Uncovering the Hidden Dangers: IoT and OT as a Growing Threat to Bank Security

[Installing a Honey Pot in my network and exposing it to the Internet in a controlled environment identified default User ID and passwords being attempted, which I recognised being used in some banks; I have done either security reviews or forensic investigations.]

Over the last several years, the banking sector has seen a significant increase in the use of the Internet of Things (IoT) and Operational Technology (OT). This trend may be attributed to the need to enhance efficiency, customer experience, and operational procedures. The growing use of Internet of Things (IoT) devices, including linked payment terminals, mobile banking applications, and smart, automated teller machines, has made it feasible to monitor data in real-time and conduct transactions without any interruptions. Along the same lines, the use of operational technology (OT) systems, which include automated processes and control systems that are networked, has resulted in increased productivity and simplified operations. Despite the fact that modern technologies provide a multitude of benefits, financial institutions also need to address new security concerns in order to safeguard sensitive data and maintain the faith of their customers. The incorporation of the Internet of Things and operational technology into banking has fundamentally altered the manner in which financial institutions operate by providing valuable information on client behaviour, operational efficiency, and market movements.

Key Takeaways

• IoT and OT pose a growing threat to bank security due to their increasing use in the banking industry.
• The rise of IoT and OT in banking has led to an increase in security risks and vulnerabilities.
• Banks need to understand the security risks posed by IoT and OT, including potential threats to their systems.
• The impact of IoT and OT on bank security can be significant, leading to potential breaches and financial losses.
• Strategies for mitigating IoT and OT risks in banking include implementing robust security measures and staying updated on regulatory challenges and compliance issues.

With the help of Internet of Things devices, financial institutions are able to collect and analyse data from a variety of consumer touchpoints, which enables them to get a more thorough understanding of the preferences and needs of their clientele. As a consequence of this, financial institutions are able to provide individualised services and targeted advertising efforts. Additionally, OT systems have made it possible for banks to operate in a way that is both more efficient and more cost-effective, thanks to the automation of repetitive processes like transaction processing, inventory management, and risk assessment. However, as a consequence of the increasing interconnection and dependency of these technologies, the security of financial systems may be put in jeopardy at the hands of cyber attacks.

IoT and OT devices are becoming more prevalent in the banking industry, which has led to the emergence of a multitude of security vulnerabilities. Because of these dangers, there is an increased likelihood that sensitive financial data may be stolen, accessed without authorisation, or manipulated. One of the most significant issues is that Internet of Things devices lack standardised security standards, which leaves them open to hacker attacks.

Due to the limited processing and memory capacity of many Internet of Things devices, it is challenging to implement robust security features such as encryption and authentication on these devices. Because of this, hackers routinely target these devices in an effort to gain access to the bank's network and compromise critical systems by taking advantage of the vulnerabilities that they provide. Financial institutions are vulnerable to cyberattacks due to the interconnection of their operational technology (OT) systems and their dependency on outdated infrastructure. Numerous operational technology (OT) systems are excellent targets for hackers who are attempting to breach networks or steal secret information since they initially did not give security considerations the attention they need. Additionally, the traditional borders that divide these sectors have grown less clear as a result of the merging of IT and OT networks in banking, which has opened up new attack avenues for hackers to take advantage of.

An attempt to find statistics on the following data points was inconclusive most of the time.

• Number of IoT Devices in Banking: Banks have made considerable investments in Internet of Things-based solutions such as intelligent branches, digital wallets, and customer interaction tools, which has led to significant adoption of the Internet of Things in the banking sector. Despite the fact that this adds to a more significant number of Internet of Things devices per institution, exact updated data are not clearly available.
• Percentage of Banks Experiencing IoT-Related Attacks: The popularity of the Internet of Things (IoT) continues to climb, which increases security issues. The Zscaler ThreatLabz analysis indicates that there has been a 400% rise in the number of malware assaults associated with the Internet of Things (IoT). This highlights the fact that many IoT networks in the banking industry are very susceptible to cyber threats. This spike has a substantial influence on the broader financial environment, with an increased likelihood that assaults connected to the Internet of Things may damage a more significant number of institutions.
• Cost of IoT-Related Security Breaches: Security breaches continue to have significant financial repercussions despite the fact that detailed expenses are not frequently published. According to reports, operational failures that impact both production and the reputation of the business are a regular outcome of assaults of this kind. As a result of accidents affecting Internet of Things networks, financial institutions are facing significant financial and operational expenses.
• Percentage of Banks with Inadequate IoT Security: Despite the fact that particular percentages are not disclosed for the financial industry, it is clear that there is still a significant disparity in terms of operating technology and Internet of Things security. It is important to note that only twenty per cent of organisations operating in the operational technology environment have developed visibility and segmentation, which is also essential for Internet of Things security in financial institutions. There are still many institutions that do not have modern security measures that are capable of efficiently dealing with complicated threats.
• Number of OT Attacks on Banks: The number of incursions that are associated with OT has significantly increased. Seventy-three per cent (73%) of organisations that deal with operations technology (OT) have seen assaults that have affected either their OT systems or both their OT and IT systems, according to the Fortinet 2024 research. This is a considerable increase from the previous year. Furthermore, 31 per cent of organisations that deal with operational technology reported more than six incursions in the previous year, which indicates a significant increase in the number of attacks that target operational technologies.

