How Important Is Cybersecurity in the Financial Industry?

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Cybercrime has several challenges, but the impact on financial institutions is the most pressing. Weighing the potential damage is not enough; we must also consider the reputational impact and the organizational challenges. Read on for an overview of the challenges in cybersecurity in the financial services industry and how financial institutions can address them. 


Impact

As financial institutions increase the use of technology, the threat of cyberattacks increases. With more financial institutions using internet banking, mobile apps, and instant payments, the threat vectors are growing, and the vulnerabilities they introduce are expanding. This increased reliance on technology is reflected in the increasing number of cyberattacks against financial services firms. In addition, with the increase in data collection from social media and consumer databases, financial firms are increasingly relying on big data to improve their customer experience and attract new customers.

The financial industry has many reasons to invest in cybersecurity. Increasingly, consumers are demanding frictionless financial services and a secure environment. Financial services companies must keep up with the latest security technologies to provide these services. As the financial industry struggles to keep up with new technologies, legacy systems can pose a major threat. Additionally, hackers are increasingly exploiting shared banking systems and third-party networks that are not secured by adequate measures.


Organizational challenges

In the financial industry, organizations face many challenges when it comes to cybersecurity. For example, compliance and customer expectations must be met while improving services and cybersecurity. Additionally, the government may impose restrictions on finance organizations. Ultimately, it’s best to enlist the assistance of experts who can help financial institutions meet these challenges. 

Training and awareness are crucial. Financial institutions are increasingly using emerging technologies to transform their IT infrastructures. Many FIs rely on cloud-based software that increases information processing, fraud detection, and financial analytics capabilities. The COVID-19 pandemic has accelerated the digital transformation of the financial industry’s IT infrastructure. This transformation increases the attack surface and the corresponding cybersecurity risks for financial institutions.


Reputational impact

With the growing use of technology for banking, mobile apps, and instant payments, cyberattacks against financial services companies are increasingly common. These attacks increase the attack vector and introduce new vulnerabilities to the financial industry. In addition, financial firms are increasingly relying on big data, and cyberattacks against them have increased dramatically. Companies can tap into consumer databases and social media data to better understand customer behavior. It, in turn, can lead to improved customer experience and greater customer satisfaction.

As a financial services provider, you are entrusted with valuable data. Financial firms store sensitive customer information, including Social Security numbers, banking details, email addresses, and income information. It makes them a lucrative target for hackers. With a $22 trillion global financial services industry, it is no surprise that cybersecurity is a growing concern for these companies. With increasing internet penetration in developing countries and a global shift to instant payment schemes, financial firms are among the top targets for cybercriminals.


Impact on customers

Increasing security awareness is imperative in ensuring that the financial industry keeps customers’ personal information secure. The growing number of cashless transactions means that many more financial transactions are digital, so weak cybersecurity in the financial industry can compromise customer data. Additionally, the recovery costs following a cyberattack can be enormous. The new cybersecurity regulations for financial institutions in the United States will require banks to notify the federal regulator when they detect a security breach.



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