Cyber Security

Your comprehensive guide to cyber security for financial services

In this comprehensive guide, we explore the role of cyber security in the financial services sector. We'll discuss the significant challenges, outline the top benefits of expert partnerships, and guide you through choosing the right cybersecurity specialists, using our extensive experience to enhance your strategic approach.
A photo of Ian Welch, who is a partner & technical director for Network

Written by

Ian Welch

Ian is the Technical Director @ Network and a certified ethical hacker (CEH), security professional (CISSP) and ISO27001 lead implementer with over 25 years experience.

Updated on

May 3, 2024

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Before we dive in

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Key Takeaways

  1. Outsourcing cyber security offers cost-effectiveness and access to specialised expertise, crucial for managing the unique challenges in the financial services sector.
  2. The prevalence of sophisticated cyber threats like phishing, ransomware, and DDoS attacks demands advanced and proactive security measures to protect sensitive data and financial transactions.
  3. Choosing the right cyber security service is essential; consider their communication skills, industry experience, and the technological solutions they provide to ensure they align with your business needs.

What is the role of cyber security in the financial sector?

Cyber security is crucial for the financial sector, serving as a strategic partner rather than just a defensive mechanism. Outsourcing cyber security is not only cost-effective but also allows financial services companies to leverage specialised expertise without the overhead associated with an in-house team.

Cyber security services actively manage risk and ensure that financial institutions adhere to multiple security frameworks, enhancing their defence mechanisms against escalating cyber threats.

  • NCSC Cyber Assessment Framework (CAF): Provides a structured way to assess an organisation’s cyber security practices, ensuring they meet the UK government's stringent standards.
  • Cyber Essentials: A government-backed scheme that guides organisations in protecting themselves against common cyber attacks.
  • The IASME Governance Standard: A benchmark to gauge and certify cybersecurity readiness and GDPR compliance.
  • SOC2: A framework that mandates rigorous controls for managing data based on five “trust service principles”—security, availability, processing integrity, confidentiality, and privacy.
  • ISO Standards (27001, 22301): Offer guidelines for information security management and business continuity management, ensuring data integrity and availability.
  • PCI-DSS: Ensures that all entities that process, store, or transmit credit card information maintain a secure environment, crucial for financial transactions within financial institutions.

What services do cyber security companies provide?

Cyber security companies offer a range of services designed to protect the digital assets of financial institutions. These services not only prevent attacks but also prepare organisations to respond effectively when incidents occur.

  • Security Operations Centre (SOC): Provides real-time monitoring and analysis to detect and respond to cyber threats.
  • Network Auditing: Identifies vulnerabilities in your network, helping prevent unauthorised access.
  • Endpoint Detection and Response (EDR): Monitors endpoint and network events while responding to security threats, streamlining incident investigation and remediation.
  • Phishing Simulations: Tests the awareness of your employees, enhancing their ability to identify and respond to malicious emails.
  • Vulnerability Scanning: Proactively detects and addresses security vulnerabilities in software and networks.
  • Dark Web Monitoring: Keeps an eye on the dark web for signs that your company’s sensitive data might be for sale.
  • Security Awareness Training: Equips your team with knowledge to handle evolving cybersecurity challenges.
  • Penetration Testing: Simulates cyber attacks to test the strength of your security measures.
  • Managed IT Compliance: Ensures your financial services firm meets necessary regulatory and compliance standards.
  • Ongoing Support: Provides continuous support and updates to security infrastructure, adapting to new threats.
A business owner looking overwhelmed as he realises he's had a cyber security breach

Do these cyber security challenges sound familiar to your business?

Your staff are anxious about phishing and malware, unsure how to identify the threats.

You’re concerned that your current cyber security measures might not be strong enough.

There’s increasing pressure to ensure customer data is more securely protected.

The importance of cyber security services for financial institutions

The financial sector is one of the most targeted industries for cyber attacks due to its critical data and financial transactions. The cost of implementing cyber security measures is far outweighed by the potential financial losses of a data breach. Engaging a managed cyber security service means having expert support ready to manage and monitor security incidents—because when it comes to cyber threats, it's not a matter of if, but when.

Your organisation’s resilience against threats like ransomware, phishing, and advanced persistent threats depends on the robustness of your cyber security strategy.

Employing an expert team dedicated to this purpose not only safeguards your financial data but also secures your reputation by ensuring the continuity of services to your clients.

What challenges does the financial services sector face when it comes to cyber threats?

The financial services industry, particularly in the UK, encounters significant cybersecurity challenges driven by both the complexity of digital transformation and the persistent threat landscape.

