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 digital banking 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.