After the initial fascination of the internet had run its course, financial developers turned their attention to laying the groundwork for banking services. In 1995, Wells Fargo became the first company to offer online banking. Since that time, the industry has seen a transformation unlike any other in history.
The cyber scene has evolved to include networks, devices, transit information, and services of every shape and size. Security quickly moved to the fore as the most influential aspect of our online world.
As devices and services explode on the cyber landscape, 96% of Americans state that more should be done to safeguard privacy. 65% of those surveyed are convinced personal data was not being protected. Along with an emerging threat of attack, the regulatory climate has been a distraction for most.
Governments worldwide are coming down hard on industries they feel are not doing enough in managing risk and personal data. As the world embraces digital, the cyber threat landscape has evolved into consumers aware of their lost privacy.
The Financial Service Industry must do more to convince its clientele their data is secure.
Over the previous few decades, there has been an exponential rise in people accessing the internet with every device imaginable. The single biggest challenge for every organization is the threat of cyber-attack. Experts acknowledged that global companies could bear the brunt of a 5.2 trillion dollar loss to cyber-criminals over the next five years.
The concern by Americans and the World; personal data is not being cared for as it should. Financial services have made strides in securing personal information, but so much more can be done.
Attacks on infrastructure networks are advancing rapidly. In 2020, attacks were up more than 150% from the previous year. According to NPR, the situation is acute; investigation has revealed over seven ransomware attacks occur per hour. These assaults have grown into a national emergency without fanfare.
US Banks are being hit hard by ransomware and other malicious code. July 2021, REvil, a devastating code, attacked a group of Ohio Banks and extorted nearly $70 million. Unless you were an Ohio resident, it is unlikely the story made was heard.
These raids on our financial infrastructure are multiplying at unprecedented rates.
Industry experts admit Financial institutions must do better with their infrastructure to secure essential data. Preparation, good data backups, and constant vulnerability scanning are part of the prevailing landscape to keep digital assets intact.
Internet of Things
IoT has been recognized by many to be the next revolutionary landscape. As billions of more devices are linked to the internet, the risk is growing exponentially. New security challenges are being identified daily by financial institutions.
IoT devices were not built with security in mind, which leads to significant vulnerabilities throughout the system. A significant flaw for an IoT device, there is no way to install a security procedure, and in some cases, malware is on the device when it is shipped.
Protocols used by many of the devices are proprietary and create havoc with traditional networked systems. Users who do not keep the operating systems on each device continually patched and updated are a serious burden for the industry.
IoT has given society unique and extraordinary ways to improve our lives. However, with over one million new devices shipped each day, safety considerations are growing.
Every industry uses The Cloud and its diverse applications to promote its business.
Financial start-ups and seasoned services employ the Cloud to increase scale and lower costs. Data management has become more accurate and easier to manipulate. Borrowing decisions and related costs are now quicker, and decisions are better informed. Credit companies, automobile, and consumer finance businesses use the Cloud extensively, reporting a buyer’s credit worthiness are faster and a lot more accurate.
The Cloud has become a secure landscape for most businesses than their on-premise IT departments. Accessibility over data location is proving to be a vital aspect of a secure environment. With the Cloud, cyber-attacks are mitigated when data is secure.
Attacks on the Cloud and its applications have surged. McAfee studied the third and fourth quarters of 2020 and found nearly 3.1 million attacks on user accounts. Widespread acceptance of remote working conditions has left the door wide-open for cyber-attack. Remote workers have limited knowledge of corporate platforms that control security and therefore have no fallback plan.
Companies must take stock of their infrastructure vulnerabilities before migration to a remote workforce. IBM reports, something as fundamental as misconfigured Cloud settings, had an average cost to business of roughly $4.41 million per incident.
Laptops, mobile phones, and tablets are excellent devices for working at McDonald’s. However, without realizing the repercussions or, in some cases, lack of concern, users are clearing the way for cyber-attackers. The Cloud provides an abundance of benefits for companies in 2021 and beyond. Each financial organization must generate its winning Cloud strategy to be successful in the modern era.
No component in the financial space is more fundamental to the success of the financial industry than network security. As the internet has grown with millions of new networks from one website to another, attackers find intrusion into your bank account much easier. The sophistication of cookies has made casual surfers’ prey to financial extortion and exploitation.
Financial experts recommended machine learning techniques for the industry, notifying authorities of any unwarranted intrusion into the system. Emerging threats come from everywhere, attacking financial apps, software, websites. Users must seize the initiative to secure their data with two-factor authentication, antivirus programs, and encryption.
Technology is continually evolving and growing into a unique phenomenon each day. No one could have foreseen the ravaging effects of a global pandemic and its effects on business and cyber security.
There are fundamental characteristics of a solid financial landscape. The first and possibly the most influential is user privacy in the financial space.
Each new financial application appearing on the iPhone or Android App Marketplaces wants some form of sign-on to access the next best financial application. Without realizing the consequences, users sign up and later wonder why their phone or tablet was hacked.
Each day there seems to be a new high-profile cyber-attack exposing millions of names, addresses, and regrettably, social security numbers. Concerns from banking and financial experts have skyrocketed with the security of the cyber landscape rapidly turning into the dominant priority.
Regulatory compliance continues to be a significant topic of controversy among banking officials. Data privacy is no longer a single component within a much larger financial application. With increased regulation and millions of identities stolen every year, user privacy will develop into a proprietary platform accessible only to users.
