Main takeaways from this article:
Cybercriminals increasingly target the financial sector due to sensitive data and large financial incentives. Global cyber incidents targeting the financial sector rose 83% in 2023, and the average cost of a data breach reached a record $4.88 million in 2024.
Compliance with international regulations such as PCI DSS, GDPR, and SOX is critical but challenging for financial institutions with globally distributed customers. Failure to comply can lead to steep penalties, as seen with Danske Bank's €1.3 million GDPR fine.
Common challenges in financial services cybersecurity include managing third-party risks, fragmented security infrastructures after M&As, and balancing modern cloud adoption with legacy infrastructure risks.
The Financial Services Cloud Security Playbook
In this playbook, learn about the trends and strategies for building a cloud foundation, as well as the security risks that fintech companies must consider during the process.
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Digital advancements in the financial services sector open the door for new cyber risks
Financial organizations are increasingly adopting new technologies for fast, cost-effective, and personalized service delivery. Mobile apps, open banking, cloud data storage, AI and ML, blockchain, and biometric authentication are a few examples. These key developments in the finance sector have brought both benefits and drawbacks, including:
Third-party vulnerabilities: Many breaches occur through third-party service providers or vendors. For example, a 2024 data breach impacting 4.2 million Comcast and Truist Bank customers was attributed to a third-party debt collection agency.
Unpatched software vulnerabilities: Attackers have exploited software vulnerabilities in several high profile occasions, including Log4Shell, SolarWinds, ProxyLogon, EternalBlue, Equifax, to name a few.
Insider threats: Employees or contractors with privileged access to cloud data can intentionally or unintentionally cause data breaches. The Capital One breach in 2019 was perpetrated by a former Amazon Web Services employee.
As financial organizations offer more digital services, the need for financial cybersecurity becomes vital.
Why financial services organizations need cybersecurity
Financial services institutions are prime targets for cybercriminals due to the vast sums of money they manage. In 2023, the global financial services market was valued at approximately $31.14 trillion, with projections to reach $44.93 trillion by 2028. This immense value makes the sector particularly attractive to threat actors employing tactics such as ransomware, phishing, and malware attacks.
Notably, the number of cyber incidents in the financial industry worldwide increased from 1,829 in 2022 to 3,348 in 2023, highlighting the escalating threat landscape.
As financial institutions continue to adopt cloud computing, their attack surface expands, necessitating cybersecurity measures to protect assets and maintain trust.
Here are four key reasons why cybersecurity is essential for the industry:
Protect sensitive customer data: Financial institutions store vast amounts of personal and financial information, making them lucrative targets for attackers. Strong security protocols are vital to prevent sophisticated cyber threats and ensure data privacy.
Prevent financial fraud: Cyberattacks like phishing and ransomware can result in significant financial losses. Proactive measures help detect and thwart fraud before it impacts businesses and customers.
Comply with regulations: Regulations like PCI DSS, GDPR, and SOX mandate stringent data security standards. Compliance not only avoids legal penalties but also enhances overall cybersecurity practices.
Safeguard trust and reputation: A security breach can erode customer confidence and damage a firm’s reputation. Strong cybersecurity helps maintain trust by ensuring secure and reliable services.
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Key cybersecurity challenges in the financial sector
Let's take a look at six critical challenges facing the finance industry:
1. Insider threats
Employees with access to critical data may compromise security due to negligence or malicious intent. For example, Yahoo sued a former employee in May 2022, alleging that he downloaded approximately 570,000 pages of proprietary information right before he gave his notice. According to Yahoo, the downloaded information included source code.
2. Third-party risk management
Third-party solutions such as data security and compliance solutions, cloud data storage solutions, data entry/processing software, credit card processors, and customer relationship management software keep the finserv sector running smoothly. Although financial institutions enter into contractual agreements with third-party vendors, this is not sufficient because the providers may provide incomplete or inaccurate information about the true capabilities of their products/services. That’s why independent verification is necessary, and you should leverage only trusted, industry-leading platforms like Wiz.
