In June 2020, the US Federal Bureau of Investigations (FBI) warned that there are chances of an increase in Financial Cyber Crimes due to the rise of digital banking. They advised that mobile banking providers and financial institutions should ensure robust security standards to overcome security issues in Digital Banking..
In this article, I'll take you through the security risks in digital banking and the preventive measures banking institutions can take to ensure digital banking security. But first, let's understand the severe need for digital and mobile banking.
Digital Banking become a must during the pandemic
As the pandemic spread across the world, global banking infrastructure faced numerous challenges in terms of personnel management, infrastructure availability, and security. Several banking institutions realized just how efficient their staff was while working from remote locations outside of the bank's walls.
With the right remote working technology and safeguards in place, banking staff could take care of their essential tasks while staying at home to fight the global pandemic. On the other hand, the customers were able to access banking services via digital banking and e-wallets.
Digital banking helped the global economy by providing more convenient and faster processing of financial transactions. The digital model of banking infrastructure enables the financial industry to operate smoothly, even in the face of a pandemic.
However, the advent of brings several challenges, and one of the crucial ones is the "vulnerability to cyberattacks." Banks across the world are facing security issues with digital banking models due to the increased adoption of these services and expected reliability for customers. So, it becomes essential for banks and fintech developers to know how to overcome digital banking security issues.
The first and obvious step to avoid security issues in digital banking is to train the staff to identify and respond to the cybersecurity risks. The banks should always have an emergency plan to respond to such issues. Also, the staff should be equipped with blueprints that could help them in the event of a security breach.
Security Issues in Digital Banking
Some of the most prolific digital banking security issues that banks are facing includes the following:
1. Identity theft
There were 651,000 reports of identity theft in 2018. As there are fewer obstacles to identity theft, it is easier to commit it online. For instance, a person having a stolen/lost credit card can buy things online, which he or she couldn't while purchasing in-person due to EMV (Europay, MasterCard, and Visa) security.
Even without a stolen card, a hacker can spy on the bank database with the aim of stealing several accounts' identity. It is the most attractive type of financial cybercrime. This was true, before, during and will be even after the pandemic, as the criminal doesn't have to be in personal contact with the victim.
2. Banking account takeovers
This type of cybercrime in financial space is executed when the criminal accesses an individual's account and alters information about it. Altering information such as email address and phone number gives the criminals the ability to steal money from the victim's account, while blocking the fund transfer alerts to the victim.
This way, the real account owner won't even know that account-based communication is rerouted to the criminal's details. Over the past several years, banking account takeover frauds have increased significantly.
3. Credential stuffing
Credential stuffing is a type of security issue in digital banking, which is often targeted to obtain banking customers' personal information. With the stolen account credentials and automated large-scale login requests, hackers can gain unauthorized access to customer's accounts.
The hackers obtain a list of keys and logins from the dark web, which saves a lot of their time. Hackers then use this data to bombard bank websites and servers by making a lot of login requests. The hackers use web automation tools to log hundreds of millions of breached usernames and passwords into bank servers.
Credential stuffing is very different from brute force attacks. With credential stuffing, hackers mostly use user credentials known to be acceptable to the bank server at some point in time. These credentials include past usernames and passwords of the bank customers. Credential stuffing is an emerging security issue in digital banking that can potentially get worse with an increase in the number of data breaches.
4. Automated malware threats
Another cybersecurity issue in digital banking is automated malware threats. The cybercriminals input malicious code in the bank’s server through computerized tools such as internet bots. These bots can complete repetitive tasks within a very low execution cost. This makes it very attractive for the cybercriminals, as they can reap a significant amount of financial benefits for a little associated cost.
5. Cloud breaches
The global IT infrastructure relies heavily on cloud services such as storage and computing. Even banks have started to utilize cloud services to offset IT expenses, boost system uptime, and ensure data security. But the perks of cloud services come with a risk of security breaches.
A recent Cloud Hopper Investigation released by WSJ found that the major corporate hack suffered by China was executed via the cloud. The hackers came in through cloud service providers, where companies thought their data is safe.
The clouds store a load of information that is also used for public services, and thus, cloud providers are easy targets for hackers that seek access to a financial institutions' data. To have a clear understanding of this security issue in digital banking, consider that more than 1.4 billion records were lost during the data breaches in March 2017 alone - many of them were through cloud servers.
Even the remote working environment for the banks brings challenges to a secure network. Due to the Covid-19 pandemic, the bank workers had to work remotely from home to comply with government orders. The challenge here is that not every bank employee has a secure network to work, which is very positive news for criminals who want to steal sensitive data from those workers.
7. Phishing Attacks
A prevalent form of cyberattack is often used to have unauthorized access to data, including credit/debit card numbers and username/passwords. Recently, it has been seen that the phishing attacks targeted at bank employees are increasing.
Phishing attacks occur when a hacker tricks the victim, who isn't suspicious of attacks, into clicking on a malicious link. This link leads to a malware installation that can potentially freeze the targeted system. A phishing attack can lead to many devastating results for an enterprise, especially the banking institutions.
