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Cybersecurity in Banking: Importance, Threats, Challenges

20th Jun, 2024
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    Cybersecurity in Banking: Importance, Threats, Challenges

    As we transition to a digital economy, cybersecurity in banking is becoming a serious concern. Utilizing methods and procedures created to safeguard the data is essential for a successful digital revolution. The effectiveness of cybersecurity in banks influences the safety of our Personally Identifiable Information (PII), whether it be an unintentional breach or a well-planned cyberattack.

    The stakes are high in the banking and financial industry since substantial financial sums are at risk and the potential for significant economic upheaval if banks and other financial systems are compromised. With an exponential increase in financial cybersecurity, there is high demand for the profession of cybersecurity. Take a look at the best Security certifications.

    What is Cybersecurity in Banking?

    The arrangement of technologies, protocols, and methods referred to as "cybersecurity" is meant to guard against attacks, damage, malware, viruses, hacking, data theft, and unauthorized access to networks, devices, programs, and data.

    Protecting the user's assets is the primary goal of cyber security in banking. As more people become cashless, additional acts or transactions go online. People conduct transactions using digital payment methods like debit and credit cards, which must be protected by cybersecurity.

    Current State of Cybersecurity in Banks

    The market for IT security in banking has maintained its rapid growth in 2024. Since financial institutions are primary attack targets, investments in protection continue to scale. The market value reached $38.72 billion in 2021, and projections see a compound growth rate of 22.4% and a value of $195.5 billion by 2029.

    Between June 2018 and March 2022, Indian banks reported 248 successful data breaches by hackers and criminals; the government notified Parliament on Aug 2, 2022.

    The Indian government has reported 11,60,000 cyber-attacks in 2022. It is estimated to be three times more than in 2019. India has been the target of serious cyberattacks, such as the phishing attempt that nearly resulted in a $171 million fraudulent transaction in 2016 against the Union Bank of India.

    Another instance of a cyberattack involving online banking was Union Bank of India, resulting in a substantial loss. One of the officials fell for the phishing email and clicked on a dubious link, which allowed the malware to hack the system. The attackers entered the system using fake RBI IDs.

    Banks have been mandated to strengthen their IT risk governance framework, which includes a mandate for their Chief Information Security Officer to play a proactive role in addition to the Board and the Board's IT committee playing a proactive role in ensuring compliance with the necessary standards.

    Reasons Why Cybersecurity is Important in Banking

    The banking industry has prioritized cybersecurity highly. Building credibility and trust is the cornerstone of banking, so it becomes much more essential. Here are five factors that demonstrate the significance of cybersecurity in banking industry and why you should care:

    1. Everyone looks to be entirely cashless and using digital payment methods like debit and credit cards. In this case, ensuring that the required cybersecurity safeguards are in place to protect your privacy and data is critical.
    2. After data breaches, it could be difficult to trust financial institutions. That's a significant issue for banks. Data breaches caused by a shoddy cybersecurity solution may easily lead to their consumer base moving their business elsewhere.
    3. The majority of the time, when a bank's data is compromised, you lose time and money. Recovery from the same can be unpleasant and time-consuming. It would entail canceling cards, reviewing statements, and keeping a watchful lookout for issues.
    4. Inappropriate use of your private information might be very harmful. Your data is sensitive and could expose a lot of information that could be exploited against you, even if the cards are revoked and fraud is swiftly dealt with.
    5. Banks need to be more cautious than most other firms. That is the price for banks to retain the kind of valuable personal data they do. If the bank's information is not safeguarded against risks from cybercrime, it could be compromised.

