Once upon a time, bank robberies happened exclusively in-person.
Criminals used guns and getaway cars to steal from people, and they did it in broad daylight.
While physical robberies still exist, thieves have found additional and more lucrative ways to target banks and their customers.
Today, cyber criminals raid financial institutions around the clock from anywhere in the world.
Business hours are optional and weapons aren’t necessary—in the digital age, a computer and internet access are all bad actors need.
In today’s article, we take a look at the digital battlefield in which banks are now engaged as we explore the fundamentals of cybersecurity in banking. Expect to discover the most common forms of cyberattack, as well as the best strategies to shield against them.
What Is Cybersecurity for Banks?
In short, cybersecurity is the holistic defense of networks, data, and devices from unauthorized or criminal use.
Like a moat around a digital castle, cybersecurity involves any protective strategy against hacking, theft, malware, or other emerging methods of attack (e.g., artificial intelligence (AI) deepfake attacks).
As for the hackers? They want power and assets in whatever form they take. They’re looking to leverage personal identification, expose private data, and extort financial payouts.
That’s why financial institutions like banks are their #1 target.
Time and time again, our cashless society has affirmed the reality that all banks have bullseyes on their backs.
That’s why cybersecurity cannot be overlooked. After all, it’s not only the shield that wards off digital predators from targeting your clients, but it’s also a crucial safeguard for your financial assets and the integrity of your operations.
In 2023, a data breach (across all industries) cost an average of almost $10 million.
And yet, that number doesn’t come close to the havoc a cyberattack can wreak on your bank’s good name. In financial services, where trust is paramount, even a minor breach can erode customer confidence, causing irreversible damage to both your reputation and your bottom line.
Why Cybersecurity Matters
It’s no secret that Wall Street is concerned about cybersecurity.
In an interview with 60 Minutes, Federal Reserve Chairman Jerome Powell unequivocally stated that “the risk that we keep our eyes on the most now is cyber.”
How real is the fear? We can find the answer by simply following the money.
JPMorgan Chase employs an army of 3,000 cybersecurity employees, as part of their $600 million annual cybersecurity spend. Impressive as that may be, Bank of America easily eclipses that number with their $1 billion cybersecurity budget.
In general, the global cybersecurity market could swell to $500 billion by 2030—more than double the current spend in 2023.
Common Cybersecurity Attacks
Everything has a cost… especially cybersecurity attacks.
While digital transformation has unlocked a world of possibilities for both businesses and consumers, it has forced us to confront an uncomfortable truth: no one is truly safe from bad actors.
Just ask JPMorgan Chase and Capital One, both of whom were breached by cyberattacks that exposed over 100 million customers.
And yet, knowledge is power. To defend your company (and your customers), you must know your enemy before you can truly take a stand.
Here are the seven most common cybersecurity attacks:
1. Malware
Like technological cancer, malware infects electronic devices through “malicious software.”
These programs aren’t just invasive; they’re built to raise hell within your computer systems.
In most situations, malware is unwittingly downloaded or installed onto a device. This can happen by opening a “spoofed” web page, by clicking on an infected email link, or even by opening a malicious text message.
As an umbrella term, malware includes many other cyber weapons like adware, trojans, rootkits, worms, logic bombs, and viruses.
Of course, malware’s most sinister application is known as “ransomware.”
2. Ransomware
Ransomware remains a fan favorite among the cybercriminal underground.
Since its inception on a floppy disk in 1989, ransomware has developed into a truly pernicious tool.
Here’s how it works: after attackers gain access to your network (and steal your personal or financial records), they install a type of encryption software into your system.
Once the malware is activated, your devices will lock up, and your data will be unreadable (thanks to the encryption).
As you might expect, panic ensues. This is a feature, not a bug.
Amid the chaos, you will receive a notification from the hacker requesting payment in order to regain access to your network. If you refuse to pay, they’ll threaten to publish your information.
Ultimately, ransomware is the digital equivalent of holding a corporation at gunpoint. Many companies—and far too many banks—know exactly how this feels.
In 2021 alone, U.S. banks processed nearly $1.2 billion in ransomware payments.
3. Phishing
Deception plays a major role in cybercrime.
Through social engineering schemes like phishing, hackers pose as a legitimate person or institution to trick people into divulging sensitive data.
By providing malicious links that look authentic, hackers induce innocent users to reveal their credentials (like passwords or bank PINs).
In some cases, hackers swindle users into downloading programs that quietly open the door to an inevitable ransomware attack.
In 2022, there were over 500 million phishing cases reported in the United States (double the amount in 2021), and it has been estimated in recent years that half of all phishing attacks target the financial services sector.
4. Spoofing
Often used within a phishing campaign, “spoofing” involves advanced forms of impersonation.