1. Increased attack surface due to digital transformation

The financial sector has aggressively adopted new technologies to improve efficiency and customer service, such as cloud computing and digital banking. However, this rapid digitalisation has also expanded the attack surface. Nearly a fifth of sensitive and restricted workloads in financial services are operated in the cloud, making them vulnerable to cyber threats. In fact, a considerable proportion of the sector acknowledges cloud services as the primary attack route.

2. The challenge of managing outsourced IT services

Outsourcing IT services, including cloud services and other third-party solutions, has become a strategic necessity for many financial institutions. While outsourcing offers cost and efficiency benefits, it introduces complexities in managing cybersecurity. The coordination required to ensure all third-party services comply with stringent security standards can be substantial, raising concerns about vulnerabilities in supply chains and third-party services.

3. Rise in cyber incidents and advanced persistent threats

The number of reported cyber incidents within UK financial services has seen a significant increase, with reports to the Financial Conduct Authority (FCA) jumping by over 50% in one year. These incidents often involve sophisticated cyber threats like ransomware and Advanced Persistent Threat (APT) groups. The sector's high-profile nature and the sensitive data it handles make it a prime target for such attacks.

4. Regulatory and compliance pressures

The regulatory environment for cybersecurity in financial services is stringent and evolving. UK financial institutions must navigate a complex landscape of regulations, including GDPR, PCI DSS, and various national standards set by the FCA. Compliance is not just about avoiding penalties but also about building trust with consumers and maintaining market integrity.

5. Adapting to emerging cybersecurity threats

Adapting to emerging threats requires not only technological solutions but also proactive threat intelligence and incident response strategies. The financial industry must continuously evolve its cybersecurity measures to address new threats. This involves significant investment in security systems and training staff to recognise and mitigate potential risks.

These challenges underscore the necessity for the financial services sector to enhance its cybersecurity strategies continuously. Emphasising risk management, regular security health checks, and a culture of security awareness will be key in safeguarding against current and future cyber threats.

What are the most common types of cyber attacks in the financial services sector?

Understanding the most common types of cyber attacks is crucial for developing effective defence strategies. Here are six prevalent cyber threats that financial institutions need to be vigilant about.

Phishing attacks

Phishing involves deceiving individuals into providing sensitive information or downloading malware by masquerading as a trustworthy entity in electronic communications.

  • Who it affects? Employees and customers of financial institutions.
  • How does it happen? Through emails, text messages, or social media messages that appear to be from legitimate sources.
  • How do you prevent this attack? Implement multi-factor authentication, conduct regular security awareness training, and use email filtering and verification technologies.

Ransomware attacks

Ransomware is malicious software that encrypts a victim’s data, with the attacker demanding payment to restore access.

  • Who it affects? IT systems of financial firms and their clients.
  • How does it happen? Typically through phishing emails or exploiting network vulnerabilities.
  • How do you prevent this attack? Keep all systems patched and updated, back up data regularly, and use advanced malware detection tools.

DDoS attacks

Distributed Denial of Service (DDoS) attacks aim to overwhelm systems, servers, or networks with a flood of Internet traffic, causing them to slow down or crash.

  • Who it affects? Online services of financial institutions like online banking.
  • How does it happen? By utilising compromised computer systems as sources of attack traffic.
  • How do you prevent this attack? Use anti-DDoS hardware and software solutions and ensure redundancy in network infrastructure.

Insider threats

Insider threats come from individuals within the organisation who misuse their access to networks, systems, or data for malicious purposes.

  • Who it affects? All levels of the organisation.
  • How does it happen? Through malicious action or negligence by employees, contractors, or business associates.
  • How do you prevent this attack? Implement strict access management and monitoring, conduct regular audits, and promote a culture of security awareness.

SQL injection

SQL Injection involves inserting or "injecting" a SQL query via the input data from the client to the application, often to corrupt database content, bypass login algorithms, or access data.

  • Who it affects? Websites and databases of financial services firms.
  • How does it happen? Through vulnerable website input fields where attackers can enter malicious SQL commands.
  • How do you prevent this attack? Regularly update and patch databases, use prepared statements with parameterised queries, and conduct regular security testing of web applications.

Man-in-the-middle (MitM) attacks

In MitM attacks, the attacker secretly intercepts and possibly alters the communication between two parties who believe they are directly communicating with each other.

  • Who it affects? Any financial transactions or data transfers occurring over insecure networks.
  • How does it happen? Through compromised public Wi-Fi networks or malware-infected systems.
  • How do you prevent this attack? Use strong encryption for data in transit, secure connections (HTTPS), and educate users about secure practices, especially on public networks.

By understanding and preparing for these common types of cyber attacks, financial services firms can better protect themselves and their clients from potential threats.