    Top Cybersecurity Threats Faced by Banks

    Cybercrimes have increased frequently over the past several years to the point where it is thought that they are one of the most significant hazards to the financial sector. Hackers have improved their technology and expertise, making it difficult for any banking sector to thwart the attack consistently. The following are some dangers to banks' cybersecurity:

    1. Phishing Attacks

    One of the most frequent problems with cyber security in banking sector is phishing assaults. They can be used to enter a financial institution's network and conduct a more severe attack like APT, which can have a disastrous effect on those organizations (Advanced Persistent Threat). In an APT, a user who is not permitted can access the system and use it while going unnoticed for a long time. Significant financial, data and reputational losses may result from this. According to the survey, phishing assaults on financial institutions peaked in the first quarter of 2021.

    2. Trojans

    The term "Trojan" is used to designate several dangerous tactics hackers use to cheat their way into secure data. Until it is installed on a computer, a Banker Trojan looks like trustworthy software. However, it is a malicious computer application created to access private data processed or kept by online banking systems. This kind of computer program has a backdoor that enables access to a computer from the outside.

    Around the globe, there were roughly 54,000 installation packages for mobile banking trojans in the first quarter of 2022. There has been an increase of more than 53% compared to last year's quarter. After declining for the first three quarters of 2021, the number of trojan packages targeting mobile banking increased in the fourth quarter.

    3. Ransomware

    A cyber threat known as ransomware encrypts important data and prevents owners from accessing it until they pay a high cost or ransom. Since 90% of banking institutions have faced ransomware in the past year, it poses a severe threat to them.

    In addition to posing a threat to financial cybersecurity, ransomware also affects cryptocurrency. Due to their decentralized structure, cryptocurrencies allow fraudsters to break into trading systems and steal money.

    4. Spoofing

    Hackers use a clone site in this type of cyberattack. By posing as a financial website, they; 

    • Design a layout that resembles the original one in both appearance and functionality.
    • Establish a domain with a modest modification in spelling or domain extension.

    The user can access this duplicate website via a third-party messaging service, such as text or email. Hackers can access a user's login information when the person is not paying attention. Seamless multi-factor authentication can solve a lot of these issues.

    The Reserve Bank of India (RBI) reported bank frauds of 604 billion Indian rupees in 2022. From more than 1.3 trillion rupees in 2021, this was a decline.

    Applications of Cybersecurity in Banking

    Cybersecurity threats are constantly evolving, and the banking sector must take action to protect itself. Hackers adapt when new defenses threaten more recent attacks by developing tools and strategies to compromise security. The financial cybersecurity system is only as strong as its weakest link. It is critical to have a selection of cybersecurity tools and approaches available to protect your data and systems. Here are a few crucial cybersecurity tools:

    1. Network Security Surveillance

    Network monitoring is known as continuously scanning a network for signs of dangerous or intrusive behavior. It is frequently utilized with other security solutions like firewalls, antivirus software, and IDS (Intrusion Detection System). The software allows for either manual or automatic network security monitoring.

    2. Software Security

    Application security safeguards applications that are essential to business operations. It has features like an application allowing listing and code signing and could help you synchronize your security policies with file-sharing permissions and multi-factor authentication. The use of AI in cybersecurity will inevitably improve software security.

    3. Risk Management

    Financial cybersecurity includes risk management, data integrity, security awareness training, and risk analysis. Essential elements of risk management include risk evaluation and the prevention of harm from those risks. Data security also addresses the security of sensitive information.

    4. Protecting Critical Systems

    Wide-area network connections help avoid attacks on massive systems. It upholds the rigid safety standards set by the industry for users to follow when taking cybersecurity steps to protect their devices. It continuously monitors all programs and performs security checks on users, servers, and the network.

    How to Make Banking Institutions Cyber Secure?

    Security ratings are a great approach to indicate that you're concerned about the organization's cybersecurity. Still, you must also demonstrate that you're following industry and regulatory best practices for IT security and making long-term decisions based on that knowledge. A cybersecurity framework may be beneficial. You can go for Ethical Hacking training to enhance your knowledge further.

    Top Cybersecurity Framework for Banks

    A cybersecurity framework provides a common language and set of standards for security leaders across countries and industries to understand their security postures and those of their vendors. With a framework, it becomes easier to define the processes and procedures your organization must take to assess, monitor, and mitigate cybersecurity risk.