Because of this, financial institutions are facing a rising number of security events that are connected to the Internet of Things (IoT) and operational technology (OT). These incidents may include ransomware attacks and data breaches, as well as system breakdowns and service disruptions. Financial institutions must take preventative measures and acknowledge the particular security concerns that the Internet of Things (IoT) and operational technology (OT) pose in order to protect their systems and data from potential attacks. The security and integrity of financial systems could be in danger due to the numerous risks and vulnerabilities that the use of IoT and OT in banking has brought about. The fact that Internet of Things devices do not have secure communication protocols in place is a significant flaw in these devices. Because of this, hackers are able to intercept confidential information and carry out attacks using the man-in-the-middle technique. Additionally, a significant number of Internet of Things devices are configured using default or weak passwords, which leaves them open to brute-force assaults that might put their security at risk.

Furthermore, the sheer quantity of Internet of Things devices that are used in the banking industry expands the attack surface for cybercriminals. These criminals may utilise any device that is not secured to get into the bank's network and launch coordinated assaults. Old software and legacy infrastructure that are used by operational technology systems are the factors that make them susceptible to vulnerabilities that have been identified but have not been patched or addressed. A significant number of operational technology (OT) systems in the banking sector, which are also connected to third-party suppliers and service providers, provide additional entry points for hackers. The convergence of information technology and operational technology networks in the banking industry has resulted in the old lines that separated the IT and OT networks becoming less distinct. This has made it more difficult for banks to monitor and manage access to essential systems.

As a consequence of this, financial institutions are being forced to contend with an ever-increasing number of threats. These threats include ransomware attacks, insider threats, and distributed denial-of-service (DDoS) assaults, all of which can disrupt operations and jeopardise critical data. Banks are required to identify and address these vulnerabilities and threats in order to ensure the safety of their operational technology (OT) and Internet of Things (IoT) systems. As a consequence of the enormous influence that the integration of IoT and OT has had on the entire security posture of financial institutions, these institutions are now required to change their security policies in order to combat new threats and problems. One of the most significant implications is the difficulty of maintaining security across a wide variety of Internet of Things (IoT) devices and operational technology (OT) systems, each of which has its own unique set of vulnerabilities and attack vectors. In addition to the conventional information technology infrastructure, banks now need to cope with a more extensive attack surface, which encompasses a broad range of interconnected devices and systems. As a result of this complexity, the likelihood of data breaches and service outages is increased since it becomes more difficult for financial institutions to identify security issues and respond promptly to them.

As a result of the rising dependence on networked Internet of Things devices and operational technology systems, financial institutions are discovering that it is more challenging to maintain rigorous segmentation and access controls. This, in turn, raises the danger of insider threats and unauthorised access to crucial systems. The confluence of information technology and operational technology networks has resulted in the creation of new threats to supply chain security. These threats are a result of the fact that hackers can exploit vulnerabilities that third-party suppliers and service providers have introduced. Additionally, concerns surrounding data privacy and regulatory compliance have been brought up as a result of the growing use of cloud-based services for the Internet of Things and operational technology in the banking business.

As a result, banks are coming under increasing pressure to enhance their security processes and adopt a more all-encompassing strategy for managing the risks associated with the Internet of Things and operational technology. In order to lower the security risks associated with these emerging technologies, financial institutions must implement a comprehensive set of strategies that address the specific issues that the Internet of Things and operational technology provide. One essential strategy is to provide a robust security framework that encompasses both information technology and operational technology settings and ensures that all connected systems and devices adhere to predetermined security rules. This architecture needs to integrate security elements such as network segmentation, access restrictions, encryption, and authentication techniques in order to prevent unauthorised access to sensitive data or alteration of that data.

