The Top 10 Cybersecurity Threats Facing Financial Firms in 2024

The financial industry remains a prime target for cyber attacks, and it's not difficult to understand the underlying reasons. With most cyberattacks being driven by money, it's only logical to direct these attacks towards companies that are heavily involved in financial transactions. As technology continues to evolve, so does the sophistication of cybercriminals, making financial firms even more vulnerable to malicious activities.

In a recent study conducted based on the third quarter of 2023, the alarming increase in cyberattacks on financial institutions has become apparent. Compared to the previous year, the number of attacks has doubled, sending shockwaves throughout the industry. This surge in cyber threats has forced financial firms to heighten their security measures, whether investing in an outsourced managed service provider, or building their in-house IT and cybersecurity teams.

The reality is that these attacks pose a significant risk not only to the financial institutions themselves, but also to the countless individuals who trust them with their money. The potential consequences of successful cyberattacks are severe, ranging from compromised personal and financial information to devastating financial losses. The first step to combating cybercriminals is understanding what your risks are as a financial firm. Let's dig into the top 10 cybersecurity threats facing financial firms in 2024.

Ransomware

Ransomware remains a top cybersecurity threat for financial institutions in 2024, and the landscape continues to evolve in concerning ways. Here's a breakdown:

Increased Sophistication:

• Targeted Attacks: Ransomware gangs are moving away from mass-market campaigns and focusing on specific institutions, tailoring their attacks to exploit known vulnerabilities and maximize impact.

• Double Extortion: Attackers not only encrypt data but also steal it beforehand, giving them leverage even if victims refuse to pay the ransom. This stolen data can be used for further extortion or sold on the dark web.

• RaaS (Ransomware-as-a-Service): Lowering the barrier to entry, RaaS models allow less technical attackers to leverage pre-built ransomware tools and infrastructure.

Financial Sector Risks:

• Disruption of Critical Services: Financial institutions rely heavily on technology, and a ransomware attack can cripple operations, impacting everything from online banking to ATM access. This can lead to significant financial losses and reputational damage.

• • Regulatory Fines: Data breaches caused by ransomware attacks can trigger hefty fines from regulatory bodies, adding to the financial burden.

• • Erosion of Trust: Ransomware incidents can damage public trust in financial institutions, potentially impacting customer loyalty and business continuity.

Advanced Persistent Threats (APTs)

APTs pose a unique and significant threat to the financial industry in 2024 due to their sophistication, targeted nature, and long-term persistence. Unlike opportunistic attacks, APTs meticulously plan and execute their operations, often with specific financial institutions in their sights. Here's a deeper dive:

Increased Sophistication:

• Zero-Day Exploits: APTs employ cutting-edge hacking techniques, including leveraging unknown vulnerabilities (zero-days) in software and systems, to gain initial access.

• Social Engineering: They're experts at manipulating people, using targeted phishing emails, spear-phishing attacks, and even physical social engineering techniques to gain access credentials or trick employees into installing malware.

• Lateral Movement: Once inside, APTs move stealthily across networks, compromising additional systems and escalating privileges to reach their ultimate targets, such as financial data or intellectual property.

Financial Industry Risks:

• Data Theft: Stealing sensitive financial information, including customer data, trade secrets, and transaction records, is a primary objective for many APTs. This data can be sold on the dark web, used for fraudulent activities, or for espionage purposes.

• • Disruption of Operations: APTs can disrupt critical financial services by attacking essential IT infrastructure, leading to outages, lost access to funds, and significant financial losses.

• • Reputational Damage: A successful APT attack can severely damage a financial institution's reputation,

Supply Chain Attacks

Supply chain attacks are no longer just a hypothetical danger; they're a concrete threat to the financial industry in 2024. Here's why:

Increased Reliance on Third-Party Vendors: Modern finance heavily relies on a complex ecosystem of vendors for various services, from software development to cloud infrastructure. This interconnectedness creates multiple vulnerabilities that attackers can exploit.

Targeting Weak Links: Attackers don't always target the big financial institutions directly. Instead, they might compromise a less secure vendor with access to crucial systems or data, using it as a backdoor to infiltrate the core network.

Examples of Supply Chain Attacks:

• 2020 SolarWinds attack: Hackers compromised the Orion software platform, impacting numerous financial institutions due to its widespread use.

