It’s safe to say that financial services companies have always been and still are at the forefront of enterprise cybersecurity trends in banking. Since banks store and process high amounts of commercial and consumer data every day, over the years, they have become a top target for hackers. The threats of regulatory consequences, financial losses, and reputational damage force banks to drive innovation in the field of cybersecurity.
However, consumers are interacting with financial services in new ways and through new channels. And you can be sure that with every novelty, there arise new cyberthreats.
Read this article to discover the most important cybersecurity trends that are going to play a critical role in strategies banks are going to develop in 2020.
Addressing the risks in mobile apps and web portals
Consumers are increasingly choosing cashless payment alternatives. As a result, banks are investing in mobile and web-based solutions that make payments and transfers easier. And such applications create new vulnerabilities that banks will need to address.
For example, according to Verizon, web applications were the number one threat pattern for financial services data breaches in 2018. A study from Accenture showed that out of 30 major banking applications examined, all had at least one known security risk.
What are the most common vulnerabilities we see in mobile apps and web-based services? Most of the time, it’s insecure data storage, insufficient authentication, or direct code tampering.
Note that it’s not just mobile where financial institutions are experiencing problems. Web-based banking applications have been around for a longer time, but they also show a lack of security.
Consumers aren’t going to change their habits and start paying by cash or visiting their local bank branches. To keep up with consumer trends and avoid major security risks, banks are going to invest in cybersecurity practices for mobile and web platforms.
Examining third-party services
Another key area for cybersecurity concerns in banking is the monitoring of third parties and their cybersecurity practices. If banks lose control over their ingress and egress points, they might leave their critical infrastructure exposed to threats. Third parties are already causing their security environments to fragment.
That’s why in 2020, bank security teams are going to strive to gain full visibility over their infrastructure. Banks are going to carefully examine their APIs and improve their security architectures to gain a greater understanding of the potential risks involved in collaborations with third parties, which are unavoidable for staying competitive in the current landscape.
Technical debt and cybersecurity in banking
Even if many financial institutions have been investing plenty of resources into building modern software systems and infrastructures, there’s still a massive amount of legacy technology being used in the sector. The ATM industry is a great example. The majority of operating systems used there rely on Windows 7. And Microsoft stopped supporting the system in January 2020.
Moreover, banks looking to deploy new controls will have to re-examine their legacy systems. They will consider potential strategies for protecting their aging technology and choosing potential candidates for innovation.
In 2020, we will see more and more banks take the time and effort to build security into their digital transformation programs. Otherwise, protecting the current environments and building up security resilience is going to be very challenging.
Artificial Intelligence for fraud prevention
In 2020, Artificial Intelligence (AI) technologies are going to play a greater part in customer behavior monitoring for fraud detection and prevention. What is the greatest strength of AI-powered platforms? They can unify a variety of channels such as digital banking, authentication, card banking, and open banking with a greater intelligence feed.
Behavioral monitoring that takes advantage of Artificial Intelligence will become a cutting-edge trend among financial institutions this year.
For example, it no longer makes sense to monitor the login and payment activity separately. That way, banks might be left vulnerable to attack. As AI technologies improve and become more commonplace, they will enable in-depth behavioral monitoring and individual profiling of customers across their locations, devices, and authentication methods. Based on the observed behavior, the software will provide actionable intelligence with recommended decisions and accurate risk score.
The recent years have brought us a number of scams and fraudulent schemes associated with cryptocurrencies. In particular, the Initial Coin Offerings (ICOs) have generated a heated debate about this type of asset trading and investment.
So far, regulators assumed that the sums of money involved are less significant than in traditional banking, in the scheme of global finance. That’s why they have used a light-touch approach to regulate the industry. Moreover, governments also wanted to welcome new technologies because they could potentially benefit from tax income in this rising sector.
However, as tech giants begin to enter the space, regulators are going to enforce new laws covering cryptocurrencies. Much stricter enforcement of regulations is going to be the topic for the crypto scene in 2020.
The rise of open banking
Until recently, banks had full control over the customer’s journey. With the emergence and spread of open banking, this is going to change.
Consumers now take advantage of banking services through third-party applications that lay outside the control of banks. That’s why open banking is such an important trend for cybersecurity. Fraud monitoring with AI and machine learning capabilities will play a crucial role here. By combining the information about the user’s normal behavior with parameters about the safety of user devices, the fraud monitoring solutions will accurately flag user behavior deemed as suspicious.
Moreover, if the United States moved to open banking just like Europe, the US Department of Treasury will have to follow the lead of the European Banking Authority to define the regulatory standards and require Strong Customer Authentication.
Adoption of IoT and 5G
In 2020, we expect 5G networks to roll out and show their true potential to every industry, including the financial services sector. What’s more, we’re going to witness an increase in the use of connected Internet of Things (IoT) devices.
Consumers are going to embrace the IoT this year because businesses are already doing that. Microsoft’s report IoT Signals showed that 85% of the survey’s respondents are in the process of IoT adoption, and 75% of them have IoT projects in planning. Among the IoT adopters, 88% think that IoT is critical to business success.
However, smart connected devices present a range of new risks. In particular, these devices may increase the network’s vulnerability to large-scale multifactor fifth-generation cyber-attacks. IoT devices and their connections to networks are still the weak links in these implementations. The ever-growing value of personal data processed by these devices will need security against potential breaches.
That’s why in 2020, banks are going to take on a holistic approach to IoT security to combine both traditional and new controls and protect the growing IoT network across the industry.
Cybersecurity in banking: A look into the future
In 2020 and the following years, we are going to witness a shift in the approach to financial cybersecurity. On the one hand, banks will need to address the evolving demands of customers and provide them with access to financial services through a variety of channels, including web, mobile, and IoT. On the other hand, every new channel will generate new vulnerabilities — some of which may remain unknown until an attack occurs.
That’s why banks will be investing more in combating cybersecurity threats to keep their customer data safe and avoid falling victim to a massive loss of resources and reputation.
Our teams work with fintech startups and financial enterprises to help them build new products and business models with technology. That’s how we can tell what the future of the financial services sector will look like thanks to the technological disruption.
Would you like to learn more about future technology trends in banking?
Here are a few articles you may also find interesting: