How Will the Financial Sector Look at Cybersecurity in 2023
As the new year begins, the financial sector is recognizing the need to navigate the growing threat landscape in its digital offerings. The financial industry occupied the second spot for the highest volume of data breaches in 2022. In the US alone, as many as 79 financial institutions reported breach incidents that affected thousand or more customers.
Across credit unions and major banks, cybersecurity incidents have consistently grown despite measures taken by firms to secure their digital assets.
However, the best way to tackle the problem of cybersecurity in the financial services industry is to be prepared for the worst in order to handle a potential threat at any time. This is why banks and financial institutions need to have a clear understanding of how problem areas of cybersecurity in the banking industry will play out in 2023. Let us look at the key trends to watch out for in 2023 in the BFSI sector.
New Threat Environment
In addition to the usual suspects like malware, phishing, ransomware, etc., 2023 is expected to witness the growth of advanced threats that leverage AI at their core to trick and bypass security guardrails put in place by BFSI organizations. This can happen across a broad area of interest for banks - for example, using intelligent conversations as a social engineering tool to lure customers or staff.
With more employees expected to work remotely, the regular organizational firewalls and network security measures may not be adequate when dealing with home networks and personal devices that employees may use to access sensitive business data.
Attacks can also come in through integrated partner channels as banks open their technology ecosystem to aid partners in leveraging the core banking infrastructure to support their businesses and, in turn, provide ROI for banks. For example, a bank may allow its payment processing system to be used by a new-age digital insurance startup for processing their payment transactions via an API.
In return, the insurer would run promotional offers on their services with preferential rates for the select bank’s customers, thereby prompting users to open an account with the bank. This is a very normal scenario, but if the insurer has a vulnerability in their digital infrastructure, there are chances that external threats will use the same to penetrate the bank’s services via the payment API gateway.
Unguarded points in SaaS or cloud offerings that a financial institution has onboarded are also susceptible to threats. Lastly, security measures can fail to carefully evaluate devices commonly used for payment services like Apple Pay.
Lack of Security-First Approach for Operations
Financial organizations who fail to ensure that a standardized security practice is followed across their internal and external operations find it difficult to cope with new-age threats. For example, they need to adopt and follow the Zero Trust Approach when dealing with interoperability with different teams and business systems.
Another great way to keep employees in the loop about security measures is to enable a seamless and reliable identity management system that addresses the fraudulent misuse of identity information. Adequate security frameworks, controls, processes, etc. must be considered for seamless and secure business operations.
From an operational perspective, continued use of legacy systems are easy for threat agents to exploit. These systems run outdated software with minimal or irrelevant security privileges and could very well be a weak link in the overall infrastructure. Replacing legacy systems will be a critical operational trend that will pick up considerable momentum in 2023.
Over the past couple of years, the world has increasingly witnessed the good and bad side of digital growth. With several countries engaged either in brutal warfare or in silent confrontation, including some of the world's most powerful countries, the war is slowly being fought over keyboards rather than missiles.
State-sponsored attacks are on the rise, and one of the major targets for such espionage attempts is the banking sector. An attack on the banking sector has the potential to disrupt the economy of a country, which can further cascade into a string of related internal conflicts and civil disturbances.
Recent news reports point to a rising number of cyberattacks on Europe’s major banks, believed to be largely the result of Russian influence since the Ukraine-Russia war started in 2022.
Legal, Regulatory and Compliance Pressure
Widespread digitalization pushed governments and businesses to safeguard the digital assets of citizens and prevent misuse. To ensure compliance with such regulations, banks and financial institutions must adopt strict adherence workflows that align with regulatory requirements, like the GDPR in Europe or the PCI DSS compliance for the card payment sector.
Even regional banking and financial authorities are setting new guidelines and standards to prevent security risks from popping up in local or domestic financial activities. To that end, 2023 will witness financial institutions increasingly looking to become compliant with local laws like the Sarbanes-Oxley Act (SOX), the Gramm–Leach–Bliley Act (GLBA), and much more.
The BFSI sector will increasingly spend on new tools and platforms to enhance their security credentials. But in reality, these investments may not bear fruit if employees are not aware of how to leverage them in the best possible way. The year 2023 will see a heightened focus from financial institutions on training and awareness programs for employees in order to equip them to manage security tools as we as:
- Awareness of the increasing threat landscape
- Best practices in cybersecurity
- Remedial steps to be taken in the event of a mishap
Risk management in 2023 will be a tricky endeavor for banks and financial companies as they try to mitigate a new and powerful threat landscape in addition to internal and external business challenges. It is vital to be aware of threats before they happen. To that end, it's critical to put measures in place to ensure that the incident has no or little impact if it ever makes it to live systems.
The key to success is to work with a dedicated technology partner to create a secure digital experience. This is where Xoriant can assist your financial business by bringing our expertise in digital transformation to you.
Looking to secure your business in 2023?