    Let us take a look at some common financial cybersecurity frameworks:

    1. NIST Cybersecurity Framework

    The former president's executive order, Improving Critical Infrastructure Cybersecurity, asked for increased cooperation between the public and private sectors for recognizing, analyzing, and managing cyber risk. In response, the NIST Cybersecurity Framework was created. NIST has emerged as the gold standard for evaluating cybersecurity maturity, detecting security weaknesses, and adhering to cybersecurity legislation even when compliance is optional. To achieve NIST compliance, organizations can follow the guidelines outlined in the NIST Cybersecurity Framework and undergo rigorous assessments to ensure they meet the necessary standards.

    2. The Bank of England's CBEST Vulnerability Testing Framework

    CBEST vulnerability testing methodology was developed by the UK Financial Authorities in collaboration with CREST (the Council for Registered Ethical Security Testers) and Digital Shadows. It is an intelligence-led testing framework. CBEST's official debut took place on June 10, 2013.

    CBEST leverages intelligence from reputable commercial and government sources to find possible attackers for a specific financial institution. Then, it imitates these potential attackers' methods to see how successfully they can breach the institution's Defenses. This enables a company to identify the weak points in its system and create and implement corrective action plans.

    3. Cybersecurity and Privacy Framework for Privately Held Information Systems (the CIPHER Framework) 

    Computer systems that organizations, both public and private, control and that hold personal data gathered from their clients are referred to as PHISs (Privately Held Information Systems).

    CIPHER framework addresses electronic systems, digital information kinds, and methods for data sharing, processing, and upkeep (not paper documents).

    The CIPHER methodological framework's primary goal is to suggest procedures and best practices for protecting privately held information systems online (PHIS). The following are the main features of CIPHER methodological framework: 

    • Technology independence (versatility) refers to the ability to be used by any organization functioning in any field, even as existing technologies deteriorate or are replaced by newer ones. 
    • PHIS owners, developers, and citizens are the three primary users who focus on this user-centric approach. 
    • Practicality - outlines possible precautions and controls to improve or verify whether the organization is safeguarding data from online dangers. 
    • It is simple to use and doesn't require specialized knowledge from businesses or individuals. 

    Challenges in Implementing Cybersecurity in Banking

    Some contributing elements have presented a significant challenge to digital cybersecurity in banking. The following are some of these: 

    1. Lack of Knowledge: The general public's understanding of cybersecurity has been relatively low, and few businesses have significantly invested in raising that awareness. 
    2. Budgets That are Too Small and Poor Management: Due to the low priority given to cybersecurity, it frequently receives short budgetary shrift. Cybersecurity continues to receive little attention from top management, and programs that assist it are accorded low priority. They might have underestimated how serious these risks are, which is why. 
    3. Identities and Access are Poorly Managed: The core component of cybersecurity has always been identity and access management, especially now when hackers are in control and might access a business network with just one compromised login. Although there has been a little progress in this area, much work still needs to be done. 
    4. Increase in Ransomware: Recent computer attacks have brought our attention to the growing threat of ransomware. Cybercriminals are beginning to employ various techniques to avoid being identified by endpoint protection code that concentrates on executable files. 
    5. Smartphones and Apps: The majority of banking organizations now conduct business primarily through mobile devices. Every day the base grows, making it the best option for exploiters. Due to increased mobile phone transactions, mobile phones have become a desirable target for hackers. 
    6. Social Media: Hackers have increased their exploitation as a result of social media adoption. Customers that are less knowledgeable expose their data to the public, which the attackers abuse.

    Cybersecurity in Banking Sector as a Career

    The banking sector is a prime target for cyber-attacks due to the sensitive financial data it handles. As digital transformation continues to reshape banking, the need for strict cybersecurity measures grows.

    This demand has created numerous career opportunities for cybersecurity professionals within the banking industry. According to the Bureau of Labor Statistics, the employment of information security analysts is projected to grow 33% from 2020 to 2030, much faster than the average for all occupations.

