How ASEAN Financial Institutions Can Prepare For Cyber Defenses

Cybersecurity is now an essential business priority as financial services rapidly digitize across the Asia Pacific region and worldwide. Technology is transforming the financial services industry, including a widespread shift to the cloud, fintech players gaining prominence over traditional financial institutions, and greater reliance on crypto-currencies by retail and institutional investors. Cyber security risks are not limited to the physical side of how cyberattacks can go wrong. ASEAN financial institutions need to consider how they may affect their core business objectives.?

Critical Threats For ASEAN Financial Institutions In 2022

Supply Chain Risk

The financial services industry is increasingly adopting digital technologies, incorporating new R&D approaches, and using third-party vendors to improve the speed of delivery. Therefore, attackers are emerging across the financial sector, especially banks and other institutions, to steal profits from third-party suppliers. As a result, while financial institutions must have robust cybersecurity defenses and controls, third parties providing critical services will remain prime targets for threat actors.

With multiple institutions using the same vendors, there's an additional obstacle of concentrations risk, where a cyber-attack on one prominent supplier has the potential to affect a significant number of firms in the financial system, either globally or regionally.

Ransomware

According to?Check Point's report 2021, ransomware attacks rose about 93% this year. The Asia Pacific faced the most significant number of institutions being attacked. Many firms have mitigated the ransomware risk by purchasing cyber insurance, which covers the ransom payments and, therefore, can minimize reputational and operational damage. However, it's not a feasible long-term strategy. Cyber insurers are tightening coverage terms, maximizing their premiums, and limiting ransomware payouts. In addition, ransomware is an evolving threat, and the amount of ransom demanded is also maximizing. Therefore, ASEAN financial institutions must invest in cybersecurity measures to protect against this potential cyber-attack.

Revival Of Trojans

Financial services digitalization has brought a wave of trojans, a kind of malware that allows cybercriminals to access systems, data and set up backdoors throughout banking infrastructure. Remote access Trojans are malicious software that is used for both espionage and attacks against systems. These trojans can be used to steal information from online banking applications, compromise web servers, and more. Banking Trojans are specifically designed to access one-time passwords or login credentials to manipulate users and hijack control of online banking sessions. We expect that Trojan revival will gain exponential growth in 2022 and target ASEAN financial institutions.

Fintech Cybersecurity Challenges

Protecting Applications And Networks

Mobile applications are the heart of fintech businesses. However, while apps allow fintech to reach a wide range of audiences and improve the services they offer, they're most vulnerable to cyber-attack since attackers can gain access to the network through applications.

Identity Fraud And Theft

Fintech applications enable users to enter confidential information and perform a financial transaction with a simple click. Consequently, they've become a prime target for cybercriminals who try to guess login credentials, gain access to bank accounts and steal money or use the victim's identity for fraudulent activity. Keeping customers' digital IDs protected from hackers is a constant challenge.

Malware

Malware attackers find fintech firms an attractive target because of their financial access and PII. The most popular attacks include denial of service attacks where cybercriminals flood the application with traffic preventing authentic users from using the application. Besides, phishing attacks are also common where attackers claim themselves as legitimate government agencies of businesses to extract personal information.

Protecting Against Breaches

Fintech firms manage and store massive amounts of data every day. As a result, online transactions have become the most effortless activity for attackers to breach. If they breach the app and steal the user information, the fintech firm is held responsible.

Banking Regulations Compliance

Fintech is the highest regulated industry since it deals with users' PII and money. Banks are heavily regulated when using online banking solutions that fintech firms provide. The regulators require fintech firms to implement specific protection measures, with consequences for the organization if the requirements are not met.

Money Laundering

Numerous fintech companies are crypto-currencies. However, crypto-currencies bring significant cybersecurity risks since attackers can use the anonymous crypto-currency for money laundering, causing financial losses and legal ramifications.

Compliance With Security Regulations And Data Protections

Regulations like the GDPR pose requirements for fintech firms to have the appropriate security protections. Failure to protect the data through sufficient security measures results in a hefty fine. Furthermore, KYC (Know Your Customer) requirements, PCI-DSS (Payment Card Industry – Data Security Standard), PSD2 (Payment Services Directive), etc., are standards that fintech firms consider at every point.

