The Cybersecurity Outlook for Financial Institutions

February 5, 2024
Neovera Team

The Cybersecurity Outlook for Financial Institutions

Over the past few years, there has been a notable increase in both the frequency and complexity of cyber breaches targeting the financial industry. In 2023, the finance sector ranked as the second most affected sector in terms of reported cyberattacks. Entities in the United States, Argentina, Brazil, and China encountered the highest impact. Worldwide, financial and insurance establishments experienced a total of 566 breaches, resulting in the exposure of more than 254 million records and illustrating the gaps within financial cybersecurity.

The growing threats to financial institutions

State-sponsored hackers targeted the central bank of Bangladesh in 2016 and exploited security weaknesses in SWIFT, the primary electronic payment messaging system of the global financial network. The attempt was to steal $1 billion, but preventive measures blocked most of the transactions. However, a sum of $101 million still vanished. The incident served as a stark reminder to the financial sector that the extent of systemic cyber threats in the financial system had been significantly undervalued.

In addition, a ransomware assault on Fidelity National Financial occurred against the backdrop of increased threat incidents directed at the financial services sector in 2023. Fidelity, a major title insurance company in the United States, shut down affected systems due to a suspected breach by a cyber threat group that accessed the company’s systems and exfiltrated data belonging to at least 1.3 million customers. The incident follows closely on the heels of another suspected ransomware attack on the U.S. trading division of the Industrial and Commercial Bank of China, which had such a severe impact that it disrupted trading activities in the U.S. Treasury market.

In a more recent event, the U.S.’s third-largest mortgage servicing company, Mr. Cooper Group, suffered a security breach towards the end of October 2023. Hence, the company opted to shut down various systems when an external hacker successfully infiltrated some of its computer systems.

The vulnerability of financial institutions to malicious cyber activities poses the potential for systemic harm. These institutions manage trillions of dollars daily, boast complex interconnections, and heavily depend on technology provided by third-party vendors. Therefore, there is an urgent need for financial companies to enhance their penetration vulnerability testing practices to uncover and mitigate exploitable security weaknesses.

Penetration testing is more important than ever for financial institutions.

Conducting penetration testing is imperative for financial institutions due to the sensitive nature of the data they collect, handle, and store. Financial institutions manage extensive volumes of confidential information, such as credit card data, account numbers, and social security details. As a result, a security breach can lead to severe repercussions, including financial losses, ruined reputation, legal consequences, and erosion of customer trust.

Several reasons underscore the essence of penetration and vulnerability testing in the finance industry:

  1. Detecting and Mitigating Vulnerabilities

Penetration testing plays a pivotal role in uncovering exploitable security weaknesses within an organization’s applications and I.T. infrastructure. Detecting these vulnerabilities early informs the required mitigation measures and best security practices needed to address and rectify them before they are exploited.

  1. Adhering to Compliance Requirements

The finance sector must adhere to regulatory compliance standards such as the Payment Card Industry Data Security Standard (PCI DSS), Gramm-Leach-Bliley Act (GLBA), and Sarbanes-Oxley Act (SOX). Penetration testing is mandated under these regulations to ensure the organization’s commitment to safeguarding sensitive data.

  1. Testing the Effectiveness of Deployed Security Controls

Penetration testing provides a valuable opportunity to evaluate the effectiveness of implemented security controls, including intrusion detection systems, EDR platforms, firewalls, and other measures. It assesses whether these controls operate as intended and offer sufficient defense against potential threats.

  1. Staying Ahead of the Evolving Threat Landscape

The cyber threat landscape is continually evolving. Penetration testing enables financial organizations to stay abreast of emerging threats and assess their capacity to detect and respond effectively to these evolving challenges.

  1. Maintaining a Good Reputation and Preserving Customer Trust

Regular penetration testing by a cybersecurity provider like Neovera, serves as evidence of an institution’s commitment to security and its capability to safeguard customer data. This proactive approach helps maintain a positive reputation and upholds the trust placed in the organization by its customers.