6 Security Challenges for the Retail Banking Industry
According to CSBS, cybersecurity is a top concern for over 70% of banks. Their apprehensions are not without reason. Instances of security breaches increased by 13% between 2017 and 2018, with the FBI revealing that the money lost to ransomware and other scams reached nearly $1 billion per year.
There is a growing concern globally that with increasing digitization, the retail banking industry’s security apparatus has become fragile. Here are six significant security challenges the banking sector faces every day.
- Credential and identity theft
Identity theft is not a recent issue for the banking industry, but the number of supply chain-related credentials and identity theft cases have increased by 78% during the pandemic. The awareness strategies banks use aren’t enough to reduce such scams. The consumers’ lack of knowledge and expertise exposes them to the risk of identity theft and fraud. More banks are offering identity theft and restoration with their credit repair programs to tackle this problem.
Ransomware is malicious software that infects your computer system using deceptive links. Hackers then ask for money for your system to work again. It takes banks about 33.8 days to resolve ransomware thefts. Recently, hackers have become more sophisticated in their approach to ransomware, making it even more challenging to detect them.
- Complex supply chains
Banking services have become more dynamic and complex. Customers want more independence to manage their finances as they choose. Therefore, the banking sector needs to give customers access to its data through apps and net banking. However, it makes the customer’s accounts more susceptible to cyberattacks. Banks need to invest more in making their data sources encrypted and secure.
- Internet of Things (IoT) exploitation
With software programs playing a central role in security matters, banks often overlook hardware. But something as simple as an unsecured home router or other IoT devices like printers and IP cameras can leave security systems vulnerable to attacks. And the threat level rises with each unprotected device.
- Managing the third-party risk
Most banking companies outsource their cloud services to third-party service providers. It is more cost-efficient, but the security challenges become more substantial as there is a lot of data sharing between the parties. Banking companies need to be more vigilant while choosing their outsourcing partners and ensure that the other party’s security goals and measures align with theirs.
The banking and financial sector has to keep up with multiple compliance frameworks and regulations, such as the US Financial Modernization Act. HMDA, PCI-DSS, SOX, and GDPR. It takes a lot of cost and effort for banks to follow multiple compliance guidelines. Banks can face severe penalties for non-compliance. But they are essential as they help safeguard customer’s data privacy and rights.
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