In recent years, the BFSI Sector (Banking, Financial Services, and Insurance) has become a primary target for cyber attackers.
A 2022 report by IBM revealed that the average cost of a data breach in the financial industry reached a staggering $5.97 million per incident. The New York Federal Reserve reports that financial institutions face 300 times more cyber attacks than other industries.
It’s a concerning trend that underscores the urgent need for stronger BFSI cybersecurity measures.
Why Do Attackers Target the BFSI Sector?
There are several reasons why attackers target this sector, and the trend is only increasing, posing an alarming threat to the industry.
The BFSI sector has always been a lucrative target for cybercriminals due to the vast amounts of sensitive financial and personal data it holds. With technological advancements, banks, and financial institutions have significantly invested in digital infrastructure, making them more vulnerable to cyber-attacks.
The rising adoption of online banking, mobile payments, and other digital financial services has provided new avenues for cybercriminals to launch attacks.
Attackers can exploit vulnerabilities in banking systems to gain unauthorized access to financial and personal data, which they can use to conduct identity theft, fraud, and other malicious activities.
The COVID-19 pandemic has accelerated the digital transformation of the BFSI sector, resulting in an increased reliance on digital channels for financial transactions. This has led to a rise in cyber attacks targeting the industry, as attackers have become more adept at exploiting vulnerabilities in digital systems.
The rising risk owing to the increasing number of smartphone users, growing adoption of connected devices, and surging e-commerce sector has increased the security concerns in the BFSI market.
The BFSI sector is often seen as a symbol of power and influence, making it an attractive target for hacktivists and nation-state actors. These attackers may have political or ideological motives, such as disrupting the financial systems of a particular country or stealing financial data for espionage purposes.
The BFSI sector is heavily regulated, and attackers may target it to create reputational damage or demonstrate regulatory compliance vulnerabilities. This can lead to legal and financial consequences for the targeted organizations.
Attackers have become increasingly sophisticated in their methods, and the BFSI sector remains one of the most challenging to defend against cyber attacks. The BFSI sector faces many threats, including phishing attacks, ransomware attacks, and distributed denial of service (DDoS) attacks. These attacks are often well-funded and well-organized, making it difficult for organizations to defend themselves effectively.
The implications of a successful cyber attack on the BFSI sector can be catastrophic. A single attack can lead to massive financial losses, reputational damage, and loss of customer trust. For example, a successful ransomware attack can cripple banking systems, causing significant disruption to financial markets and the broader economy.
Biggest Cybersecurity Threats Faced by BFSI Sector
Phishing Attacks
Phishing attacks are one of the most common cyberattacks in the BFSI sector. In a phishing attack, cybercriminals use emails or other digital communication channels to trick individuals into providing sensitive information.
Phishing attacks often target customers of banks and other financial institutions by posing as legitimate entities, such as the bank or a financial institution. Once the customer provides their information, cybercriminals can use it for fraudulent activities.
Ransomware Attacks
Ransomware attacks on banks rose by 1318% in the first half of 2021, with U.S. banks paying around $1.2 billion in ransomware payments.
In a ransomware attack, cybercriminals use malware to encrypt the victim’s data, making it inaccessible. The attackers then demand a ransom in exchange for the decryption key.
Ransomware attacks on the BFSI sector can be particularly damaging as they can disrupt financial operations and compromise customer data.
Malware
Malware attacks are also a significant threat to the BFSI sector. Malware is software designed to harm computer systems, steal data, or disrupt operations. Malware attacks can be launched through various methods, including email attachments, malicious links, and infected websites.
Malware attacks on the BFSI sector can lead to financial loss, reputational damage, and legal liabilities.
DDoS and Web App Attacks
A DDoS attack is when hackers attempt to break into your systems by paralyzing them with traffic. The main target is to get personal data while the organization analyzes and diagnoses the crashed web app.
Botnets and zombie computers organize an attack against a particular network. DDoS attacks’ most significant strength is the speed with which the information is transferred and stolen. Another variant of these attacks is ransomware, which can steal data without the user’s knowledge.
Vulnerability Exploitation
Attackers may look for vulnerabilities in the BFSI sector, including exploiting software vulnerabilities.
The state of application security report for Q4 2022 revealed that AppTrana WAF detected over 61,000 vulnerabilities, including over 1,700 critical and high-risk ones that remained open for over 180 days.
It is crucial to patch these vulnerabilities promptly to mitigate potential risks. Virtual patching can effectively mitigate the risks by providing immediate security measures to address the vulnerabilities before attackers can exploit them.
Major BFSI Data Breaches
Let’s look at some high-profile data-breach cases that affected top BFSI companies and their impact on the same.
Morgan Stanley Data Breach- July 2021
Morgan Stanley is a multi-national banking giant in the BFSI sector; the breach was revealed on July 2nd, 2021. It impacted millions of records of their corporate clients’ data. It involved a third-party vendor, Guidehouse, which provided account maintenance.
The attackers accessed information by exploiting a vulnerability in the vendor’s server. The team patched the vulnerability within five days.
Robinhood Data breach- November 2021
Robinhood rose to fame for the wallstreetbets controversy and later stopped people from buying shorted stocks, but in November of 2021, they were in the news for yet another reason. With about 18.9 million retail clients, a breach exposed the sensitive information of more than 7 million customers.
A vishing call led to the breach as one of the company’s customer representatives was misled into revealing critical information. This transpired into an investigation and a $20 Million fine on Robinhood. Training employees on threat awareness and cyber security in the banking sector is key to avoiding such a situation.