• 2023 Open-source attacks: Threat actors injected malicious code into open-source packages targeting banking institutions, highlighting the risks in this domain.

Financial Industry Risks:

• Data Breaches: Attackers can access sensitive financial data like customer records, transaction details, and trade secrets.

• • Disruption of Operations: Compromising critical systems through the supply chain can disrupt financial services, impacting everything from online banking to ATM access.

• • Financial Losses: Stolen data can be used for fraud, ransomware attacks, or sold on the dark web, leading to significant financial losses.

Cloud Security Issues

As financial institutions migrate more critical data and operations to the cloud, securing these environments becomes essential. Here's a deeper dive into the specific cloud security issues prevalent in the financial industry in 2024:

Increased Attack Surface:

• Misconfigurations: Complex cloud environments make it easy for misconfigurations to occur, creating vulnerabilities attackers can exploit.

• Insecure Access Controls: Weak access controls like shared credentials or excessive permissions can grant unauthorized access to sensitive data.

• Data Leaks: Accidental or intentional data leaks pose a significant risk, especially with sensitive financial information stored in the cloud.

Financial Industry Risks:

• Data Breaches: Cloud breaches can expose vast amounts of customer data, financial records, and trade secrets, leading to hefty fines and reputational damage.

• • Regulatory Non-Compliance: Failing to comply with data privacy regulations like GDPR or industry-specific regulations can incur significant penalties.

• • Operational Disruption: A cloud outage or attack can disrupt critical financial services, impacting online banking, payments, and markets.

Social Engineering

Social engineering remains a major threat for financial institutions in 2024, despite advancements in technology and security measures. Here's why:

Increased Sophistication:

• Personalization: Attackers use readily available personal data and social media information to craft highly targeted and believable scams. They mimic communication styles, tone, and even urgency to gain trust.

• Deepfakes: Emerging technology like deepfakes creates realistic video and audio forgeries, potentially impersonating executives or trusted figures to trick victims.

• Multi-Platform Attacks: Scammers combine tactics across various platforms, like email, phone calls, and text messages, to create a seamless and convincing narrative.

Financial Industry Risks:

• Data Breaches: Social engineering tricks employees into revealing sensitive login credentials, account information, or internal data, leading to breaches.

• • Financial Losses: Victims tricked into sending money, authorizing fraudulent transactions, or investing in scams incur significant financial losses.

• • Reputational Damage: Successful attacks can damage an institution's reputation, erode customer trust, and impact brand image.

Cryptojacking

While not the most prominent threat, cryptojacking remains a relevant concern for the financial industry in 2024 due to its potential to:

Drain Resources: Cryptojacking utilizes compromised devices or malware to mine cryptocurrency on financial institution systems, consuming processing power and bandwidth. This can:

• Slow down critical services: Reduced resources can impact online banking, trading platforms, and other essential functions.

• Increase energy costs: The additional power consumption associated with mining can lead to higher operational expenses.

• Impact performance: Fluctuations in resource usage can cause lags and disruptions in sensitive financial operations.

Data Security Risks: While the primary aim is mining, cryptojacking malware can also be used to:

• Gain unauthorized access: The initial breach that allows cryptojacking might be used for further intrusions into sensitive systems.

• • Exfiltrate data: Malware involved in cryptojacking might have additional functionalities to steal sensitive financial information.

• • Disrupt security measures: Ongoing cryptojacking activity can mask other malicious activities on the network.

Internet of Things (IoT) Vulnerabilities

Internet of Things (IoT) presents both opportunities and challenges for financial firms. While interconnected devices offer new avenues for streamlining operations and enhancing customer experiences, their inherent vulnerabilities pose significant risks to sensitive financial data and infrastructure. Here's a deeper dive into the specific concerns surrounding IoT vulnerabilities in the financial industry as we enter 2024:

Increased Attack Surface:

• Proliferation of Devices: Financial institutions are deploying an increasing number of IoT devices, from smart sensors in branches to wearables used by employees. This expands the potential attack surface significantly.

• Diverse Vulnerabilities: Different devices harbor varied vulnerabilities, increasing the complexity of securing the entire ecosystem. Legacy devices without adequate security updates pose additional concerns.

• Unsecured Communication: Insufficient encryption and weak authentication protocols for communication between devices create points of entry for attackers.

