Cryptocurrencies are disrupting the way people feel about managing their finance. The idea of transferring a currency in a matter of seconds forces traditional financial systems to do some catching up. On the other side, not everyone is fully confident that an all-digital financial future is around the corner, as cyber-crime, power outages, service denial and learning curves encompass not only Crypto Currencies but IT-related products as a whole.
Still, some institutions have already begun a digital transition, if not in the commodities they trade, at least in the way they handle operations. Smart Banking is the term used to describe the process of digitalisation of customer care, finance and wealth management, consultancy and all other operations that a financial institution might offer to its clients.
Smart Banking is nowadays widespread, and all major make use of it to answer the growing desire for applications and other IT services that allow customers more independent control over their finances. Yet how does that play from the Cyber Security perspective?
In this article, we will explore all the risks related to smart banking, and we will try to understand whether your money is safer on the web rather than under the mattress.
Cyber Security and Smart Banking: can you trust it?
The Brno University of Technology published a study in 2022 that tried to capture the Cyber Security posture of Smart Banking. According to their findings: “Financial services firms fall victim to cybersecurity attacks 300 times more frequently than businesses in other industries,’’ and ‘‘Number of security incidents in this sector has tripled in the past five years’’.
These numbers show how Smart Banking functionalities are becoming more and more of a target for cyber attackers. The issue that most bank face, however, according to the same study, is the insider threat.
This means that the most occurring breach scenarios involve an insider, such as an employee or a contractor, exploiting a weakness of the Smart Banking system to benefit from breaching the security by acquiring customer data or stealing actual information.
The simplicity and gravity of these attack vectors are correlated, as insider threats are usually more prominent in environments where scarce security policies are put in place. In other words, the ability of an employee to make use of a vulnerability is influenced by the internal checks and balances put in place by the bank.
This notion alone could probably tell us that if the first concern of banks today is still et their internal procedures and checks up to speed, maybe the world is not ready for it yet.
Conversely, this assertion is only valuable when compared to the bigger picture of the financial system. If we look at the U.S. Security and Exchange Commission’s annual report (SEC.gov), we will also find that insider trading and market manipulation cover a large percentage of crimes investigated (13%), putting it among the top 5 investigation category.
The problem of the trustworthiness of financial systems handled by people is way more complex than simple statistics related to reported incident causes. Over the years, most financial institutions have been exposed to various insider attacks. Yet, we still have faith in the banking system because of the many efforts made to regulate and balance it.
The same logic should be applied to cyber security and smart banking. What effort should you see your bank making to know you can trust their Smart Banking functionalities?
What should a Smart Banking platform include?
Here follows a list of features that your Smart Banking app and the webpage should include to be considered trustworthy:
Encryption: Sensitive data such as customer passwords, financial transactions, and personal information should be encrypted using strong encryption algorithms to prevent unauthorized access.
- Encryption and Updates: All the data at rest (saved on your phone or on the bank servers) and in transfer (data exchange during communication between you and the bank) should be encrypted with up-to-date strong algorithms and techniques. This applies to web pages and apps, which should be regularly updated and available on the latest version of operating system and devices.
- Multi-factor authentication and ID Verification: A modern Smart Banking platform should implement multi-factor authentication with easy-to-use methods. Today there are several tools and providers of authentication methods, and you should be able to choose the most convenient method. Also, check whether the bank you use verifies its customer by ID and personal verification. This will ensure that sensitive actions are not taken unless someone verifies your identity remotely.
- Employee training: Employees are the first line of defence of any company, and if they lack the appropriate training, then all other security measures implemented will have marginally less effective in mitigating the risks.
- Intrusion Detection and Access Control: Security monitoring through intrusion detection systems and other industry standard technologies should be enforced. Also, access to the back end of the application should be controlled with an access control list that ensures that only people with appropriate rights are able to log in and operate on the code. These two elements ensure non-repudiation of actions
- Cyber Security Policies: Risk management, third-party management, vulnerability assessment and regular audits are a basic list of procedures that the bank should possess and enforce; any online financial platform should have these and more
The simplicity of use and a strong customer service portal is the last but important elements you should be looking for.
Being locked out from your Smart Banking app or being unable to understand how it works properly are issues that will make you more vulnerable and unable to manage a crisis should any accident happen.
Also, the point of Smart banking is to give you more control over your financial information, don’t let this goal be forgotten while searching for a trustworthy Smart Bank.
You can trust Smart Banking only as much as you can trust your bank. Remember to evaluate a Smart Banking platform’s trustworthiness based on a few key principles and try to get a platform that can be most familiar to you, at least in the beginning, to ease your learning curve.
Remember that Smart Banking is evolving with you. Nothing will impede you from switching to a different platform in a few years, so don’t miss the opportunity to stay up to date right now.
Smart Banking is a term that refers to all the services provided by banks and other financial institutions that allow customers to control their accounts and finances easily through the internet and mobile apps.
Smart Banking exposes your financial accounts and operations to all risks correlated to web activity. Also, in case of data breach on the bank side, you put at risk all your personal information related to your account.
Banks that apply best practice rules are a better option than those which don’t. The following are a few parameters you can use to make a comparison: technical features (encrypted app and connection, identity and access control on backend and multi-factor authentication for apps and webpages), policies and culture (personnel training, cyber security policy), ease of use and updates (frequency of updates, interface appeal and uasbility).