Flagstar Data breach – December 2021
In 2021, Flagstar Bank experienced a data breach that compromised thousands of its customers’ personal and financial information. The incident was discovered in January 2021, and the bank immediately launched an investigation.
The data breach reportedly occurred due to a vulnerability in one of Flagstar’s online systems. The attackers were able to exploit this vulnerability and gain access to sensitive customer information, including names, addresses, Social Security numbers, and account numbers.
Flagstar Bank notified affected customers of the data breach and offered free credit monitoring services. The bank also implemented additional security measures to prevent future data breaches, such as enhancing its network security protocols and strengthening its employee training programs.
9 Ways to Improve cybersecurity in BSFI Sectors
- WAF and DDoS Protection are mandatory
BFSI organizations rely heavily on web applications like online banking portals to interact with customers. These web applications are prime targets for cybercriminals, who can exploit vulnerabilities in the application to gain unauthorized access to sensitive data or inject malware.
Implementing a WAF helps protect against these attacks and reduce the attack surface by blocking malicious traffic before it reaches the web application.
By adding threat monitoring intelligence systems, financial institutions can gain greater visibility into web-based attacks and enhance their ability to identify and block malicious traffic.
DDoS protection is a solution designed to mitigate the impact of DDoS attacks. It can include traffic monitoring, rate limiting, and specialized hardware or software to filter out malicious traffic. DDoS protection can help prevent downtime and ensure that online services remain available to customers during attacks.
By implementing these measures, BFSI organizations can significantly improve their security posture and protect their customer’s sensitive data and transactions.
- Regular Security Audits
Whenever a new feature is launched, or a third-party tool is integrated, vulnerabilities arise from the gaps within integrations as tech teams focus on developing and fixing instead of the cybersecurity perspective.
Threat actors find exploitable vulnerabilities and classify them according to the flaws in the system, like computers, networks, and communications.
Regular security audits are essential to identify vulnerabilities in the system and address them before cybercriminals can exploit them. These audits should include a review of security policies, procedures, and controls to ensure they are up-to-date and effective.
Continuous monitoring of networks, applications, and systems can help identify and mitigate threats before they result in data breaches. Implementing automated monitoring and alert systems can help detect and respond to threats in real time.
- Provide Cybersecurity Awareness Training
Cybercriminals overload the LAN with false address resolution protocol packets (ARP) that help them tap into the traffic routing and redirect it to read the information. The process is called ARP spoofing; it affects the network and communications. Brand spoofing also happens when scammers impersonate a person/corporation to trick users into sharing information and making payments.
Employees are often the weakest link in the security chain, as they may unwittingly fall prey to phishing scams or other forms of social engineering. Providing regular training on cybersecurity best practices can help reduce the risk of such attacks. This training should cover topics such as password hygiene, recognizing phishing emails, and avoiding suspicious links.
- Implement a zero-trust Methodology
Thanks to the zero-trust concept, only those who are permitted to have access are given it. This minimizes the possibility of the hacker gaining access to private data while stealing the credentials.
Implementing a zero-trust methodology can be a practical step toward enhancing security in the BFSI sector. This methodology assumes that no user or device should be automatically trusted, and all access requests must be carefully scrutinized and verified before granting access.
- Regulation of third-party integrations
Third-party integrations are commonly used in the BFSI sector to provide additional functionality and services to customers. While third-party integrations can be beneficial, they can also pose significant security risks. Therefore, regulation of third-party integrations is vital to secure BFSI.
Third-party risk management is important as it can expose various financial, legal, and reputational risks. Financial companies can request third-party vendors undergo regular audits to verify compliance with applicable laws and regulations.
Third-party integrations often require access to sensitive customer data, including personal and financial information. Therefore, it is essential to regulate third-party integrations to maintain data privacy with numerous legal and regulatory requirements to protect customer data. Regulating third-party integrations can help ensure that these requirements are met and that organizations remain compliant.
- Secure mobile applications
The surge in mobile fraud application transactions, which has risen by more than 600% since 2015, highlights the urgent requirement for strong mobile security strategies. While mobile applications provide customers with the convenience of banking from anywhere in the world, the growing number of threats has made customers hesitant to opt for this facility.
Given the widespread adoption of mobile devices for conducting financial transactions, it is imperative to prioritize the development of secure mobile applications.
- Implement Two-Factor Authentication (2FA)
Two-factor authentication is an extra layer of security that requires users to provide two forms of identification before accessing their accounts. This can be done by requiring a password and a verification code sent via text message or a mobile app.
2FA is an effective way to prevent unauthorized access to sensitive information, as it makes it more difficult for cybercriminals to gain access to accounts even if they have obtained the password.
- Use Encryption
Encryption is a reliable method to safeguard confidential information from being accessed without authorization. It involves converting plain text data into an unreadable format using an encryption key. The data can only be deciphered using the key known only to authorized users. Implementing encryption for data at rest and in transit can help protect against data breaches and theft.
- Implement Access Controls
Access controls are a crucial component of any security program. They ensure that only authorized users have access to sensitive data and systems. This can be done by implementing role-based access control (RBAC), which assigns users permissions based on their job function. It’s also important to regularly review access controls to ensure they are still appropriate and effective.
In conclusion, the BFSI sector faces an alarming threat from cyber attackers, who are becoming increasingly sophisticated in their methods. Organizations in the sector must take proactive steps to protect themselves from cyber attacks, as the consequences of a successful attack can be severe. By prioritizing cybersecurity and investing in robust security measures, the sector can continue to serve as a critical engine of economic growth and prosperity.