3. Numerous regulations
Due to the sensitivity of PII, there are multiple international, domestic, and even regional cybersecurity regulations that financial services companies must comply with. Staying on top of regulatory compliance can be challenging, so let’s take a look at a few regulations in more detail:
| Regulation | Overview |
|---|---|
| Payment Card Industry Data Security Standard (PCI-DSS) | PCI-DSS encourages organizations to encrypt and restrict unauthorized access to cardholders’ personal and financial information. |
| The Gramm-Leach-Bliley Act (GLBA) | The GLBA includes rules guiding the collection, use, and sharing of PII by all American financial service providers in—or with clients in—the U.S. |
| The New York State Department of Financial Services (NYDFS) Cybersecurity Regulations | NYDFS Cybersecurity Regulations require DFS-licensed institutions and financial institutions’ third-party service providers to implement strong cybersecurity policies and regularly audit them for proactive risk management. |
| The Sarbanes-Oxley (SOX) Act | The SOX Act compels organizations located in or operating in the U.S. to provide accurate financial audits signed by their CEO and CFO and audited by a third party on an annual basis. It seeks to ensure financial records are accurately compiled and securely stored. |
| The California Consumer Privacy Act (CCPA) | The CCPA mandates that organizations that either operate in California or have clients in California must properly secure and record data/processing history. The act requires organizations to provide forms that customers can fill in to state if their PII can be used or sold—and to what extent. |
| The General Data Protection Regulation (GDPR) | The GDPR covers all financial services providers in the European Union. It limits the collection of PII to only absolutely necessary data and provides strict guidelines for its processing and storage. |
For organizations with customers who are distributed around the globe, ensuring compliance with these (and other) policies can be cumbersome. Failure to comply with these regulations often results in hefty fines. For instance, Danske Bank, a Danish bank that violated GDPR and Danish Data Protection Agency (Datatilsynet) regulations was fined €1.3 million. The bank was unable to provide evidence of properly processing customer PII, including deleting data that was no longer necessary. Institutions can protect themselves from steep fines by adopting a comprehensive compliance solution.
4. Maintaining fragmented security infrastructure
Mergers and acquisitions are common in the financial services industry. When they occur, getting full visibility into diverse cloud-hosted resources to manage potential cyber risks can be difficult and require expert intervention. To avoid this, verify your service provider’s reliability.
5. Cost and expertise required to maintain security standards
Deploying cloud services means security responsibilities are shared between CSPs and financial institutions. In addition to the overhead associated with paying for cloud storage and security solutions, extra costs stem from employing and training staff who can manage them. For small and medium-sized institutions seeking to leverage the benefits of tech solutions, staffing and costs can be unmanageable.
6. Legacy infrastructure
Although there is industry-wide cloud adoption that will continue for years to come, there’s an abundance of legacy applications and infrastructure in the financial services sector that are not immediately movable to the cloud. Since those immovable resources are on-prem, they could be backdoors to an organization, introducing risks that the cloud could have abstracted away. For example, outdated software components, natural disasters, power surges and outages, disk malware, and other forms of manual attacks can compromise on-prem functions.
Most common cyber attacks financial systems face
Financial services firms face some of the most advanced and persistent cyber threats due to the immense financial value and sensitive data they manage. Understanding the nature of these attacks is critical for implementing defenses that align with your institution's operational complexity and regulatory obligations.
Phishing attacks
Phishing schemes target employees with deceptive emails or messages designed to steal credentials or deliver malware. These attacks often exploit trust, leading to compromised accounts or unauthorized financial transactions. Notably, between August 2023 and July 2024, approximately 68% of identified phishing pages targeted financial institutions and their customers.
Malware and ransomware attacks
Ransomware is a type of malware that encrypts an organization's data, with attackers demanding payment for decryption keys. The financial services sector has seen a rise in ransomware incidents, with attacks increasing from 55% in 2022 to 64% in 2023. These attacks can disrupt operations and lead to substantial financial losses.
Distributed denial of service (DDoS) attacks
DDoS attacks overwhelm online services with excessive traffic, rendering them inaccessible to legitimate users. The financial sector was the most targeted by DDoS attacks in 2022, with the frequency of such attacks continuing to grow. These disruptions can erode customer trust and result in financial losses.
Man-in-the-Middle (MITM) attacks
MITM attacks occur when an attacker intercepts and potentially alters the communication between two parties without their knowledge. In financial contexts, this can lead to unauthorized transactions or data breaches. For instance, sophisticated deepfake scams have been used to impersonate executives, leading to significant financial thefts, such as the $25 million stolen from a UK company through a Hong Kong bank.
Vulnerable APIs
Application Programming Interfaces (APIs) are essential for integrating services and enabling communication between software systems in financial institutions. However, if not properly secured, they can become gateways for cyberattacks.
A 2024 report revealed that 42% of financial institutions experiencing API-related data breaches attributed them to fraud, abuse, and misuse. These statistics underscore the critical need for API security measures, including comprehensive monitoring, authentication protocols, and regular vulnerability assessments, to protect sensitive financial data and maintain system integrity.
The Financial Services Cloud Security Playbook
Strategies and recommendations that financial services organizations can leverage as they migrate towards cloud environments.
Download Playbook10 cloud security fundamentals to protect financial institutions
Digital transformation in financial institutions hinges on delivering secure, feature-rich digital financial products that meet customer expectations and regulatory requirements. As these institutions adopt cloud services to modernize legacy systems and enable seamless collaboration with partners, a cloud security framework becomes essential to protect sensitive data and ensure compliance.
