In the past two years, the global financial industry has experienced unprecedented digital transformation as the pandemic and its aftermath not only increased demand for online financial services but also made work-from-home arrangements much more common. Yet, while expanding digital services are modernizing the sector and allowing for greater convenience, the opportunities for disruptive cyber incidents have grown as well.
Cyber actors now pose a significant threat to the global financial system, financial stability and confidence in the integrity of the system. In fact, the financial industry came in second behind only the health industry for experiencing the most pandemic-related cyberattacks, according to the Bank for International Settlements. And new reports reveal security leaders in 63% of financial institutions stated they experienced an increase in ransomware, up from 41% the previous year.
Understand Security Risks Associated With Digital Transformation
As the financial industry continues to transform, the agility of today’s digital platforms has become almost untenable for banks to manage. This is largely due to the legacy security technology that permeates the financial industry. In addition, the operation and maintenance of these legacy systems are becoming more difficult and costly as the pool of experts with the needed technical and institutional knowledge to support such systems is rapidly decreasing. All of this results in even more opportunities for hackers to strike.
Most financial security risks, and specifically those in cybersecurity, can ultimately be traced to the rising interconnectivity between banks and their third-party vendors. While working with outside vendors improves business and cost efficiency, such collaboration also comes with a heightened risk of data breaches and other cyber incidents. When an external party is granted access to an organization’s critical systems to administer or manage corporate assets, the organization takes on the added risk because it cannot control the vendor’s own security policies or behaviors.
For example, a fraud verification vendor requires access to a bank’s internal network to verify a customer’s legitimacy. If that vendor suffers a data breach, the bank will have no way of knowing whether the attackers also accessed its own systems and, if they did, how deeply they penetrated. Moreover, hackers tend to leave behind backdoors so they can come back in later without being challenged by cybersecurity protections, which can cause long-term damage to general operations.
Turn to a More Advanced Security Solution
Despite the security challenges that accompany the financial industry’s digital transformation, there are innovative solutions available to minimize risk and improve overall security posture and readiness. Chief among these solutions is zero trust access. In contrast to traditional perimeter security tools that provide full network access to any user who passes a single authentication process, the zero trust framework brings a more modern, identity-based approach to cybersecurity and access management. The zero trust model assumes that all users, whether internal or external, are potential threat actors and that all activity is a security threat. To put it another way, no inherent trust is given to any entity at any time (hence, “zero trust”).
In this framework, initial verification of all users and devices via a strong authentication method such as multifactor authentication (MFA) is only the first of multiple ongoing steps to ensure identities are both confirmed and given the proper level of access. In stark contrast to virtual private networks (VPNs), which generally place remote users directly onto corporate networks to provide connectivity and access, zero trust adheres to the principle of least privilege, which dictates that users are given access only to the information and resources required to fulfill their roles — and nothing more. It’s easy to see how this higher level of access control helps prevent both malicious entry and potential insider threats. Continuous authorization, another key facet of zero trust, also helps prevent account takeover.
In addition to more vigorously controlling access, zero trust tools can also minimize third-party risk by actively supervising and recording a vendor’s actions within a bank’s system. With all activity recorded and available for real-time auditing, security professionals and business owners can assess behaviors, control vendor access requests and gain substantially better visibility into what’s happening inside their networks. For an industry that is highly regulated and subjected to numerous compliance inspections, this level of added security can help banks avoid a hefty fine, as well as lost customer trust, for not meeting compliance requirements.
Based on the finance sector’s shift to a more digital world and the ongoing rise in cyber attacks, banks everywhere need to evaluate their security systems and understand the vulnerabilities in their operations, both internally and externally. Now is the time for financial institutions to begin adopting solutions that empower them to minimize risk across their complex network architectures and ever-expanding attack surfaces.
(Almog Apirion is the CEO of Cyolo)