Mounting consumer demand, new industry trends, and major global events such as the COVID-19 pandemic have accelerated the digitization of banking and other financial services in the last few years. Banks have had to bring underutilized and completely new digital services to the forefront of their operations, including mobile banking, electronic bills payment, remote deposits, and more. Many have also begun working more closely with third-party technology service providers to digitize more banking functions.
Though convenient and potentially lucrative, the transition to digital banking has significantly heightened the risk of cyberattacks for financial institutions. Divulging techniques such as GuidePoint’s social engineering reveals that as cybercriminals become more sophisticated, they are keen to exploit weaknesses in the evolving security systems of banks, making cyber threats like phishing scams, ransomware, and distributed denial of service (DDoS) attacks the foremost operational risks in the financial sector.
It’s more important than ever for banks to fortify their cybersecurity programs with robust anti money laundering and financial crime compliance tools. These new solutions must also come hand in hand with initiatives to improve cybersecurity awareness and efforts to implement current best practices across the entire organization. Here are 4 highly effective cybersecurity best practices banks can adhere to in order to better protect themselves from financial crime:
Evaluate Current Cybersecurity Measures
According to the Federal Financial Institutions Examination Council (FFIEC), information security programs at financial institutions should effectively identify, assess, address, monitor, and document cyber risks. At baseline, banks must implement fundamental cybersecurity hygiene protocols such as creating multiple backups for critical company data, immediately applying available security updates, and using multifactor identification (MFA). Digital security measures like MFA, strong passwords, and virtual private networks are essential for banks with remote employees.
Implementing real-time threat monitoring solutions and protocols is especially critical for financial institutions looking to beef up their incumbent cybersecurity programs. After all, hackers often operate by sneaking into bank networks with stolen login credentials and masking illicit activities like data theft and fraudulent fund transfers with sophisticated tactics. The covert nature of most data breaches means that banks must strive to detect threats early and respond to them immediately or even proactively. Effective early detection through the use of artificial intelligence- and machine learning-powered tools helps curb the impact of cyberattacks and prevents steep financial and reputational damage for compromised financial institutions.
Provide Employees with Cybersecurity Awareness Training
The spread of malware is most often assisted by social engineering schemes that manipulate unsuspecting internet users into creating inroads for hackers. Phishing scams that trick users into downloading infected files, installing illicit applications, or even simply clicking dummy links that go to illegal websites are among the most common tactics cybercriminals employ to gain access to private networks or to steal credentials.
Employees are banks’ first line of defense against phishing and other similar threats, so they must be trained to spot them in the wild and take appropriate action. Organizing cybersecurity awareness training sessions can help banks educate employees on common red flags, encourage greater vigilance among bank employees, and lay the foundations for a more security-oriented company culture.
Assess and Mitigate Third-Party Risks
Now that financial institutions have opened themselves up to a wider variety of third-party suppliers, vendors, and partners, they need to prevent these relationships from creating security liabilities for the business. For instance, banks should implement robust risk assessment and sanctions screening measures for newly onboarded third parties to determine what risks, if any, may arise from working with them. Sanctions screening protocols are a mandatory compliance requirement for most banks and a proven effective anti-money laundering tool.
Important steps banks can take to minimize third-party cybersecurity risks include the following:
- Require business partners to observe and maintain security best practices through written service agreements.
- Limit third-party access to company networks and critical company data.
- Ensure that any sensitive information exchanged via the cloud is encrypted and easily recoverable within predetermined timeframes.
- Use a threat detection and response solution to monitor interactions between their internal network and third-party vendors or partners.
Develop a Comprehensive Incident Response Plan
The risk of data breaches is real for organizations of every size, in every industry. Major incidents are especially tumultuous and time-consuming, and they can result in severe disruption and significant losses for organizations that aren’t equipped to handle them. Hence, no matter how large or well-protected a bank is, it’s still in the institution’s best interest to operate under the assumption that they will be breached at some point.
Bank leaders should form teams to come up with a comprehensive incident response (IR) plan, test it thoroughly, and periodically review it for updating. These measures ensure that the organization is prepared to manage data breaches long before any actually occur. But while clear IR protocols are most important for internal crisis response teams and frontline security analysts, dealing with a cyberattack swiftly and efficiently is best approached as a company-wide effort. Every bank employee, regardless of their rank or role, should be familiar with the standard operating procedure in the event of a cybersecurity incident.
There’s no denying that digitization offers financial institutions no end of opportunities and conveniences, but it’s worth remembering that going digital also comes with significant risks. By educating themselves on current cybersecurity best practices and implementing these at their institution, banks place themselves in the best position to navigate the digital world safely and utilize its benefits to the fullest.
