms, reputational damage can result from various factors such as data breaches, hacking, phishing, malware attacks, or any other cybersecurity incident that exposes sensitive information or causes disruptions in business operations.
The financial industry is particularly vulnerable to reputational damage due to the sensitive nature of the information they handle. Any breach of this information can lead to a loss of customer trust and loyalty, decreased sales and revenue, and even legal repercussions.
For small finance firms, the impact of reputational damage can be even more severe. As mentioned, these firms may not have the same level of resources and expertise as larger firms to manage the fallout from a cybersecurity incident or negative publicity. As a result, they could struggle to regain the trust of their customers and stakeholders, leading to long-term financial and reputational damage.
Biggest cyber threats for financial services in 2023
Ransomware refers to when cybercriminals use malware to encrypt your systems and lock you out of your computer, demanding a ransom in exchange for reversing the damages caused.
Ransomware attackers target financial institutions specifically because of the valuable data they hold, which makes it easy to pressure victims into paying the ransom quickly. Namely, cybercriminals will often threaten to release sensitive information onto the dark web, causing reputational damage for the financial firm, as well as likely seeing them succumb to hefty fines from the authorities for breaching security and data protection regulations.
Despite this pressure, the FBI strongly advises financial companies not to pay these ransoms and instead seek professional help. Whilst it may seem easier to succumb to the attackers requests, according to the State of Ransomware 2020 report by Sophos, remediation costs actually double when a ransom is paid.
Phishing is one of the most popular cyber-attacks worldwide. It refers to when cybercriminals send illegitimate emails, asking recipients to complete a request (e.g., download a file or click a link) posing as a legitimate sender.
Phishing emails act as a gateway to launching a fully-fledged cyber-attack, ultimately installing malware on the targeted computer system. These emails can be extremely convincing, for example, during the coronavirus pandemic, attackers posed as governing bodies like the World Health Organisation, sending pandemic-related communications to vulnerable people.
In fact, almost half of the phishing attacks in 2019 occurred in the finance sector. And in the first half of 2021, phishing attacks in the financial sector increased by 22% since the same period in 2020, showing that there are no signs of these types of attacks slowing down. These shocking statistics make phishing one of the greatest cyber security threats to the financial industry this year.
Web application attacks
Web applications make up a lot of what we do online, as businesses and consumers. Applications include online forms, shopping carts, spreadsheets, email programs, file scanning and video editors. Essentially, if you’re doing something online – it likely involves a web application!
In fact, Akamai found that the volume of web application and API attacks have surged by 3.5 times year on year in the financial services sector, making cyber security in financial industry evermore crucial.
Web application attacks occur when hackers or cybercriminals exploit weaknesses in a website’s code to gain unauthorized access or steal information. They may use automated tools to scan for vulnerabilities or manually search for weaknesses in the code. Once they find a vulnerability, they can use a variety of techniques to exploit it, such as injecting malicious code or manipulating data inputs.
For example, a common attack is known as SQL injection, where the attacker inserts malicious SQL code into a website’s input field to gain access to sensitive data or execute harmful commands. Another attack, called cross-site scripting (XSS), involves injecting malicious code into a website’s pages to steal user data or redirect them to a fake login page.
Case study: Cyber security in financial industry
When? 5th October 2017
Who? Far Eastern International Bank (FEIB)
What happened? Cyber criminals used spear-phishing emails and malware to commit fraud against the Far Eastern International Bank, specifically by infecting the company’s IT systems used for the SWIFT international payment system.
Attackers obtained valid credentials that enabled them to successfully transfer funds from FEIB accounts to other accounts internationally. Total losses for FEIB equated to approximately $500,000.
This incident (and numerous similar ones) occurred as a result of weaknesses in the local security of targeted banks. Whilst this particular example is high-profile and international, it’s a good demonstration of the strategy, intellect and effort that goes into exploiting the financial sector. Even international banks, with their robust cyber security strategies, have weaknesses in their security that are vulnerable to the ever-evolving innovations of cyber criminals.
So, what can you do as a small financial firm to secure your clients’ data? Answer: improve your cyber hygiene.
Ensure you understand cyber hygiene:
You might be asking, what exactly is cyber hygiene? Cyber hygiene simply refers to the practices and steps that you take to maintain the health and security of your devices, infrastructure, and systems. Much like physical hygiene, cyber hygiene needs regular attention to continue to ward off threats and protect your business.
A key best practice for maintaining good cyber hygiene is to document the use of all equipment and programs in your business, including all hardware, software, and applications. An IT professional will then be able to help you analyse this list, determining where potential vulnerabilities lie and what actions should be taken to mitigate risk. For example, if you have lots of old or unused devices, these should be wiped and disposed of properly to ensure data isn’t lost or corrupted. Similarly, if you’re using multiple apps to do the same thing, these should be consolidated to mitigate risk and avoid data being spread across multiple different programs.
By doing this, you’ll have the foundations to build a robust cyber hygiene policy; a key component to maintaining good cyber security in financial industry.
Typically, cyber hygiene policies include items such as:
- Processes for updating software and hardware to ensure that the most up to date versions are always in use.
- A password policy to ensure all passwords are created and stored securely.
- Access restrictions to ensure that only necessary employees have admin-level access to the relevant applications and systems.
- Ensure data is always backed up in the cloud, meaning it can be accessed securely from anywhere in the event of disaster or data loss.
- A process for regularly maintaining and reviewing your cyber hygiene strategy, ensuring it’s always up to date with the latest technology and cyber threats.
Taking steps towards better cyber security for financial industry
Here are some simple steps you can take to defend against the cyber threats that financial services companies often face…
Build a robust cyber hygiene strategy
Utilise support from IT professionals to thoroughly audit the current status of your cyber security. Then use this information to implement security strategies that minimise vulnerabilities and reduce risk for your business. Importantly, make sure to keep on top of your cyber hygiene strategy. We recommend scheduling meetings, at least quarterly, to discuss the security of your business and steps you can take to improve it.
Consolidate your client data
Only collect vital information from your clients. The less data you have of theirs, the less chance there is of this being exposed if you were to succumb to a cyberattack. Every time you ask a client or prospect for data, ask yourself: why do I need it? What will I do with it? And is it really necessary?
When protecting your financial business, primarily you need to consider the technical security of your devices, emails, and employees. These are the top three avenues exploited by cyber criminals to infiltrate your systems, which is why, at Sereno, we group our managed cyber security packages accordingly.
Our cyber security packages include all of the core security services you need to protect your finance business from the most common threats, categorised by Employee Security, Email Security and Device Security. Within these categories, you can choose between Basic, Standard and Premium offerings. We will work with you to determine the most valuable package for your business.
Within each package, we provide world-class security solutions that target the most prevalent security threats in 2023. For example, Multi-Factor Authentication is covered under all of our Employee Security packages. Implementing Multi-Factor Authentication adds an extra layer of protection to your passwords by verifying the identity of a user before giving them access to applications. This is one of the most effective ways to protect your employees from potential data breaches or cyber-attacks, which is why we recommend it to all of our clients.
Further to this, within our Premium Employee Security package, we offer more advanced security measures, such as Password Strength & Security Awareness Reporting, whereby we can immediately identify weak passwords being used across your business, as well as pinpointing the employees in your team who may need further education when it comes to cyber security in financial industry. As such, we can provide a one-to-one approach for employees who may be at risk of accidentally putting your business at risk, using specialised Security Awareness Training.
For more information on cyber security in financial industry and how best to protect your business from potential threats, get in touch for a free consultation today. Or, to learn more about our IT security services , check out our flexible cyber security packages here.