Top 20 Reasons Why Cybersecurity is Important in Financial Industry – Techbytes

Cybersecurity is now a vital investment for all organizations, and most importantly, companies in the financial service industry. According to a survey by consulting firm Deloitte, financial services companies and firms spend approximately 10% of their IT budget on cybersecurity.

Cyber-attacks have been on the rise across the world. Additionally, cyber-criminals have commercialized cyber-crime by deploying advanced and stealth cyberattacks that exploit organizational weaknesses and technology vulnerabilities and use them for financial gain.

What is Cybersecurity?

Cybersecurity, also referred to as IT Security, is the continuous application of a combination of technologies, strategies, and controls to protect computerized systems and networks from cyber-attacks. The main aim of cybersecurity is to avoid, detect, prevent, mitigate, or eliminate cyber-attacks.

An effective cybersecurity strategy must deploy a proactive and holistic approach to IT security, take advantage of centralized security management, involve users through training, and utilize modern and effective securrity technologies.

Cybersecurity in Financial Industry

A 2019 report by Boston Consulting Group indicated that the financial industry is one of the main targets of cyber-attacks. The report shows that financial service companies are 300 times more likely to be targeted by cyber-attacks than other firms are.

Cyber-threats in the financial industry has transformed from malware attacks to advanced persistent threats (APTs) and social engineering. Direct attacks such as burglary have advanced to man-in-the-middle attacks and Cross-Site Scripting, and DoS to DDoS.

Cybercriminals also utilize rogue insiders (current and ex-employees, business partners, and IT contractors who have access to the organization’s systems) to access financial systems.

Cybersecurity incidences often lead to the unavailability of banking systems. Such incidences may also lead to significant recovery costs and reputational damage for financial companies.

Cyber-attacks can also have systemic consequences since threats can spread quickly through networks and banking systems. These concerns underpin the importance of cybersecurity in the finance industry.

The following factors make banks vulnerable to cyberattacks:

• Use of obsolete systems and technologies that are not secure or compliant by design

  • The advancement of cyberattack strategies has also contributed to the success of many cybercriminals.

  • The interconnectedness of banks systems with third-party computerized systems such as cloud services.

  • Lack of a holistic IT security strategy and trivialization of cybersecurity.

  • The proliferation and use of new and disparate devices coupled with weak BYOD policies

  • Increase in endpoints connected to financial information systems that are not adequately secured

  • The amount of value they hold mainly in the form of money

  • The ability of cybercriminals to receive ransomware payments using anonymous cryptocurrency accounts

Why is cybersecurity important in Financial Industry?

1. Helps protect organizational data – Organizational data is a critical asset, and cybersecurity helps keep it safe and private against espionage by competitors.
2. Keeps customers’ data secure – Use of data encryption, access control, and other cybersecurity procedures helps keep client’s data private and confidential.
3. Reduce or eliminate recovery costs - The cost of cyber-crime is very high. Cybersecurity helps reduce or eliminate potential costs associated with recovery from cybercrime.
4. Ensure system availability - DoS and DDoS attacks affect the availability of financial systems. Cybersecurity helps mitigate these attacks and ensure the continuous availability of financial services.
5. Improves system throughput - Some malware variants consume considerable system resources, rendering financial systems inoperable. With effective cybersecurity strategies, financial institutions can prevent or eliminate malware, thus improving system throughput.
6. Enhance client confidence - A survey by a professional services company, PricewaterhouseCoopers, indicates that 85% of customers will not do business with a company if they are worried about its data security practices. Enhancing cybersecurity will ultimately strengthen stakeholders’ trust and improve client confidence.
7.  It strengthens user security - Bank customers use mobile apps and web interfaces to access financial services. Cybersecurity helps ensure that Personally Identifiable Information (PII) is not exposed when using the financial system’s endpoints.
8. It improves access to financial services - Cybersecurity in financial industry ensures the financial information system’s continuous availability and improved throughput and enhances customer confidence. This has a trickle-down effect as it leads to improved access to financial services.
9. Helps comply with industry standards and legal requirements – Almost all countries have laws that regulate the financial industry. The regulations often demand that financial companies comply with local and international standards in the financial sector. One of the standard requirements is the implementation of a comprehensive IT security strategy.
10. Helps avoid legal penalties – Effective cybersecurity strategies can help avoid legal and statutory penalties due to data breaches.
11. Prevent the loss of customer’s money – When cybercriminals breach a financial system, they often transfer money to many other accounts which are difficult to trace. The breach can lead to loss of customer money. Cybersecurity measures are put in place to avoid such breaches.
12. Helps secure bank system’s endpoints – Endpoints such as web interfaces, ATMs, and mobile apps improve access to financial services. Endpoint security is an integral component of cybersecurity as it ensures that the relevant endpoints are secured and not used to breach the financial information system.

Conclusion

Cybersecurity is a critical component for every organization, especially in the financial industry. Cybersecurity can help avoid, detect, stop, or mitigate cyberattacks. Failure to implement a cybersecurity plan can lead to reputational damage, high recovery costs, and loss of business.

Every financial services company should have a professional and dedicated cybersecurity team and implement modern technologies to mitigate cybercrime.