Spoofed websites, email addresses, phone numbers and text messages are made to appear legitimate, from the typeface to logos to branding. However, when you look closely, you’ll spot the flaws.
Email addresses are slightly misspelled, grammar and syntax are wonky, and websites enter the “uncanny valley” of your mind.
And it’s not just the biggest or most well-known banks that are targeted either: recent data shows that over 20% of community banks experience website impersonation attacks.
Fortunately, there are some powerful ways to mitigate the insidious effects of spoofing (as we’ll discuss in a minute).
Note: With the rise of AI, “deepfake” spoofing may soon be the next frontier of cybercrime.
5. Insider Threats
Thus far, we’ve discussed a range of outsider threats initiated by professional hackers, state-sponsored agents, and organized crime groups.
Like infamous drug kingpins, the cybercrime underground has its own celebrity class like DarkSide and Ragnar Locker, who have effectively corporatized the hacking industry.
While bad actors remain an existential reality, insider threats play an equally dangerous role.
Unlike their external counterparts, insiders—e.g., employees, clients, vendors, contractors, partners, etc.—have authorized access to a company’s devices and network.
Though they legally work with or within a company, insiders can still inflict serious harm.
In some cases, an executive might unwittingly leave important files on their desk only for a rogue vendor to steal them. Or, a well-meaning employee might accidentally disclose private information in an email.
Of course, malicious insiders are capable of leveraging their authorized access in collusion with outsider groups.
However they materialize, insider threats can have devastating repercussions. According to recent studies, insider threats cost organizations an average of $15.4 million annually.
6. DDoS
In a Distributed Denial-of-Service (DDoS) attack, cybercriminals flood servers with fake traffic.
As a result, the targeted website and servers are totally disabled for legitimate users.
Cybercriminals leverage DDoS for many reasons.
“Hacktivists” will occasionally shut down a company’s servers to make a political statement. In other situations, a business will tank a competitor’s website to steal customers.
More often, cybercriminals use DDoS as a smokescreen to exfiltrate data and install ransomware.
Banks are especially vulnerable to DDoS warfare. In fact, over the last year, 30% of all DDoS attacks have targeted financial services companies.
7. Third-Party Provider Attacks
In the digital age, banks increasingly rely on third-party providers for various services to help them reach new market segments, drive business growth, and improve customer satisfaction.
And yet, for all the benefits that this interconnectivity provides banks and their constituents, third-party providers are one of the primary vectors for cyberattacks against banks.
This is because many third-party providers require access to sensitive data and critical systems. As processes and systems are linked across multiple networks and organizations, cyber criminals have more attack avenues than they normally would that they can probe and potentially exploit.
For instance, cloud service providers, crucial for remote operations, have become lucrative targets for cybercriminals.
Cybercriminals love cloud computing because they store treasure troves of sensitive data, often without the security protocols to adequately protect them.
In fact, only 45% of all cloud data is encrypted.
As with local servers and devices, cloud-based cybercrime involves DDoS attacks, insider threats, malware, and “hyperjacking”—where adversaries seize virtual machines and gain access to their data (often without the owner’s knowledge).
Given the nature of this threat, banks must engage in a thorough risk assessment and adequate due diligence before contracting with a third-party vendor.
Cybersecurity in Banking: Strategies and Solutions
The cybercrime arsenal is vast, but so are the strategies used to prevent them.
Some solutions are simple, while others are complex. When unified, they can form a cohesive defense against an increasingly clever criminal class.
Here are seven strategies to help defend your networks, systems, and digital assets.
1. Establish an Employee Training Program
In the digital age, companies are only as strong as their weakest link.
After all, cybercriminals just need one team member to forget a security protocol, expose vulnerabilities, and open the door to attack.
To protect your company’s best interests, ensure that all of your employees complete comprehensive cybersecurity training. Invest in resources that can help create a culture of security and highlight the value of keeping data safe.
Check out our overview of employee cybersecurity training best practices to learn more.
2. Develop an Incident Response Plan
Cyberattacks aren’t a matter of if. They’re a matter of when.
Given the inevitability of hacking, banks must have a robust incident response plan (IRP) in place.
Though there are many potential structures, a standard IRP framework should include:
- Preparation and Prevention, through comprehensive cybersecurity training.
- Detection and Analysis, through antivirus and anti-spyware software.
- Quarantine and Eradication, to contain and destroy the threat.
- Recovery and Review, to regain control and strengthen defense protocols.
However you craft your IRP, ensure that your structure allows for iteration, repeatability, and improvement.
As a tabletop exercise, be sure to test your IRP and involve your team throughout the process.
3. Regularly Update Antivirus and Anti-Spyware Software
We live in an age where antivirus and anti-spyware software are both accessible and affordable. Better yet, they’re also a rapidly-improving technology.
That’s why it’s so important to regularly update your security software and stay one step ahead of rogue agents.
