Learn how and why the financial industry is often targeted and discuss best practices for remediating these evolving security challenges.
Wiz Experts Team
5 min read
When it comes to cybercrime, financial services are a growing target. Because the sector makes up about 20–25% of the global economy, threat actors see financial services as a potential goldmine. In 2022 alone, an alarming 1,829 cyberattacks were carried out on financial services around the world. Let’s take a closer look at how and why the industry is often targeted and discuss best practices for remediating these evolving security challenges.
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The financial services sector: An overview
Like many industries, financial services are increasingly adopting digital technologies for fast, cost-effective, and personalized service delivery. Two key developments in the sector have brought both benefits and drawbacks:
Institutions such as banks, fintech companies, and insurance companies leverage mobile applications to give customers easy access to their accounts. Unlike traditional setups with limited hours and locations, apps facilitate 24/7 availability and remote access. However, these advantages bring security risks like fake banking apps.
Cloud data storage
The financial services sector handles large amounts of data, which have traditionally been stored on-premises. On-prem storage has major downsides: High costs and limited disaster resistance are just two. By adopting cloud storage providers’ pay-as-you-go services, financial institutions limit data storage costs and ensure seamless service restoration in the event of disasters. On the other hand, this cloud storage medium also introduces security vulnerabilities, such as DDoS attacks, account hijacks, and data breaches.
Why the financial services sector needs cybersecurity
To put it simply, cybersecurity is paramount for financial services because there’s a lot of money at stake. The sector is responsible for protecting massive transactions, after all. With an estimated $28,115.02 billion in the finserv market in 2023, there’s a lot of money to be made from ransomware, phishing, malware, and brute force attacks on the industry. And as financial institutions continue to adopt cloud computing, their attack surface widens. That’s why financial technologies need top-of-the-line safeguards.
Key cybersecurity challenges in the financial services sector
Let's take a look at six critical challenges facing the finance industry:
1. Insider threats
Employees with access to critical data may compromise security due to negligence or malicious intent. For example, Yahoo sued a former employee in May 2022, alleging that he downloaded approximately 570,000 pages of proprietary information right before he gave his notice. According to Yahoo, the downloaded information included source code.
2. Third-party risks
Third-party solutions such as data security and compliance solutions, cloud data storage solutions, data entry/processing software, credit card processors, and customer relationship management software keep the finserv sector running smoothly. Although financial institutions enter into contractual agreements with third-party service providers, this is not sufficient because the providers may provide incomplete or inaccurate information about the true capabilities of their products/services. That’s why independent verification is necessary, and you should leverage only trusted, industry-leading platforms like Wiz.
Due to the sensitivity of PII, there are multiple international, domestic, and even regional cybersecurity regulations that financial services must comply with. Staying on top of compliance can be challenging, so let’s take a look at a few regulations in more detail:
Payment Card Industry Data Security Standard (PCI-DSS)
PCI-DSS encourages organizations to encrypt and restrict unauthorized access to cardholders’ personal and financial information.
The Gramm-Leach-Bliley Act (GLBA)
The GLBA includes rules guiding the collection, use, and sharing of PII by all American financial service providers in—or with clients in—the U.S.
The New York State Department of Financial Services (NYDFS) Cybersecurity Regulations
NYDFS Cybersecurity Regulations require DFS-licensed institutions and financial institutions’ third-party service providers to implement strong cybersecurity policies and regularly audit them for proactive risk management.
The Sarbanes-Oxley (SOX) Act
The SOX Act compels organizations located in or operating in the U.S. to provide accurate financial audits signed by their CEO and CFO and audited by a third party on an annual basis. It seeks to ensure financial records are accurately compiled and securely stored.
The California Consumer Privacy Act (CCPA)
The CCPA mandates that organizations who either operate in California or have clients in California must properly secure and record data/processing history. The act requires organizations to provide forms that customers can fill in to state if their PII can be used or sold—and to what extent.
