Banking, Financial Services, and Insurance sector have aggressively transformed themselves and leveraged technology to suit the needs of evolving customers. While technological advancements have always outpaced organizational adaption, the BFSI sector has acclimatized faster.
From managing paper records to offering online purchases and one-click premium payments, banks and insurance entities have invested heavily to improve customer experience. While the technological transformation has improved the bottom-line, the security concerns have increased too. With phishing attacks aiming to steal login credentials and DDoS attacks trying to sabotage online payments, the BFSI sector has suffered immensely.
The most prevalent challenges faced by BFSI are:
Threats due to Deployment and Operational Challenges: Earlier BFSI organizations maintained in-house servers for catering to the needs of local customers. With core banking becoming popular, banks shift their data on the cloud. Cloud storage brought additional security concerns with itself. Banks now rely on a hybrid model for data management. While the hybrid model is considered to the safe but increasing the use of fingerprint and one-time-password based login system, banks are receiving more complaints of hacking and phishing.
Frauds due to Third-Party Integrations: Customer’s growing reliance on Internet coaxed banks into offering core banking and net banking services. Banks and Insurance institutions relied heavily on third parties for creating the requisite IT environment for them to function. The growing dependence on the web brought problems in multitude. Banks constantly suffered downtime either because of poor integration or because they were under attack.
Introduction of mobile wallets brought in additional pressure on banks, then they collaborated with nascent tech companies to offer wallet options, which didn’t go so well. Third-party integrations didn’t bear the expected fruit and left the system open to vulnerabilities. Hackers acquired access to the root system and stole highly confidential financial data.
Lack of clear Guidelines and Poor Implementation: The Fintech disruption caught both the government and the banks unguarded. Lack of clear guidelines and poor implementation cost banks a lot. While the government gave Fintech start-ups with the requisite permission to go ahead and make an app-based payment system mainstream, it failed to offer banks the same opportunity to scale.
With NBFCs making a mark, banks decided to join the party but they were simply late. In 2016, Bangladesh Bank was attacked and 81 Million USD were siphoned. Hackers attacked the SWIFT Credential system and transferred money across the globe. The heist was discovered quite late. Lack of security guidelines and missing security protocols were discovered to be the reason for the mishap.
Targeted by Advanced Persistent Threat Groups: The nature of data possessed by the BFSI sector, which includes financial data and social security numbers makes it a prime target of Advanced Persistent Threat groups like terrorist organizations. While the banks are relying on IT companies for building a robust and impregnable system, the government is busy building compliances that protect user’s data and ensures privacy.
State-Sponsored Attackers: BFSI sector has faced downtime because the enemy nation went rogue, hacked into their mainframe and brought the whole system down. Such attacks are going to increase shortly. Enemy nations rely on such practices to affect the nation-building practices, by attacking Banks and Insurance Corporations they aim to affect the base of all.
How BFSI can tackle existing Security Challenges?
The prevalent challenges faced by the BFSI sector hint towards lack of security patches furnished compliances and round the clock scrutiny as the measure reasons for the attack. BFSI sector needs no overhaul to protect data and money from getting wrongly accessed, all they need is a robust cybersecurity party. A partner that can help them furnish compliance needs, offer robust and round the clock scrutiny, find and remove vulnerabilities.
1. Proactive Threat Detection: Leveraging vulnerability assessment and penetration testing services from a company with a proven record can work wonders. Proactive threat detection not only helps the bank avoid data breaches but also assists with reputation management. Investing in vulnerability assessment and penetration testing for proactive threat detection and neutralization has many benefits including:
- Helps weed out unauthorized access.
- Highlights lapses in the company’s security.
- Paves the way for expansion and safe onboarding.
- Sanitizes system against vulnerabilities that came along with third-party integrations.
- Advanced Authorization System: Indian and Chinese governments are rampantly changing norms for Fintech and BFSI. With India and China emerging as the top 2 Fintech markets, governments are keen on shaping the sector rightly to ensure citizen’s money and privacy are protected. The governments are now advising the app-based payment system powered by BFSI and NBFC enterprises to have an authentication based login system. No payment app can offer direct access to banking, they must put the banking functionalities behind an authentication wall.
All authentication and authorization needs of BFSI and NBFC can be fulfilled by getting compliant. HIPPA, GDPR, PCI DSS, and GLBA are some of the compliances that ensure user’s data like credit card information and social security number are protected from unauthorized access. A suitable compliance vendor can help banks get the requisite certificates and start functioning under a safer blanket.
3. Customize Tradeoff for suitable Customer Experience: While data security is the measure concern, the dipping customer experience will bring the whole system down. With customers moving to platforms with a better experience, businesses will repent. Investing in building a security feature that caters to the quality customer experience is the need of the hour.
Encryption is the solution to all security problems. When data is converted before being digitally transmitted, the chances of unauthorized access go null. Varied encryption services available can customers enjoy the peace of mind.
4. Collaborative Intelligence: Just like Managed Security Services that relies on multiple security operation centers to safeguard businesses, banks need to collaborate to tackle growing concerns. Through managed security services, banks can achieve the following benefits:
Never miss a security concern: Since multiple SOCs work in sync, the chances of a malware going unnoticed is very low. One of the other centers will catch it and alert all the other centers.
Instant Gratification: With MSSPs banks can be sure that the attack will not reach its final stage. Every bizarre trend is identified, monitored and neutralized almost instantly.
Risk and Compliance Management: A remote team of industry leaders traverses your system inside out looking for errors and codes that could malfunction. With such robust scrutiny, you can be sure that you are compliant and working in a risk-free atmosphere.
It is tough for banks to outnumber the growing challenges but by educating customers, offering high-level encryption and monitoring ecosystems round the clock, attacks can be minimized. By leveraging encryption and adhering to compliances BFSI sector can proceed towards offering quality Fintech services.