Phishing attacks can be conducted to obtain a foothold in the bank's network, which can be scaled to a more considerable extent like an advanced persistent threat (APT) event. In APT attacks, the attack remains undetected for an extended period. This scenario can lead to an employee compromising the security parameters, which eventually distributes the malware inside a closed and secured environment, where the attacker can access the secured data.
The access to a bank employee’s email account provides cybercriminals with an ability to send emails on the bank’s behalf, read sensitive data such as customer financial information, and gain access to employee’s bank accounts. Such cyberattacks can result in damage that is worth billions of dollars in terms of both financial and reputational value.
Spoofing is a newer form of cybercrime, where cybercriminals mimic a bank’s website URL with a new website that looks very similar to its website. The customer won’t even know that he’s not on the bank’s original website, and he or she then enters their login credentials to log in. The cybercriminal will get the user credentials and making them able to access their account.
Online Security Recommendations for Banks
It is very imperative for banks to address the security challenges associated with digital banking. Hence, I’ve listed down the security recommendations for banks going online, especially those that are building mobile banking apps.
1. Multi-factor authentication
The above-mentioned security issues in digital banking point to a need for strengthening the customer login process. Giving access to the bank account with a single password will only compromise digital banking cybersecurity.
Multi-factor authentication will make the account access more secure by sending OTP to a mobile number or requiring fingerprint authentication for easy access. Unlike two-factor authentication, a combination of username and password, multi-factor authentication is a much safer method for the customer login.
Multi-factor authentication requires additional layers for authentication, such as fingerprint scanning, which isn’t easy to bypass. Although implementing multi-layer authentication is quite expensive, the efforts are justified for digital banking. My suggestion for banking mobile app development is that the user shouldn’t be required to input a username and password every time that they open the app from the same mobile device.
2. End-to-End Encryption
Did you know that sensitive data worth billions of euros are exchanged every year?
Merchants, banks, card brands, payment gateways, and a few other parties are included in a digital transaction. Every one of them has a different role to play, making digital transactions a hotspot for cybercriminals.
End-to-end data encryption is the best solution to make digital banking safer. This practice requires significant checks and tests, which takes data safety to the next level.
One way to ensure end-to-end encryption is to ask for SSL chain verification. Requiring SSL chain verification is considered the best standard to provide an encrypted connection between a web server and the browser. Using the TLS protocol is also recommended to secure computer networks. Several encryption algorithms, such as RSA, Blowfish, Twofish, AES, or Triple DES, can be utilized for encryption.
3. Secure code and architecture
The customer data and financial information are not the only things that need to be encrypted; the app/web app code should also be encrypted. Avoid giving the cybercriminals a chance to clone your app to prostrate your cybersecurity.
It is always recommended to use obfuscation instruments for comprehensive mobile/web app testing. Think of yourself as a cybercriminal, and then try to infiltrate your app. This will help you find the weak spots. Also, your keys need to be managed securely. Even the most robust encryption means nothing if the keys are not easily accessible. Try to focus on the length of your key and store them in a safe environment.
4. Enable real-time alerts
It is safe to assume that the customer using mobile banking or paying via cards has direct access to their smartphone or email account in most cases. Banking institutions can leverage this assumption to send real-time alerts to the customer by notifying them of their account activity.
Some mobile banking apps allow customers to personalize their notifications, by enabling the app to trigger alerts for more than the specified amount. Real-time alerts will enable customers to identify immediately if anyone has wrongfully used their money or altered their account details.
5. Educate customers about security
The last but not the least aspect of digital banking security is ‘the customer.’ No matter how robust or secure your digital banking infrastructure is, if your customer isn’t aware of how they should safely avail digital banking services, your efforts will be in vain.
Let’s take the example of spoofing attacks. If the customer is aware of such threats, they’ll always look for the identifiers that ensure that the website is legitimate, safe to log in and safe to make transactions.
Banks can send security recommendations to their customers via emails, text messages, in-app notifications, or putting text on web portals. When the customer is educated, they’ll avoid cyber attacks such as phishing attacks.
Of all of the security issues in digital banking, cloud security breaches are the worst. Hence, it is recommended to choose the most secure cloud service provider. Despite having several ways to infiltrate into a banking system, cybercriminals won’t be able to get there if you focus on your banking mobile/web app’s security during and after the development phase.
If you’re developing or planning to build your banking app, keep the above-mentioned security recommendations in mind. You would require a skilled development team that has worked on fintech development in the past. If you don’t have it, consider outsourcing your banking app development work to experts.
We at Nimble AppGenie, are experts in developing banking apps and eWallets. We’ve produced numerous fintech apps that are excelling in the global marketplace. If you’re interested in knowing the cost of banking app development, read my recently published article here: Banking App Development Cost And Crucial Features.
Madhukar is a marketing communication specialist at Nimble AppGenie. A writer by day and reader by night, he specializes in technical blogging. Throughout the time, he has been helping businesses by writing valuable business guides and articles.
Whereas, Nimble AppGenie is an expert in developing solutions for Healthcare, FinTech and EdTech. Nimble AppGenie is helping small-large scale enterprises by providing innovative solutions that excel in the market.