How ASEAN Financial Institutions Can Prepare For Cyber Defenses

While few of the innovations utilized by fintech firms like blockchain technology are significantly touted for cybersecurity measures, the technology itself has safety issues. Cybercriminals can gain access at the application layer above the blockchain technology. Combatting these cyber threats needs a specifically tailored cybersecurity program for fintech firms and a fully developed and tried-and-tested incident response plan. These cybersecurity measures are not roadblocks to progress but guardrails to future sustainability.?

Data Protection

While protecting data is essential to defend against all kinds of cyber-attacks, it's critically necessary for safeguarding against ransomware. Ransomware attackers exfiltrate and lock up data backups prior to making ransom demands. As a result, ASEAN financial institutions must invest in a data vault separated from backups or central systems. By keeping sensitive data offline, organizations can ensure that losses and disruption are kept to a minimum; however, they retain valuable benefits during ransom negotiations.??

Patching Vulnerabilities

One of the effective ways to enhance vulnerability management is to establish a robust asset management program to determine precisely what devices your firm is using, their location, and their software version. A robust tracing system enables organizations to identify which devices need an update and how quickly it can be patched.

Strengthen Existing Defenses

Strengthening existing defenses includes email security, fortifying end-points, up-skilling staff to secure networks and minimize human errors. In addition, ASEAN financial institutions must keep board positions and senior management cybersecurity a top priority to secure adequate investment.

Threat Intelligence Sharing

It doesn't matter the number of threat intelligence feeds an organization subscribes to; it can never anticipate all cyber-attacks all the time. Therefore, it's essential to share threat intelligence on a trusted platform, along with smaller communities that concentrate on industry verticals and regions of operation. Threat intelligence sharing not just help organizations establish pre-emptive defenses against cyber-attacks but also help victims determine the tactics of cybercriminals, such as whether they'll post the data publically or decrypt it upon payment.

Build Procedures To Respond To Cyber-Attacks

All ASEAN financial institutions should use red teaming to simulate attacks to determine how well prepared they are to respond to cyber-attacks. The premise behind red teaming is to assume a cyber-attack or data breach has already occurred, and the team has to comb the system to detect the compromise. To efficiently do this, cyber defense teams must analyze the current threat actors and their attack strategies.

Reinforce Third-Party Threat Management

Enhance cybersecurity on the organizations' side with third-party security service providers, reducing the possibility that third-party vulnerabilities affect data and systems. Systematically review security protocols, processes, documentation, and personnel used by or related to suppliers. Consider implementing real-time threat monitoring systems to assist in evaluating the risk posture of vendors.

Build And Recruit Diverse Teams

In today's constantly changing online world, a talent pool with various skills is a successful business imperative. Without a wide variety of experiences and skillsets, it's impossible to stay ahead of innovative cybercriminals, providing them excessive strategic advantage. With the global shortage of cybersecurity talent, investment in cybersecurity professionals focusing on advanced technical skills and diversity is fundamental to protecting the organization.

Furthermore, speed is a necessity in a fintech landscape. For instance, being the fastest to provide personalized service such as adding digital assets or making immediate lending decisions can help an organization stand out and compete with crypto-native companies, virtual banks, etc. however, speed should not come at the expense of security.

Without a balanced approach to foundational cybersecurity concepts and strategic growth, fintech firms could keep scrambling to implement cybersecurity measures to existing platforms retroactively. Therefore, all ASEAN financial institutions need to ensure that foundational cybersecurity concepts have been prioritized to comply with evolving government regulations.

By keeping the strategies mentioned above and tips in mind, fintech firms can establish a balanced approach to advanced technology-driven growth!

THE FINAL VERDICT

The current global fintech industry is expected to reach?$190B by 2026. Within the market, AI is projected to?grow 23.5% annually by 2027. But as financial institutions rush toward that progressive future, they may overlook foundational, traditional challenges critical to business operations, for instance, cybersecurity. Cyber-attack on financial infrastructure is a significant threat to the stability and safety of the global economy. To minimize the systematic consequences of cyber-attack, we should maximize the focus on recovery and response so ASEAN financial institutions can prepare to identify problems and their solutions as effectively as they can.