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The top 10 benefits of working with cybersecurity experts in the financial services industry

There are many benefits to working with cybersecurity experts who understand how financial companies operate and can collectively enhance the overall resilience and competitiveness of financial service providers, ensuring they are well-equipped. Here are 10 benefits to consider:

  1. Enhanced Risk Management: Cybersecurity experts provide specialised knowledge that helps financial services firms identify, assess, and manage cyber risks proactively. This is crucial for safeguarding sensitive data and financial transactions.
  2. Regulatory Compliance Assurance: With ever-evolving regulations in the financial sector, cybersecurity experts ensure that financial institutions comply with laws like GDPR, PCI-DSS, and others. This compliance is vital for avoiding hefty fines and legal complications.
  3. Advanced Threat Detection: Utilising cutting-edge technologies and methodologies, cybersecurity professionals can detect advanced persistent threats and other sophisticated cyber threats before they cause harm.
  4. Improved Incident Response: Financial services benefit from having experts who can swiftly manage and mitigate the effects of a cyber incident, minimising downtime and financial losses.
  5. Cost Efficiency: By outsourcing cybersecurity, financial firms can reduce the need for in-house security teams, thus lowering overall costs related to hiring, training, and maintaining a large staff.
  6. Access to Specialised Skills and Latest Technologies: Cybersecurity firms often have access to tools and resources that may not be feasible for every financial institution to possess internally. This includes the latest security software and advanced analytical capabilities.
  7. Strategic Security Planning: Experts help financial services firms develop and implement a comprehensive cybersecurity strategy that aligns with their business objectives and risk tolerance.
  8. Enhanced Customer Trust: By demonstrating a commitment to cybersecurity, financial institutions can build and maintain trust with their customers, an essential component in the financial sector.
  9. Third-Party Vendor Risk Management: Cybersecurity experts assist in managing and monitoring third-party risks, ensuring that all external partners comply with the same stringent security measures as the institution itself.
  10. Continuous Improvement and Learning: Working with cybersecurity experts ensures that financial services organisations stay updated on the latest threats and best practices, fostering a culture of continuous learning and improvement.

How to choose the perfect cyber security specialists for your financial business

According to many of our clients, a key factor prompting a switch in cyber security providers was poor communication. Finding a new cyber security partner can be a challenge, especially if past experiences have been less than satisfactory.

Here’s a checklist to help you evaluate potential cybersecurity specialists for your financial business:

  • Evaluate Communication Skills: Does the provider offer clear, consistent communication? Effective communication is crucial for understanding complex cyber issues and IT solutions.
  • Assess Industry Experience: Do they have specific experience in the financial services industry? Knowledge of industry-specific challenges and regulatory requirements is essential.
  • Check for Certifications and Qualifications: What certifications do their team members hold? Look for relevant credentials such as CISSP, CISM, or those specific to financial cyber security.
  • Review their Technology Stack: Does the provider use the latest technologies and security measures? Ensure their tools and techniques are up-to-date and robust.
  • Consider their Approach to Cyber Security: Is their approach proactive or reactive? Opt for specialists who focus on proactive strategies to prevent cyber threats rather than just reacting to them.
  • Understand their Incident Response Capabilities: How effective is their incident response? Ensure they have a solid plan to handle breaches swiftly to minimise damage.
  • Examine Client Testimonials and Case Studies: What do other clients say about them? Look for testimonials and case studies that demonstrate their expertise and effectiveness.
  • Query about Customisation Options: Can they tailor their services to your specific needs? Customised solutions are often more effective than one-size-fits-all approaches.
  • Discuss Compliance Support: How well do they support compliance with regulatory requirements? This is crucial for avoiding legal and financial penalties.
  • Analyse Cost Versus Value: Are their services cost-effective considering the value they provide? Ensure the pricing aligns with your budget and the benefits you expect to receive.
  • Check for Scalability: Can their services scale with your business growth? Your cyber security needs may evolve as your business expands.
  • Inquire About Third-Party Vendor Management: Do they offer support in managing third-party risks? This is important as third parties can introduce vulnerabilities.

This checklist can guide you in choosing a cyber security consultancy that not only meets your business needs but also enhances your overall cyber resilience. By considering these factors, you can make an informed decision that safeguards your sensitive data and financial systems against potential cyber threats.

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We hope this guide has empowered you with a deeper understanding of the critical role cyber security plays in the financial industry. From tackling common threats to choosing the right experts, you're now better equipped to enhance your organisation's cyber resilience.

Does your business face similar cybersecurity challenges? How do these challenges impact your operations and strategic decisions? Are you worried about potential data breaches?

We'd love to hear your experiences and discuss how we can help. If you're considering enhancing your cyber security measures, feel free to reach out to us.