In the globally interconnected digital world across Omni-channels and platforms, threats to the IT infrastructure are on the rise. Specifically, with banking in the Industry 4.0, the number of cyberattacks has also increased. Anupama Suresh Mehra of Elets News Network (ENN) explores the new Cyber Security threats to the banking sector and industry best practices to overcome them.
The industries across the globe are in the midst of the transformation in order to meet today’s complex and competitive industry demands. With technology advancement occurring every day, in a current scenario a new wave has emerged, ‘Industry 4.0’.
The term ‘Industry 4.0’ or ‘Industrial Revolution 4.0’ originated in the year 2011 from a project in the high-tech strategy of the German government, which works on promoting the computerisation of the manufacturing. The term was announced during the Hannover Fair publicly.
The Hannover Messe is the world’s largest trade fair. It is organised in Germany and mostly has about 6,500 exhibitors and 2, 50,000 visitors. Industry 4.0. includes cyber-physical systems, cloud and cognitive computing, and the Internet of Things (IoT). As was seen during the times of the First Industrial Revolution, the adoption of computers and automation has intern enhanced productivity in the new age.
The Industrial Revolution 4.0 is progressing at a very fast pace and creating disruptive challenges in day to day life of mankind. What lies behind this phenomenon, commonly referred to as the fourth industrial revolution, and what will be its impact on banks?
Process automation is not a new concept for banks. With increasing competition and shrinking margins from the FinTech companies and digital startups, to the Banking, Financial Services and Insurance (BFSI) sectors across the globe have been relying on technology in order to reduce costs, optimise processes and speed up delivery time for products and services. The cloud is proving to be a superior option to boost the capacity to handle data and is now providing an unrivaled level of agility, security, and scalability to the BFSI sector. For use cases such as data analytics, batch processing, and data storage, banks can access the cloud as and when required, which means they can utilise such resources more flexibly and efficiently.
Cloud computing is also enabling financial institutions to achieve considerable gains in efficiency and reductions in costs, as the technology requires banks to pay for only the services they use. Ultimately, this means that for testing new applications, it is much more cost-effective to do so on the cloud than on existing IT infrastructure. Every innovation brings a lot of improvement in the system, but challenges are bound to be there in the process as well.
As Industry 4.0 is a blend of technologies that is leading to the creation of smart, agile & highly versatile cyber-physical world, Cybersecurity is the biggest challenge to Industry 4.0. The integration of the information and operational technology is bringing new challenges, especially ‘Cyber Security’. Financial institutions are the main targets for cyber attacks. And the reason is quite simple, banks are where the money is which makes it a prime target for cybercriminals. Attacking banks for cybercriminals offers multiple avenues for profit through extortion, theft, and fraud, while nation-states and hacktivists also target the financial sector for political and ideological leverage.
Regulators around the world are taking notice, and implementing new controls for cyber risk to address the growing threat to the banks they supervise. In recent years, there has been a paradigm shift in the way attackers are exploiting the source, behavior, vector, and motives. This shows that the traditional multilayered defense that banks already have is not adequate.
On the National and International level, there has been a steep rise in the cybersecurity cases with most of them have been large-scale breaches, frauds, and heists. This type of breaches not only leaves the banks and organisations with serious financial loss but also potentially erode substantial brand value.
The Reserve Bank of India (RBI) has been taking proactive steps in the right direction in order to curb fraud. It is also directing banks to strengthen their cybersecurity posture in the wake of the increasingly sophisticated nature and quantum of attacks. “The regulations in India are forward looking and positively stringent and I think, from an industry standpoint, it is very important to adopt such guidelines that protect your data assets from any types of threats.
We must welcome any prudent security guidelines in place, to protect Confidentiality, Integrity & Availability of data,” says Jithesh P V, Digital Banking Head, Federal Bank. As compared to other industries, financial organisations adopt the cloud more extensively. According to a study, overall, 96 percent of the respondents from the financial sector store sensitive data in the cloud.
One third, 34 percent, of respondents, say the security of their IT infrastructure improved after cloud adoption, and 31 percent report no change. Consider the poor on-premises experience of Lloyds Bank, thousands of people had their data stolen when a storage device disappeared from the company’s office.
However, if they would have stored the data in the cloud in the first place, the theft could have been averted. According to Microsoft, more than 80 percent of the world’s largest banks and more than 75 percent of the most important financial institutions use Azure -solid proof of the cloud’s attractiveness for the financial industry.
But storing data fully on the cloud doesn’t ensure 100 percent security. The data flow freely to and from both enterprise endpoints and mobile devices belonging to employees through the cloud. This is a major concern for the respondents, as it raises strong cybersecurity concerns about the vulnerability of the devices to unauthorised access.
As the industry continues to evolve and leverages the increasing computing power available to consumers through smartphones and laptops, what steps need to be taken to ensure safe and secure transactions?
Security architectures need to be redesigned while taking into account the new trends, as there are implications for BFSI sector as well as other industries and device manufacturers.
From the consumer’s point of view, security is an integral part of financial services solutions, the onus for which lies with the provider. Moving forward, security and data privacy are going to play a key role in winning consumer confidence and catalysing the adoption of digital banking.
The time for action is now. In order to fight cybercrime, banks need to make sure to hire more skilled labor and invest heavily into the systems. As cyber-attacks are changing constantly, financial institutions need to keep a check on cybercrime protection, they need to keep themselves updated to keep up with increasingly sophisticated cyber-attacks.