Important: To detect and quarantine the latest malware threats, be sure to continuously update your software.
4. Install a Firewall
While leveraging antivirus solutions, a firewall will help shield your systems from malicious traffic as it will filter web traffic and stop potential hackers in their tracks.
If you have any remote employees, ensure that each of their home offices are protected by both hardware and software firewalls.
5. Utilize Multi-Factor Authentication
With the help of AI, cybercriminals can hack 50% of the most common passwords in less than a minute.
That’s why Multi-Factor Authentication (MFA) is essential, because it instantly doubles (and even triples) the barrier to entry.
After all, MFA requires several authentication factors to verify a user’s identity.
Here’s how this works in practice:
- Step 1: An employee logs in to her company’s network with her username and password.
- Step 2: After inputting her login credentials, she unlocks a proprietary authenticator mobile app via biometric data (i.e., biological traits such as fingerprints, voices, retinas, and facial features), which then messages her a one-time-use passcode.
- Step 3: The employee enters the expiring code into her log-in page and receives access to her account.
While time-consuming, multi-factor authentication helps prevent unauthorized users from attacking your company.
Plus, it’s a proven weapon against brute force attacks.
6. Cyber Insurance
Amid the rise of cyberattacks on the financial industry, cyber insurance has grown in prominence.
Though a fairly new product offering, cyber insurance is often provided in three categories:
- Identity Recovery Protection, which helps businesses and their employees restore personal records. Typically, this coverage includes reimbursement for any lost wages and legal fees.
- Data Breach Protection, which helps businesses restore both employee and customer information. Legal defense costs are generally included here.
- Cyber Protection, which protects banks against damage to servers and computer systems. It also covers your liability to third parties that may have been compromised due to cyberattacks on your company. This coverage includes reimbursement for lost business and other expenses.
Though bank cyber insurance is important (if not essential), it’s getting increasingly costly as cyberattacks become ubiquitous. Worse yet, some providers—like Lloyd’s of London—are no longer willing to cover state-sponsored attacks.
Cyber insurance remains a rapidly-evolving topic, so be sure to investigate all your options before purchasing a policy.
7. .Bank Domain and Email Authentication
As we’ve seen, banks are increasingly vulnerable to cyberattacks—specifically phishing and spoofing.
That’s where email authentication protocols like DMARC, SPF, and DKIM can help.
DMARC (Domain-Based Message Authentication, Reporting, and Conformance) acts as the frontline defense for email security by verifying that every email sent from your domain is authentic and legitimate. This protocol proactively flags and instantly blocks suspicious emails, ensuring that email communication platforms like Yahoo and Gmail won’t inadvertently deliver phishing attempts to your employees or customers.
As powerful as DMARC is, it isn’t a silver bullet.
It works most effectively when combined with SPF (Sender Policy Framework) and DKIM (DomainKeys Identified Mail). While SPF allows you to designate which mail servers are authorized to send emails on behalf of your domain (providing an additional layer of protection against spoofing), DKIM helps receiving servers verify an email’s integrity and authenticity by adding a digital signature to every outgoing email.
We recommend that banks layer DMARC, SPF, and DKIM together with a .Bank domain for the most effective and resilient anti-phishing and authorized email delivery outcomes.
Designed exclusively for the banking sector, a .Bank domain is strictly limited to authenticated banks. This makes it a specialized cybersecurity solution that helps banks effectively ward off malicious entities as it ensures that any email or website ending with “.Bank” is a legitimate banking institution.
At .Bank, the security and integrity of your communications are a top priority. As such, with our domain, you can feel confident that malicious emails stand little chance of infiltrating the inboxes of your stakeholders
Welcome to .Bank—Banking Fortified
In the banking world, “success” is no longer defined by solutions and service alone. Under the pall of cybercrime, true success now depends on security.
And although there are many important strategies to consider, mainly due to regulatory requirements, domain security can no longer be an afterthought.
Unfortunately, traditional domain extensions have consistently been commandeered by bad actors, impostors, and reprobates who hold banks and their customers hostage and ransom their hard-earned money.
They spoof reputable companies and their staff, abusing their reputations with lookalike emails and knockoff websites.
With a .Bank domain, those days are over.
Built on the foundation of stringent security requirements, including DNSSEC with robust cryptographic algorithms, the HTTPS protocol, and the enforcement of TLS 1.2 or higher on web servers, a .Bank domain acts as a fortress of trust in the digital banking landscape.
Factor in mandatory SPF and DMARC records for email communication (plus a rigorous verification and authentication process exclusive to banks and their associations), and you have a formidable shield against the sinister advances of even the most sophisticated cybercriminals.
While other domains leave the door open to cyberattacks, .Bank slams it shut.
Security, trust, and recognition are just a domain away.
Find out why 800+ banks have said goodbye to old school domains.
