Why Cyber Security is a Major Concern in the Financial Services...

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Why Cyber Security is a Major Concern in the Financial Services Industry

CFO Tech Outlook | Wednesday, December 01, 2021

The financial industry is targeted on all sides by cybercriminals, second only to healthcare in the hierarchy of most cybersecurity threats.

FREMONT, CA : Banks, credit unions, credit card businesses, and investment organizations are entrusted with each customer's and client's personally identifiable information (PII). This information includes the homeowner's address, Social Security number, banking information, phone number, email address, and information on their income. Due to the enormous value of this data on the darknet, cybercriminals view this sector as an appealing target.

Internet banking advancements, smartphone applications, and fast payments all demand new technologies. Increased technological adoption necessarily expands the attack vector for the sector and provides new vulnerabilities.

The increasing incidence of cyberattacks on financial services firms reflects how this sector has embraced technology to address a slew of issues. Numerous financial organizations rely on big data to expand their market share. Financial organizations can use social media, consumer databases, and news feeds to understand their clients better and attract new ones.

Due to the inherent hazards of technology, academia is under increasing pressure to produce a new generation of highly competent security specialists. The banking industry may have fallen at the starting blocks in its drive to stay one step ahead of cyber bad actors.

Indeed, the financial services business requires additional cybersecurity expertise. While the current cybersecurity skills shortage impacts all company sectors, financial services firms are frequently high-profile targets and must exercise extra caution regarding cybersecurity. As gatekeepers of sensitive client PII, financial institutions are subject to an ever-increasing number of cybersecurity guidelines and regulations. Financial firms are encouraged to invest significantly and collaborate to strengthen the sector's cybersecurity preparedness, responsiveness, and resiliency in response to regulatory pressure and the need to safeguard brand reputation.

Data breaches in financial services are most frequently caused by hacking and malware. Insider threats and inadvertent disclosures, on the other hand, are increasing. Over the next several years, rising cloud adoption is projected to amplify these challenges.

According to widely accepted figures in this area, 75 percent of breaches involve hacking and malware, 18 percent involve accidental disclosure, 6 percent involve insider risks, and 2 percent involve physical breaches.

Consumers face little direct danger from financial institution hacking. Consumers are protected by US federal law, which requires banks to repay customers who tell them within 60 days of an erroneous transaction appearing on their statement.

Banks, on the other hand, receive fewer guarantees from the federal government. The Financial Stability Oversight Council of the US Department of the Treasury is entrusted with overseeing the nation's financial system's stability. Critics assert that this group is failing to adequately prepare for cyberattacks that could jeopardize the solvency of large institutions.

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