Financial Industry Risks:

• Data Breaches: Compromised IoT devices can act as gateways to internal networks, exposing sensitive financial data like customer information, transaction details, and trade secrets.

• • Disruption of Operations: Malicious actors can exploit vulnerabilities to launch denial-of-service attacks, disrupting critical financial services and causing outages.

• • Fraudulent Activities: Hacked IoT devices can be used to manipulate data, initiate unauthorized transactions, or facilitate financial fraud.

Mobile Banking Threats

Mobile banking has become a cornerstone of modern finance, but with its convenience comes increased threats. Here's a closer look at the key concerns for financial institutions in 2024:

Increased Sophistication of Malware:

• Targeted Attacks: Attackers are developing malware specifically designed to target mobile banking apps, exploiting vulnerabilities and bypassing security features.

• Social Engineering: Phishing scams and smishing (SMS phishing) continue to be prevalent, tricking users into downloading malware or revealing sensitive information.

• Man-in-the-Middle (MitM) Attacks: Interception of communication between devices and servers allows attackers to steal login credentials or manipulate transactions.

Financial Industry Risks:

• Account Takeover: Stolen login credentials can be used to access and drain bank accounts, leading to significant financial losses for both individuals and institutions.

• • Data Breaches: Malware can steal sensitive personal and financial data from mobile devices, impacting customer privacy and potentially triggering regulatory fines.

• • Reputational Damage: Security breaches and fraudulent activities can erode public trust in mobile banking services, impacting customer adoption and brand image.

Artificial Intelligence (AI) Security Risks

Artificial intelligence (AI) is increasingly integrated into the financial industry, offering benefits like fraud detection, algorithmic trading, and personalized financial products. However, with this integration comes a new set of security risks that financial institutions need to be aware of in 2024:

Bias and Discrimination:

• Unfair algorithms: AI models trained on biased data can perpetuate discriminatory practices in areas like loan approvals, credit scoring, and insurance pricing.

• Explainability issues: Lack of transparency in how AI models make decisions can make it difficult to identify and address biases.

Data Security and Privacy:

• Data breaches: AI systems require access to large amounts of sensitive data, increasing the risk of breaches and unauthorized access.

• Privacy concerns: The use of AI for personalized marketing and risk assessments can raise privacy concerns for customers.

Security vulnerabilities:

• Adversarial attacks: Malicious actors can manipulate AI models with carefully crafted inputs to produce inaccurate or harmful outputs.

• Model poisoning: Introducing biased or corrupted data into the training process can compromise the integrity of AI models.

Operational risks:

• • Overreliance on AI: Overdependence on AI systems for critical decisions can create vulnerabilities if they malfunction or are exploited.

• • Lack of expertise: The limited availability of skilled professionals in AI security can hinder effective risk management.

Insider Threats

Even with sophisticated security measures, insider threats remain a significant concern for the financial industry in 2024. These threats originate from individuals within the organization who misuse their authorized access to steal data, disrupt operations, or commit fraud. Here's a deeper dive into the specific concerns:

Types of Insider Threats:

• Malicious Insiders: Employees with malicious intent may steal data, sabotage systems, or commit financial crimes like embezzlement.

• Negligent Insiders: Unintentional mistakes or poor security practices can expose sensitive information or create vulnerabilities.

• Confused Insiders: Individuals may unknowingly fall victim to social engineering attacks or download malware, compromising systems.

Financial Industry Risks:

• Data Breaches: Insider access allows theft of sensitive customer data, financial records, and trade secrets, leading to hefty fines and reputational damage.

• • Fraudulent Activities: Insiders can manipulate transactions, initiate unauthorized transfers, or commit insider trading using their knowledge of internal systems.

• • Operational Disruption: Disgruntled employees or saboteurs can disrupt critical financial services, impacting online banking, trading platforms, and customer access.

The best approach to combating cyber threats for financial companies is adopting a proactive approach to cybersecurity. Continuously updating your security systems, conducting regular risk assessments, and educating employees about the latest cybersecurity practices. Additionally, collaborating with government agencies, sharing information, and fostering a collective effort to combat cybercrime is crucial in safeguarding the financial industry.

If you're looking for assistance in attaining a secure network for your financial company, don't hesitate to book a meeting with Charles IT. We're here to help!