Observers around the world were shocked when news broke about a major bank heist in Bangladesh. This was no ordinary robbery though – this time, the thieves stole tens of millions of dollars by exploiting a flaw in the SWIFT network—an internationally recognized code for banks. The cyber-oriented nature of the theft highlighted the growing threat to the financial services industry from malicious cyber-actors.
As financial institutions have moved more of their products and services online, the criminals who prey upon them have also shifted into this new domain as well. All of the many and varied types of financial crime – theft, money laundering, embezzlement, and more – now have cyber-components.
But the threats to financial institutions are not limited to those coming from external criminals. Steven Grossman, Vice President for Program Management at Bay Dynamics, told the Cipher Brief that the biggest threat to financial institutions comes from insiders with credentials.
Michael Orozco, Managing Director at Accenture Strategy, believes that nation-states will form a significant threat in the future. According to Orozco, “being able to hack a corporate investment bank and recognizing who they’re underwriting and the asset that is currently on the table for merger, for divestiture, etc., can create an unprecedented opportunity to enter into a competitive scenario or potentially provide a better bid, at which point could be generating billions of dollars in an emerging market or in a market that’s highly sensitive to technology innovation or consolidation.” The potential economic gains that can be made via cyber-espionage on financial institutions would be very tempting to regimes with poor economies – and it is an avenue of cybercrime that many organizations may not have anticipated.
Fortunately, financial institutions have not been allowing these activities to grow unchecked. Just as the criminals have been innovating and developing new tools to help themselves profit from their cyber-capabilities, so too have their targets. The financial services industry is acutely aware of their exposure when it comes to financial crimes – cyber and otherwise – and many companies within that sector are actively working to develop new tools and processes to help combat cyber-threats.
However, the ability to combat malicious cyber-actors is not universal across the financial services industry. The major banks appear to be able to fund efforts at keeping cyber-criminals out of their networks fairly well, but that is not the case for smaller, local, or regional banks. These institutions often have fewer resources and are therefore more vulnerable to attack. Additionally, according to Grossman, “the even bigger challenge is for the smaller regional banks that don’t have the resources that the bigger ones have. They’re very much on the same networks as the global banks, and they provide kind of a weak entry point into those big networks.” This provides even greater incentives for criminals to target smaller institutions, since those breaches can be leveraged to gain access to larger targets.
Financial institutions will always be targets for criminals, cyber and otherwise, because the overwhelming majority of criminals are financially motivated. However, they are not operating in a vacuum, and the financial services industry is working just as fast to prevent them from succeeding. At present –SWIFT heist notwithstanding – the financial institutions appear to be ahead. The challenge is whether they will be able to maintain their lead moving forwards.