    The table below explores the job outlook for cybersecurity roles in the banking sector, highlighting key responsibilities, skills, and average salary.



    Skills Required

    Average Salary (per year)

    Security Analyst

    Monitors networks for breaches, installs security software, conducts penetration testing

    Firewalls, VPNs, IDS knowledge, strong analytical skills

    $151,476 (Source: Glassdoor)

    Cybersecurity Manager

    Develops security policies, manages teams, oversees incident response plans, ensures compliance

    Leadership abilities, deep cybersecurity understanding, risk management experience, banking regulations knowledge

    $1,78,814 (Source: Salary.com)

    Network Security Engineer

    Designs secure network solutions, monitors network traffic, ensures network availability

    Network protocol proficiency, network security tools experience, strong problem-solving skills

    $116,934 (Source: Indeed)

    Security Architect

    Designs security architectures, assesses new security technologies, develops security standards

    Extensive IT security experience, strong security framework knowledge, scalable security solution design

    $2,23,172 (Source: Glassdoor)

    Compliance & Regulatory Analyst

    Ensures compliance with regulations, conducts audits, manages compliance documentation

    Regulatory requirements understanding, compliance audit experience, legal & technical document interpretation

    $94,873 (Source: Salary.com)

    Fraud Analyst

    Monitors transactions for fraud, analyzes data for suspicious patterns, collaborates with law enforcement

    Strong analytical skills, data analysis tools familiarity, fraud detection techniques knowledge

    $61,513 (Source: Bing.com)

    Incident Responder

    Responds to security incidents, conducts forensic investigations, develops incident response strategies

    Incident management experience, digital forensics knowledge, ability to work under pressure

    $116,028 (Source: Bing.com)

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    Every organization is concerned about cyber security. It is crucial for banks to have the proper cyber security solutions and procedures in place, especially for institutions that store a lot of personal data and transaction lists. Banking cyber security is an issue that cannot be bargained with. Hackers are more likely to target the banking sector as digitalization advances. 

    KnowledgeHut is a platform that provides hundreds of courses in Data Science, Machine Learning, DevOps, Cybersecurity, Full Stack Development, and People and Process Certifications. With KnowledgeHut top Cybersecurity certifications, you can increase your knowledge about cybersecurity in the banking industry and get the proper training.

    Frequently Asked Questions (FAQs)

    1How does cybersecurity work in banks?

    The goal of cybersecurity in the banking sector is to protect consumer assets. The bank should also take action to thwart the hackers. The number of financial-related acts is growing as more individuals work.

    2What happens to the banks if there is a cyber-attack?

    Through fraudulent transactions, cyberattacks can result in significant financial losses for the customer and the banks. Attackers who steal sensitive data from a banking institution may sell it. Data that has been stolen is later misused.

    3What should be done to reduce cybersecurity threats in the banking sector?

    Antivirus software is typically used on bank computers, firewalls, fraud detection, and website encryption, which encrypts data so that only the intended receiver can read it. Your financial institution likely implements these security precautions if you bank online.


    Vitesh Sharma

    Blog Author

    Vitesh Sharma, a distinguished Cyber Security expert with a wealth of experience exceeding 6 years in the Telecom & Networking Industry. Armed with a CCIE and CISA certification, Vitesh possesses expertise in MPLS, Wi-Fi Planning & Designing, High Availability, QoS, IPv6, and IP KPIs. With a robust background in evaluating and optimizing MPLS security for telecom giants, Vitesh has been instrumental in driving large service provider engagements, emphasizing planning, designing, assessment, and optimization. His experience spans prestigious organizations like Barclays, Protiviti, EY, PwC India, Tata Consultancy Services, and more. With a unique blend of technical prowess and management acumen, Vitesh remains at the forefront of ensuring secure and efficient networking solutions, solidifying his position as a notable figure in the cybersecurity landscape.

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