Importance of Cybersecurity in Digital Banking

With digitalization taking part of most of our daily activities and businesses, cyber threats have grown at an unprecedented pace, giving criminals new ways to obtain our most valuable assets. Under this panorama, we now encounter a broad number of financial services available online, which even though might be highly useful for consumers, pose new potential entries for malicious attackers. In this blog, we will be looking at some of the main challenges faced by digital banks and some of the solutions tech savys have come up with to minimize their impact.  

Being cybersecurity the practice of protecting digital systems and devices from malicious attackers, it has become increasingly relevant for financial institutions specialized on offering their services online, in order to protect their customer’s assets and online transactional activities. Even the smallest breach identified by attackers could become an exploited vulnerability on the company’s systems, causing massive damage on both the users’ and the digital banks’ valuable information. Good practices in cybersecurity allow digital banks to ensure safety of the sensitive data stored in their systems, avoiding drastic financial loss to its users and ensuring a trustworthy reputation amongst stakeholders.  

To ensure that digital banks meet the increasing demand of their users, they must be prepared to face in the best way possible several cybersecurity challenges. According to AT&T Business, these challenges include:

1. Remote Work

2. Cyber Attacks (such as Spoofing, Phishing, Malware and Ransomware)

3. Customer Behavior

4. Fraud and Identity Theft

Remote work has become a highly popular working model since the beginning of the COVID-19 pandemic. Such practice was adopted by employees from different economical sectors, including those from financial institutions. Both digital and traditional banks have to make sure they are meeting the required working needs of their employees, including the protection of their working devices (computers, teblets, etc.) and systems. Hence, rigorous cybersecurity measures and controls should be considered and put in place to replace those cybersecurity defense mechanisms and practices that were available at their physical offices.  

Cyber attacks, specially those related to the malicious activities of spoofing, phishing, malware, and ransomware, have become increasingly popular in the financial sector. Hackers are continously seeking to vulnerate employees and users involved with digital banks, as they have become targets for obtaining financial gains. Through the use of emails, domains, and mobile-related communications, attackers try to trick their victims into giving away login credentials and financial information by disguising or impersonating themselves as the official digital bank or financial institution. To help avoid the rise of effective cyber attacks, these institutions could implement key activities such as communication and awarness campaigns with their employees and consumers to help them flag any malicious activity encountered in their devices, and prevent them from falling into the traps of the attackers. Moreover, cybersecurity tools such as behavoiral analysis and AI could be used to identify advanced malware and ransomware threats.  

Another challenge faced by digital banks include consumer behavior, as poor cybersecurity practices on their behalf can also put at risk their sensitive information. Users should be well aware of the risks that pose activities such as using/re-using weak passwords or opening malicious links on the internet. For this reason, digital banks should try to work towards the creation of a highly secure digital environment that incorporates their consumers’ devices.  

Finally, but certainly not the last challenge faced by digital banks, is the risk of fraud and identity theft. According to the United States’ Federal Trade Comission, in 2020 about 1.4 million reports were filled in relation to identity theft. Even though these practices have always been common among financial institutions, digital banks now face a similar and complex challenge, with fraud being conducted via digital tactics. To avoid these sort of risks, digital banks should aim to incorporate new cybersecurity controls that allow them to constantly monitor their systems and detect any fraudulent activity on behalf of unwanted visitors.  

Through the years, digitalization will continue being used by organizations worldwide to deliver better services to their consumers. For this reason - and especially for those sectors that are most vulnerable to cyber attacks such as the financial sector – it is important to consider putting in place the best cybersecurity practices to keep their information safe. Digital banks, which particularly require the use of sensitive data to perform financial transactions, should become well aware of the challenges they face by operating online, and come up with strong cybersecurity strategies to protect their data and avoid significant financial and reputational losses.  

Sources: AT&T Business, EnterSlice  

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