Banking in India is a very structured and regulated. Banks realize they’re dealing directly with citizens’ hard-earned money and take it seriously. However, Indian banks were no strangers to the recent digital revolution. The very nature of transactions changed, with internet banking, digital payments, and UPIs. Banks face newer threats. Financial regulators aren’t blind to the prevalent threats and are already taking steps to fortify cybersecurity in banking.
Because they safeguard actual money, banks make more lucrative targets for hackers than, say, data theft or account takeovers.
Importance of IT and Cybersecurity in Banking
Everything is now right at our finger tips. Be it communication, online shopping, bank transfers, or essential services like railway bookings, Adhaar linking etc. Even the grocer now accepts payments on his shiny smartphone via UPI.
However, these new cashless means of payment aren’t built on thin air. At their foundation are the same banks which handle your assets. The same money which has simply shifted its form. Cashless money is still money, and needs to be protected. Even more so now, now that all transactions happen over the internet, which is prone to hacking, interception, and tampering.
Internet banking’s solution for self-protection is the deployment of passwords, encryption, and multi-factor authentication. These do work, no doubt. But it means your credentials have suddenly become a hot potato in the cyber crime world. Renewed energy is spent on phishing attacks, even more cases of banking frauds have come to light. OTPs have become invaluable to cyber criminals; the UPI pins are at a greater risk of getting snooped.
As a provider of online security, we realize the need for tighter cyber security in banking and online finance. Having a sound and reliable solution protecting online banking systems is inevitable. You simply cannot depend on the due diligence of banking customers because these new styles of cyber-attacks play on the human capacity for fear and excitement.
Why has cybersecurity in banking become critical?
RBI’s Financial Stability Report awakened the banking sector to the necessity for better cybersecurity in banking. They gave a warning indicating that the banks should buckle up and tighten their security. The RBI report says, “Cyber security preparedness requires continuous and synchronous efforts from multiple stakeholders with varied levels of cyber security preparedness.”
Following are 3 reasons why banks need better security.
Data breaches can impact bank’s reputation
Data breaches are a high-impact, code red situations at banks. A data breach at a bank leads to loss of sensitive customer data and consequently, customer trust. Data breaches can pass through the cracks of weak cybersecurity strategies. Therefore, banks require strong cybersecurity essentials to protect their sensitive data.
Financial loss to the customers
Customer trust is intangible, invisible. What customers get most miffed about is their cold, hard money. A security breach at a bank can cause serious financial losses to its customers. Thereafter, the bank is as good as dissolved, because nobody would be willing to deal with it again. A card fraud can be caught and reversed, but data breaches are much more untraceable and deadly. Only in rare cases, can money lost to a cyber fraud be recovered. Not to mention the waiting and investigating time makes the customer more agitated by the minute.
Customers’ data is sensitive
Customers;’ data is private and crucial for them. They won’t be bothered by the technicalities of a security breach; all they care about is their data safety. Once data leaks out of a bank, it becomes harder for the banks to contain the situation. Word gets out and the bank is thrown into a nightmare of dealing with the bad publicity and the very furious victim of the cyber fraud. It is in the best interest of a financial institution to plan for recovery mechanisms, contingencies and better cybersecurity than go into a firefighting mode when a breach does occur.
Just what are the cyber threats faced by a bank? And more importantly, how can you prevent them? You can find out on our blog on security threats in banking.