Financial services organizations like banks, credit card companies, and investment firms hold extremely valuable client data. This includes payment information and extremely detailed, personally identifiable information. Selling this data on darknet marketplaces can generate millions in revenue, incentivizing cybercriminals.
It's not a coincidence that the global financial system has become increasingly reliant on digital payments. As the internet, mobile usage, and cashless payments spread, this leaves multiple opportunities for exploits. Emerging technologies provide new solutions, but they are all susceptible to vulnerabilities.
The finance sector is racing against time, trying to stay one step ahead of cybercriminals. While it's universally understood that cybersecurity should be one of the priorities, it rarely is the case.
Let's look deeper at the importance of cybersecurity in the finance sector, including banking, investment firms, credit card companies, and other financial service providers. Highlighting the vulnerabilities present in consumer databases that hold valuable client data, including payment information, personal information, and social security numbers, this article also discusses the regulatory compliance requirements in the finance sector, such as GDPR, and the consequences of data breaches, including loss of reputation, operating licenses, and fines.
To mitigate these risks, financial industry threat monitoring is crucial, as recent cyber attacks have demonstrated the need for collaborative efforts to prevent data breaches. One such attack was the First American Financial data leak, which exposed millions of clients' personal information. Compliance with cybersecurity regulations in the finance sector is critical to prevent such incidents from happening again.
Why is cybersecurity important for finance?
The finance sector, including fintech and banks, face more or less identical regulatory requirements. As they handle highly sensitive client information, many regulatory compliance requirements apply to them. Companies in the finance sector must protect their client data by law. For this reason, data breaches are extremely harmful to these industries. Not only can they irreversibly ruin a company's reputation, but a company can lose its operating license or be fined for mismanaging private client data.
The pressure on financial service providers is high, as 8 out of 10 US citizens believe businesses aren't competent enough to secure their financial information in case of a cybersecurity accident, and 57% of consumers think organizations don't do enough to protect their data.
Such an attitude results from the cybersecurity context, as everyone almost daily hears about security incidents, leaked data, and financial losses. Just during 2020-2021, the financial sector suffered from a significant amount of growing cyberattacks:
Major breaches in the finance industry
The constant threat push requires an enormous collaborative effort to avoid breaches and potential damage. However, criminal actors sometimes succeed, allowing industry members to analyze practices and wrong decisions, causing reputational damage, loss of trust, capital & clientele, regulatory fines, and other inconvenience.
Here are some of the cases that reached public audiences in 2021:
American Express leak. Credit card details of 10,000 Mexico-based users appeared on a forum—information that included names, email addresses, and credit card details (except expiration dates & passwords) were available to anyone for free.
Microsoft Exchange servers breach. Cyberattackers discovered four unknown or unpatched (zero-day) vulnerabilities that impacted Microsoft Exchange servers affecting 30,000 users. Security updates were launched three months after learning bout the breach.
Google Play Store billing fraud. "Joker" malware appeared in the app store, triggering SMS message notifications for billing fraud. Targeted mainly at Southwest Asia and Arabian Peninsula users, malicious Android apps got over 700,000 downloads.
German cooperative banks hit by DDoS attack. Service disruption caused for Fiducia & GAD IT technology operators affected 800 financial institutions.
Amazon-hosted cloud data breach. 711,00 files of Insurance tech start-up BackNine with sensitive data containing medical information of clients and their families became available after storage server misconfiguration.
Blockchain crypto heist. Poly Network suffered a $600M loss in cryptocurrency after a funds theft found a system vulnerability. Interestingly, cybercriminals returned most of the stolen tokens.
These just a few cases illustrate the variety and amount of data stolen and millions of people impacted by data breaches. Moreover, an aftereffect of cyberattacks showcases tendencies escalation usually takes months to uncover a violation and sometimes even more time to eliminate the vulnerabilities exploited. At the same time, sensitive data sits on the dark web for illegitimate use.
Case study: data leak of First American Financial
One of the biggest data leaks in a financial institution must be insurance giant First American Financial Corporation. In 2019, it was reported that more than 885 million sensitive documents were exposed. The data leak contained bank account numbers, mortgage records, wire transfer receipts, social security numbers, and other documents. All of this information was available in an unencrypted form — free to be used by anyone who knows where to look for it.
The most troubling part is that it wasn't a traditional cybersecurity accident involving hackers exploiting vulnerabilities. Their servers haven't been compromised. Their clients' data just were publicly available. The culprit was an error in the First American Financial Corporation website design. A webpage was created with sensitive client data without any method to verify who was accessing it.
After the vulnerability had been found, the only thing left for hackers to do was create a bot to scrape all the available data. This created backups of the files, which would later be sold in darknet marketplaces. Even a novice hacker could pull this operation undetected if the volume was kept to a minimum to avoid triggering any alerts.
It's estimated that this attack could amount to over $13 billion in business losses. However, it's still difficult to pinpoint exactly how many people were affected. The estimation could even be higher when factoring that all this data could be later used for identity thefts and phishing scams, which would be a direct consequence of this cybersecurity accident.
