Cybersecurity in Digital Banking: Threats, Challenges and Solution

Ashish M. Shaji

01 Mar, 2023

With an increase in digitalization, Cybersecurity threats have also grown tremendously. You may have heard recently about billions of dollars being skimmed off belonging to the largest financial institutions.

As the world is being increasingly connected digitally, it has also opened up entry points for cybercriminals; therefore, Cybersecurity in digital banking is the need of the hour. There have been breaches of data of technologically savvy banks.

What is Cybersecurity?

Cybersecurity is the practice of protecting electronic systems like computers etc. and data from malicious attacks. It is also called Information technology security or electronic information security. Cybersecurity means the body of technologies and practices designed to protect networks, devices etc. from attack, damage from any unauthorized access.

What is the need for Cybersecurity in digital banking?

The primary purpose of Cybersecurity in digital banking is to protect the customer’s assets. As people go cashless, more and more activities or transactions are done online. People use their digital money like credit cards and debit cards for transactions which require to be protected under Cybersecurity.

Cybercrimes in digital banking not only affects the customer, but it also affects the banks while they attempt to recover the data. The banks may require spending a considerable amount of money to recover the data or information. 

A strong Cybersecurity is a must for banks as data breaches may make it tough to trust financial institutions. It may cause severe problems for banks. Cybersecurity in digital banking ensures that your sensitive data is safe and secure, which if revealed, could cause a lot of problems like fraud.

One’s data can be easily breached if it is not protected under Cybersecurity. It may cause substantial financial loss to a person and mental stress in a case where cybercrime occurs.

Threats for Cybersecurity in Digital Banking

Without a robust Cybersecurity measure in place, your sensitive data may be at risk.

In this segment, we shall cover the biggest threats to the Cybersecurity of banks.

• Unencrypted data

It is one of the common threats faced by the banks where the data is left unencrypted, and hackers or cybercriminals use the data right away, thereby creating severe issues for the financial institution. All data that is stored on computers in financial institutions or online must be fully encrypted. It will ensure that even if your data is stolen, cybercriminals may not be able to use them.

• Malware

End to end-user devices like computers and mobile devices are mostly used for conducting digital transactions; therefore, it must be secured. If it is compromised with malware, then it may pose a serious risk to the bank’s Cybersecurity whenever they connect with your network.

Sensitive data passes through this network, and if the user device has malware installed in it without any security that malware can pose a serious threat to your bank’s network.

• Third-party services

Many banks and financial institutions use third-party services from other vendors to serve their customers better. However, if these vendors don’t have a tight Cybersecurity measure, then the bank that has employed them will suffer badly.

• Spoofing

This is one of the newest forms of cyber threats faced by banks. The cybercriminals will impersonate a banking website’s URL with a website that is similar to the original one and functions the same way and when the user enters his or her login credentials that login credentials are stolen by these criminals and use it later.

This cyber threat has gone to the next level where new spoofing techniques have been employed by these criminals. In this, they use a similar URL and target users who visit the correct URL.

• Phishing

Phishing means the attempt to get sensitive information such as credit card details etc. for malicious activities by disguising as a trustworthy entity in an electronic communication. Online banking phishing scams have evolved continuously. They look to be genuine and real, but they fool you into giving away your access information.

Cases of attack in Cybersecurity in Digital banking

According to a global economic crime survey, cybercrime has increased like never before and is the most reported economic crime. With the world going digital, Cybercriminals have also found new ways to attack and breach data.

In India, banks have seen relentless attacks from organized criminals and hackers. It was illustrated in a recent case with Canara Bank where a hacker attacked and defaced the bank’s site by inserting a malicious page and tried blocking some of the bank’s e-payments.

Another case of an attack in Cybersecurity in digital banking took place with Union Bank of India where it accounted for a huge loss. The attackers gained entry using spoofed RBI ID’s and one of the officials fell prey to the phishing e-mail and clicked on a suspicious link which led to the malware exploiting the system.

Due to the effective action from the Union Bank of India, a massive loss was avoided. It was only possible because of the incident response readiness from the bank.

Our recommendation: Covid-19 Impact on Digital Banking in India

What are the challenges relating to Cybersecurity in digital banking?

Some of the factors have posed a serious challenge to the Cybersecurity in digital banking. These are mentioned below:

• Lack of Awareness

Awareness among the people regarding the Cybersecurity has been quite low, and not many firms invest in training and improving the overall Cybersecurity awareness among the people.

• Inadequate Budgets and Lack of Management

Cybersecurity is accorded low priority; therefore, they are most of the time neglected in the budgets. Top management focus also remains low on Cybersecurity, and support for such projects is given low priority. This may be because they misjudge the impact of these threats.

• Weak Identity and Access Management

Identity and access management has been the fundamental element of Cybersecurity and especially in these times when the hackers have the upper hand; it may require only one hacked credential to enter into an enterprise network. There has been a slight improvement in this regard, but still, a lot of work remains to be done in this area.

• Rise of Ransomware

The recent events of malware attacks bring our focus to rising menace of ransomware. Cybercriminals are starting to use methods that avoid them to be detected by endpoint protection code that focuses on executable files.

• Mobile devices and Apps

Most of the banking institutions have adopted mobile phones as a medium to conduct business. As the base increases each day, it also becomes the ideal choice for exploiters. Mobile phones have become an attractive target for hackers as we see a rise in mobile phone transactions.

• Social Media

Adoption of social media has led to hackers to exploit even more. Less aware customers put out their data for anyone to see which is exploited by the attackers.

What is the solution to the threat to the Cybersecurity in digital banking?

There are certain approaches that can be followed to curb the threat to the Cybersecurity in digital banking.

Some of the measures are specified below:

• Integrated Security

As BFSI^[1] is highly regulated, banks invest time, money, and effort in employing the best technology which may be sometimes difficult to manage together. Moving towards integrated security where all components work and communicate together is more beneficial.

• Machine Learning and big data analytics

Analytics is an essential element in leveraging cyber resilience. A new generation of security analytics has come out which can store and assess a huge number of security data in real-time.

• Understand the importance of security

The mindset where security is seen as a cost must make way for security as a plus. The risk of security threats and its impact must be analyzed then only the importance of security can be truly understood.

• Invest in Next-generation endpoint protection

Banks and institutions must invest in technologies that can recognize and eliminate the practices and actions used in exploits.

• Protect information

Today the data is stored in different devices and in the cloud, so every system that holds the sensitive data must be protected with security.

• Consumer Awareness

It is one of the important aspects where the consumer must be made aware of not disclosing their banking credentials to anyone. They must report to the Cybersecurity cell in case of any suspicious developments in their transactions or in their bank account as quickly as possible.

• Anti-virus and Anti-malware applications

A firewall may increase protection, but it won’t stop attack unless updated anti-virus and anti-malware applications are used. Updating to the latest application can deter potentially disastrous attacks on your system. 

Conclusion

Also, read: Implementation of Platform-based banking