Data privacy impacts a considerable swath of companies in every industry around the world. Every aspect of a company’s operation is affected. Strategies to stay in alignment with cyber security trends to HR resources are involved.
The Graham-Leach-Bliley Act of 1999 was enacted to remove barriers between financial service firms. Other noteworthy facets of the Act:
- Financial Privacy Rule-required financial businesses to provide consumers with a privacy notice and explain personal information collected.
- Safeguard Rule-financial organizations must have a “written information security plan,” to protect client’s non-public information.
- Pretexting Protection – Pretexting is known as social engineering. Organizations are encouraged to safeguard against this activity.
Financial businesses must rethink their approach to personal and public privacy going forward or lose ground to changing organizations. Some of the concepts being considered:
- Data encryption while in transit from bank to bank and consumer to the bank.
- Network segmentation
- Access control by role
- Destruction and document retention
User data protection plays a significant factor in financial organizations. Businesses must develop a solid base and identify the deficiencies in their infrastructure.
Securing the Future
Regaining customer trust is a major hurdle for the financial industry. Banking organizations must move beyond tradition and forge a new approach to doing business in the era of mobility.
Consumers are hungry for economic independence, and they see managing and investing their finances as a way to get there. The cyber landscape is evolving quicker than any individual or business realizes.
Predicting the future is just as obscure now as it was a generation ago. However, there are three areas of technology that hold great promise for the future.
Financial organizations are utilizing artificial intelligence as a way to enhance the customer experience. Each organizational step in AI requires a vast amount of data to work correctly. Financial organizations have the data. It is only a matter of time before they can integrate adequate AI technologies into the mix.
Artificial intelligence in the financial industry is growing in sophistication. Industries are on the very tip of realizing the true potential of these technologies. Replacing human involvement is the objective of most AI-enabled security schemes.
Facial recognition and analyzing vast quantities of data to establish security risk faster makes financial institutions much safer. These capabilities will be beneficial to large corporations especially. Under-resourced, small, and mid-sized enterprises will see tremendous progress as well.
AI techniques present a quantum leap in threat detection for every enterprise. Unfortunately, cybercriminals have the same opportunity and are taking advantage to automate their networks.
According to Business Insider, by 2023, the potential savings for banks from AI-enabled applications will be a staggering $447 billion. 80% of banks worldwide are aware of the tremendous benefits AI will bring to the industry.
The financial industry will accelerate AI and machine learning technologies with increased user acceptance and shifting regulatory guidelines. Task automation, fraud detection, and advanced technologies are the main drivers of the future in banking.
Each year the consequences of fraud on the financial services industry cost billions of dollars. Financial firms are keeping their data stored online, and this is another open door to cyber-attack. Machine learning is coming into focus as a significant way to combat fraud in the industry.
A set of rules defined fraud detection in the past, making it extremely easy to bypass these conditions. Machine learning scans millions of data points to find anomalies and unique activities in a user’s account. The system then sends up a red flag for incidents that require further investigation. Machine learning techniques compare data points such as IP address and location to compare if the transaction is in line with the account holder’s activity.
Machine learning algorithms analyze vast amounts of datasets to find correlations. Human efforts cannot find the subtle differences in the mounds of data that will lead to fraud detection. Full control machine learning systems will decline a purchase or deposit until there is human intervention.
Machine learning systems are much faster at analyzing the data with less manual work. Some of the largest financial institutions rely heavily on ultra-modern machine learning techniques.
Mastercard uses several machine learning algorithms in its business to detect fraudulent transactions. With machine learning, the system analyzes the account behavior and the transaction to determine any fraud. It is estimated that merchants lose almost $118 billion a year on false transaction declines.
According to Javelin Strategy and Research, traditional brick and mortar financial institutions take nearly 40 days to detect fraud and react to the intrusion. It takes longer for an offline consumer to detect fraud activity, while cybercriminals are getting better at evading detection.
The significant challenges for the financial services industry are real-time fraud detections and assessment to improve accuracy.
No article on the future of financial services is complete without mentioning one of the newest technologies on the block. Experts fully agree Blockchain can revolutionize every area of the financial service industry.
A Blockchain transaction starts by recording a single step in the entire transaction; before moving on to the next step, an encrypted validation key is generated by the previous step. Any future steps in the process must have the validation key from the previous step to move on. For any Blockchain transaction to be valid, every step from the beginning of the process must be accounted for and validated. There is no way around the process.
Most people unfamiliar with Blockchain see the tech used only for bitcoin. Although cryptocurrencies make heavy use of the technology, Blockchain is so much more. The technology can be used for currency exchange, property, goods, or anything that requires an enforceable contract.
Blockchain records each transaction verifies the transaction as valid, secures the transaction with encryption, and enforces the terms. Every primary financial concern in the world is developing, actively using, or taking a hard look at the advantages of Blockchain.
Blockchain technology is entirely uncrackable and safe due to its encrypted validation key. The rush to use Blockchain by every financial institution on earth has just begun.
Let BACS IT Help Keep Your Bay Area Financial Services Company Safe
Find out how the professional IT consultants here at BACS IT can help keep your financial services company safe. We understand the security steps you must take to maintain compliance, and we also know what IT services will work best for your industry. How we specialize it for your company is what we must discuss next. Call us today and let us figure out the best options to keep you, your employees, and your customers safe from scams, malware, and breaches.