When it comes to its operational technology (OT) systems and Internet of Things (IoT) devices, financial institutions should also conduct vulnerability assessments and penetration testing on a regular basis. The ability to patch any security gaps proactively before hackers take advantage of them will be made possible as a result. It is necessary to increase employee awareness and training programs in order to better teach workers about the hazards connected with the Internet of Things (IoT) and operational technology (OT) in banking. Teaching staff members the best practices for securing Internet of Things devices, recognising potential threats, and managing security issues in a timely manner is something that should be done. Some examples of this include the creation of stringent password restrictions, the implementation of software and firmware upgrades on a consistent basis, and the reporting of any unexpected or suspicious activities in the Internet of Things or operational technology systems.

Furthermore, financial institutions should evaluate the possibility of investing in cutting-edge security technologies such as endpoint protection programs, intrusion detection systems (IDS), and security information and event management (SIEM) platforms. These technologies will allow financial institutions to monitor and analyse network traffic in search of indications of potential threats. The use of industrial technology and the Internet of Things in the banking industry has resulted in significant compliance and regulatory issues in the areas of risk management, consumer protection, and data privacy. The security measures of banks are being scrutinised more extensively by the regulatory bodies that oversee the financial sector in order to guarantee that customer information is adequately protected against unauthorised access or disclosure. In order to do this, it is necessary to comply with regulations such as the California Consumer Privacy Act (CCPA) in the United States, the General Data Protection Regulation (GDPR) in Europe, and the Payment Card Industry Data Security Standard (PCI DSS) for the management of credit card information. In order to demonstrate that they are in compliance with these rules, financial institutions are required to implement appropriate security measures for their Internet of Things (IoT) devices and operational technology (OT) systems. These measures may include encryption, access limits, data retention policies, and incident response processes.

When deploying Internet of Things (IoT) devices or operational technology (OT) systems that collect or handle personal data from customers situated in different jurisdictions, financial institutions are required to take into consideration the implications of data transfers that occur across international borders. Due to this, it is crucial to carefully review international data protection legislation, such as the APEC's Cross-Border Privacy Rules system or the US and EU's framework. Failure to comply with these regulations can result in severe penalties for financial institutions, such as the imposition of fines, legal action, or damage to their reputation, which can lead to a loss of trust from customers. Banks are required to navigate a complex regulatory environment in order to guarantee that their Internet of Things (IoT) and operational technology (OT) security processes are in accordance with industry standards and best practices.

New concepts and trends that aim to counter the dynamic threat environment will have an impact on both the Internet of Things (IoT) and operational technology (OT) security in banking. The deployment of machine learning (ML) and artificial intelligence (AI) technologies to increase the threat detection capabilities of operational technology (OT) systems and the Internet of Things (IoT) is a significant breakthrough. Financial institutions are able to gain real-time insights about network traffic patterns, user behaviour, and potential security events that could signify a cyberattack by using analytics tools that are artificial intelligence-driven. Through the adoption of a proactive posture, financial institutions are able to identify abnormalities or behaviours that raise questions before they escalate into severe security breaches. Another emerging trend is the use of blockchain technology to protect Internet of Things (IoT) devices and operational technology (OT) systems via the use of decentralised consensus mechanisms that prevent tampering or unauthorised access.

The distributed ledger technology known as blockchain provides a high level of trust and integrity for the data that is sent within the network. This technology provides an open and immutable ledger that records all transactions or interactions that take place between linked devices. By implementing blockchain-based solutions for Internet of Things (IoT) and operational technology (OT) security, financial institutions may ensure that their critical systems are protected from cyberattacks while still adhering to data protection rules. Additionally, owing to the emergence of edge computing technologies, banks are now able to analyse data closer to its source, giving them the ability to avoid relying on centralised cloud infrastructure for Internet of Things (IoT) devices or operational technology (OT) systems. While simultaneously reducing the amount of latency and bandwidth that is required, this distributed strategy enhances data privacy and security for sensitive information that is acquired from Internet of Things devices. Through the use of edge computing solutions for the Internet of Things and operational technology, financial institutions may limit the danger of data disclosure or interception while it is in transit while also maintaining high levels of performance and dependability. In a nutshell, the Internet of Things (IoT) and operational technology (OT) in banking have resulted in the creation of new security threats that need active management, in addition to numerous beneficial outcomes.

By being aware of the specific challenges that new technologies offer, financial institutions can design and implement risk-reduction strategies that are not only effective but also ensure regulatory compliance. Specific emerging trends that aim to increase the resilience of financial systems against cyber-attacks will shape the future of the Internet of Things and operational technology security in banking. These developments include edge computing technologies, blockchain-based solutions, and threat detection driven by artificial intelligence. Banks need to make security a top priority as a fundamental component of their operations in order to protect client data and maintain trust in a world that is becoming more interconnected. This is especially important as banks continue to embrace digital transformation via the use of connected devices and operational technology.