Not incidentally, First American Financial Corporation was the first financial institution to be fined $487,616 under The New York State Department of Financial Services law.
Cybersecurity compliance regulations for finance
Compliance regulation for financial institutions depends largely on the area of operations. The regulations will be somewhat different for US and EU institutions. Meanwhile, some standards like Payment Card Industry Data Security Standard (PCI DSS) will apply to all companies accepting payment information.
Still, almost universally, when trying to be more compliant with various regulations, the requirements boil down to these points:
Adoption of a cybersecurity program — it should include appropriate policies and procedures based on individual risk assessment.
Have a cybersecurity auditing mechanism — various risks and current organizations set up to withstand them should be periodically evaluated.
Have a chief information security officer (CISO) — someone who should be responsible and be held accountable for cybersecurity risk management.
Secure data in transit and at rest — sensitive data can't be unencrypted.
Access to client data should be restricted — sensitive information should be granted after passing identity confirmation.
All network activities should be logged — during an inspection, auditors will have to see what was accessed and when.
Introduce cybersecurity awareness training — employees should receive training to be prepared to detect the most common social engineering examples.
Have an action plan in case of a data breach — if an organization was affected by a cybersecurity accident, there should be clear action steps on what should be done, i.e., what government institutions should be informed.
Still, depending on the handled data, there could be additional requirements, it all depends.
Cybersecurity checklist for finance-related businesses
Financial institutions not only have to keep their businesses up and running as well and be technically proficient at securing against cybersecurity threats. Which can be hard to do if you don't even know where to start.
1. Unmanaged devices security
As organizations begin to adopt bring-your-own-device strategies more widely, this introduces many unsupervised devices within an internal network. While flexible device policies can improve productivity, the finance industry should be extra careful.
IT teams should know what devices are plugged into the company's network. This should help them plan for various containment strategies when unmanaged user devices become infected. There should be clear policies on what requirements should be applied when allowing connections, going as far as the operating system's version.
2. Define user privileges
Every employee shouldn't have administrative privileges. Financial institutions should be especially careful with granting administrative privileges due to the sensitivity of the date they're holding. In-house and BYOD devices should have regulations regarding their use and permissions.
The ability to bypass, override or change system settings should be left only to network administrators. Every other user group should have minimal privileges that would allow them to perform their specific job roles. It should be done to limit the potential damage in a cybersecurity accident.
3. Train the staff
The biggest data breaches usually involve employee negligence. Therefore, when planning a cybersecurity strategy, it's important to consider how to fill the gaps in employee knowledge. Various cybersecurity awareness training could help to align the workplace better. Closer familiarity with cybersecurity threats can help to recognize them in real-life situations.
Financial organizations should be especially aware of various phishing attempts. As they're one of the biggest targets within their industry. Priority should always be given to newly hired, as well as ensuring that the information periodically gets updated based on the threat landscape.
4. Have critical assets mapped out
It's hard to have an effective cybersecurity strategy when it isn't clear what resources should be protected or where they are stored. As financial institutions always have sensitive information circulating their networks, it's important to pinpoint all the routes, how it's traveling, and where it's stored. This will act as a basis to prioritize specific channels to increase their security through encryption and additional authentication requirements.
Most valuable assets should have a matching protection level with a high entry bar. Practicing risk-based access security will help to create a holistic cybersecurity model that will help to ensure the security of the client data.
5. Have clear cybersecurity processes
IT teams working in finance should have dedicated teams that organize tests, processes, and other procedures in place. This creates a clear direction for everyone involved in setting action paths in case of emergency and responsible personnel.
Naturally, the team should have a leader to spearhead cybersecurity initiatives. Additional tools and environments should be provided to track issues with status updates. Having a structured approach should limit the amount of confusion and panic in case of a cybersecurity incident.
How is NordLayer relevant to financial sector enterprises?
The finance industry attracts virtual intruders due to the possession of sensitive financial and personal information. Finance-related service providers must prove reliable for clients to entrust their data and money.
Evaluating business risk appetite helps assess risk and security gaps, draw prospects for employee cyber-mindset training, and efficiently implement network security and data protection–targeted measures and policies.
Developed in the light of the SASE approach, NordLayer is a secure remote access solution that offers an effective strategy for modern companies with remote teams of all sizes to transition to a safe environment. Easy to deploy, start and scale hardware-free features are convenient in planning a company's cybersecurity roadmap and maintaining compliance policies and standards.
Data security and network access management–centered NordLayer help enhance existing organization infrastructure with operating tools and services. The Zero Trust introduced access control practices, business VPN service, data encryption, network segmentation, and fixed IPs stacks up to a layered security model.
NordLayer's design is valuable for upgrading the company to an up-to-date technology environment and refining the most reasonable cybersecurity practices by monitoring and auditing ongoing processes with a centralized Control Panel. Despite incoming challenges, protecting an organization's network in the financial sector can be simple — get in touch and learn how to achieve adequate security that adapts to your business needs.