The General Data Protection Regulation (GDPR)
The GDPR covers all financial services providers in the European Union. It limits the collection of PII to only absolutely necessary data and provides strict guidelines for its processing and storage.
For organizations with customers who are distributed around the globe, ensuring compliance with these (and other) policies can be cumbersome. And failure to comply with these regulations often results in hefty fines. For instance, Danske Bank, a Danish bank that violated GDPR and Danish Data Protection Agency (Datatilsynet) regulations was fined €1.3 million. The bank was unable to provide evidence of properly processing customer PII, including deleting data that was no longer necessary. Institutions can protect themselves from steep fines by adopting a comprehensive compliance solution.
Mergers and acquisitions are common in the financial services industry. When they occur, getting full visibility into diverse cloud-hosted resources in order to manage potential security risks can be difficult and require expert intervention. To avoid this, verify your service provider’s reliability.
5. Cost and expertise required to maintain security standards
Deploying cloud services means security responsibilities are shared between CSPs and financial institutions. In addition to the overhead associated with paying for cloud storage and security solutions, extra costs stem from employing and training staff who can manage them. For small and medium-sized institutions seeking to leverage the benefits of tech solutions, staffing and costs can be unmanageable.
6. Legacy infrastructure
Although there is industry-wide cloud adoption that will continue for years to come, there’s an abundance of legacy applications and infrastructure in the financial services sector that are not immediately movable to the cloud. Since those immovable resources are on-prem, they could be backdoors to an organization, introducing risks that the cloud could have abstracted away. For example, outdated software components, natural disasters, power surges and outages, disk malware, and other forms of manual attacks can compromise on-prem functions.
Examples of financial institutions doing cybersecurity right
Blackstone, the world’s largest alternative asset manager, tackles advanced cloud-native security
Lili, an all-in-one banking app, achieves PCI DSS compliance by remediating its most critical risks and perform deep architectural reviews
Tide, a financial platform for micro small and medium enterprises, uses a unified cloud security platform to keep its infrastructure and customers’ data safe, and automate its approach to securing its containerized environment
Revolut, one of Europe’s best known money applications, enhances its response to potential threats with clear, concise reporting that creates focus in a large, fast-moving engineering team
Aon, a risk management and insurance brokerage firm, automates risk identification and compliance reporting, while successfully fast-tracking remediation and M&A integration
Financial institutions have a large amount of sensitive data they need to protect in the cloud in order to gain their customers’ trust. It can be challenging to understand where your sensitive data is, how it can be accessed, and how different risks come together to result in a risk of a data breach.
Wiz’s unified cloud security platform makes it easier for financial institutions to stay secure in the cloud by offering:
Sensitive data protection: Wiz can automatically identify and classify sensitive data, such as customer PII and financial transaction data. It can then be used to create policies to protect this data from unauthorized access or disclosure.
Comprehensive risk assessments: Wiz provides a unified view of all cloud assets, including workloads, infrastructure, and configurations. This allows financial institutions to identify and prioritize security risks across their entire cloud environment.
Deep risk analysis: Wiz uses a variety of techniques, including machine learning and graph analysis, to deeply understand the relationships between cloud assets and identify complex risks that traditional cloud security tools may miss.
Prioritized remediation: Wiz prioritizes remediation actions based on risk, business impact, and other factors. This helps financial institutions to focus their efforts on the most important risks and reduce their overall risk exposure.
Compliance and reporting: Wiz helps financial institutions to comply with a variety of industry regulations, including PCI DSS and HIPAA. It also provides comprehensive reporting capabilities that can be used to track and demonstrate compliance over time.
Multi-cloud enablement is at the heart of our transformation strategy and security is paramount. Wiz helps us visualize our entire cloud environment and drive actionable insights, in minutes. They’ve made cloud security an enabler for Morgan Stanley and helped us break down the barriers between security and development teams.