As each year passes, cybersecurity becomes more important for businesses and agencies of every size, in nearly every industry. In 2020, ransomware cases grew by 150%, and every 39 seconds, a new attack is launched somewhere on the web. A data breach also causes rising costs in banking and finance.
What Happens in a Banking and Finance Data Breach?
Data breaches can come in all shapes and sizes. All of them could lead to financial loss. Some recent changes have made this worse: the shift to digital financial records, mobile banking and heavy reliance on cloud services. Those give openings to cybercriminals looking to profit from the sensitive financial information of their clients.
Cybersecurity in banking can be a challenge since many financial institutions have to tighten their budgets on IT spending. Therefore, banking and finance data breaches often happen. They might also stem from poorly secured third-party apps or a lack of proper user authentication protocols.
Examples of Banking and Finance Data Breaches
Over the years, a number of data breaches have impacted banking and finance. But there is a bright side. These examples have helped organizations to harden their defensive efforts and learn from previous mistakes.
In March of 2019, Capital One was the victim of a wide-scale data breach that compromised more than 100 million customer accounts, including social security numbers, names, addresses and credit card scores. Exploiting a misconfigured Web Application Firewall, the attacker was able to gain access through public cloud servers.
In May of 2019, an attacker hit First American Financial Corp. in a massive data breach, exposing over 855 million real estate and mortgage documents to the public. Due to a data management error, users were able to quickly lookup personal information. That included social security numbers, mortgage and tax records, driver’s license numbers and more. Attackers could see them by simply altering a nine-digit transaction record.
One of the most famous cases occurred in September 2017, when a data breach at Equifax exposed the personal information of 147 million people. The attackers broke into Equifax’s system through a consumer complaint web portal. From there, they could move to other servers that weren’t segregated from one another well enough. Further vulnerability analysis revealed that a number of poor data governance practices led to easy system access.
How Much Does a Banking and Finance Data Breach Cost?
The total global cost of data breaches in the financial industry is slightly lower in 2021 versus 2020. However, banking and finance data breaches still represent the second most costly industry impacted by data breaches. In 2021, financial industries have suffered on average $5.72 million in losses directly connected to data breaches. According to the Cost of a Data Breach Report 2021, sponsored, analyzed and published by IBM Security, the average number of days to identify and contain a data breach is 287 days. With the average breach going unrecognized for more than nine months, the financial impact associated with compromised banking records and stolen records can be severe and oftentimes leads to costly recovery efforts.
Risks and Challenges
The cost of data breaches reached new records in 2021. So, banking and financial organizations are met with a number of unique challenges. Since 2019, a rise in the demand for remote banking solutions and services has increased database security issues. This has led to an increase in compromised credentials, too. Those might come from remote working employees, successful phishing attempts and misconfigured cloud sharing networks.
Another challenge that financial industries face now and into the future is the increased reliance on artificial intelligence (AI). This can improve customer satisfaction and streamline options in self-driven platforms and services. However, attackers also invest heavily in using AI to discover system vulnerabilities. With it, they can farm usernames and passwords into online banking systems and mobile apps.
The highly targeted nature of banking and financial attacks makes reliance on big data and vulnerability analysis paramount. The Cost of a Data Breach Report showed that groups that operate with fully deployed, mature security automation were able to identify and contain a data breach 77 days sooner, or 27% more efficiently, than those in the early stages of modernization. Banking and finance industries will need to balance their budgeting needs year over year. But the need to invest in governance, risk management and cloud environment encryption has never been higher.
The Number of Data Breaches Decreased
Across the globe, data breaches have increased 10% from 2020 to 2021, and the costs related to them have risen from $3.86 million to $4.24 million on average, according to the IBM report. However, there is good news. Other industries have seen some major increases in their year-over-year losses connected with data breaches. Meanwhile, the banking and financial industries have seen a slight decrease. As more organizations invest in automation, data encryption and better cloud management practices, there is hope that data breach trends will continue to decline.
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