1. Avoid risks of migrating to the cloud
Migrating to the cloud introduces new security challenges that can expose financial institutions to risks without proper planning and tools.
Ensure visibility into your cloud footprint: Maintain complete awareness of all cloud resources and configurations to effectively assess and manage your security posture.
Adopt a unified multi-cloud security platform: Simplify security management and reduce risks by centralizing oversight across cloud environments with a single security solution.
Regularly audit and optimize configurations: Continuously review cloud resource settings to detect misconfigurations and maintain alignment with security best practices.
2. Address compliance requirements
Compliance is critical for financial institutions to avoid legal penalties and maintain customer trust.
Gain a holistic view of compliance: Identify applicable regulations and map them to the services and resources they impact to streamline compliance management.
Establish a compliance baseline: Use detailed reporting to measure compliance at organizational, team, and individual levels, providing actionable insights and remediation guidance.
Implement compliance guardrails: Detect and address violations early in the development pipeline to prevent non-compliant resources from entering production.
3. Manage changes due to Mergers and Acquisitions
Mergers and acquisitions (M&A) introduce significant complexity, especially in aligning cloud infrastructure and security practices. A structured approach ensures a smooth transition while protecting sensitive data and maintaining compliance.
Pre-acquisition: Inventory cloud infrastructure, controls, and compliance to establish a clear understanding of the organization's digital assets and security posture.
During acquisition: Prioritize key tasks for the first phase of integration, focusing on merging critical IT environments and addressing immediate risks.
During integration: Architect unified security systems and workflows to protect sensitive data and streamline operations in the post-acquisition process.
Post-acquisition: Identify and resolve compliance gaps as part of the cloud risk analysis to align with regulatory and organizational standards.
4. Embrace a shift left approach
Shifting security left ensures vulnerabilities are addressed early in the development lifecycle, reducing risks and remediation costs. By integrating security into every phase of development, financial institutions can enhance collaboration and streamline workflows.
Foster a collaborative culture: Promote close collaboration between development, operations, QA, and security teams to integrate security seamlessly.
Integrate tools and processes: Leverage automated testing tools and CI/CD pipelines for early detection of security issues.
Embed cloud security tooling: Incorporate cloud security solutions directly into engineering workflows for proactive risk management.
Invest in training and skills development: Equip teams with the knowledge to effectively implement shift-left practices through targeted training programs.
5. Create “cyber resilience”
Cyber resilience ensures that financial institutions can maintain operations during cyber incidents and recover swiftly afterward.
Establish risk management frameworks: Conduct regular risk assessments to identify vulnerabilities and develop mitigation strategies.
Develop incident response and disaster recovery plans: Outline detailed procedures to sustain operations during attacks and restore normalcy quickly post-incident.
Prioritize third-party risk management: Evaluate the security practices of third-party vendors and cloud service providers to ensure alignment with your organization’s standards.
Address compliance gaps: Regularly assess and resolve compliance issues as part of an ongoing risk analysis to maintain regulatory alignment.
6. Strengthen identity and access management (IAM)
Strong IAM practices are essential to ensure that only authorized individuals have access to sensitive resources, reducing the risk of unauthorized activity or breaches. Financial institutions must adopt strong IAM controls to secure critical data and operations.
Implement least-privilege access: Restrict user permissions to only what is necessary for their role, minimizing potential attack surfaces.
Enable multi-factor authentication (MFA): Add an extra layer of security by requiring multiple forms of verification for account access.
Use Wiz to monitor permissions: Leverage Wiz to identify over-permissioned roles and risky access paths, enabling quick remediation to strengthen security.
7. Enable advanced threat detection
Advanced threat detection tools are critical for providing real-time insights into emerging risks and identifying anomalous activities that could indicate a breach. By leveraging these tools, financial institutions can respond quickly and minimize the impact of cyber threats.
Deploy AI-driven detection tools: Use AI and machine learning to identify suspicious patterns and uncover hidden threats in real time.
Correlate events across systems: Integrate data from multiple sources to gain a comprehensive view of potential security incidents.
Utilize Wiz for attack path analysis: Identify and prioritize critical vulnerabilities with Wiz’s ability to visualize attack paths and recommend effective responses.
8. Encrypt data at all levels
Encryption is vital for protecting sensitive financial data both at rest and in transit, ensuring that it remains secure even if intercepted or accessed by unauthorized individuals. Implementing strong encryption protocols safeguards critical information and complies with industry regulations.
Implement encryption protocols: Use industry-standard encryption methods to secure data at rest and in transit.
Leverage cloud-native encryption tools: Utilize built-in cloud services like AWS KMS or Azure Key Vault to simplify and enhance encryption processes.
Manage encryption keys securely: Establish strict controls for key generation, storage, and rotation to ensure that malicious actors cannot gain unauthorized access.
Use Wiz to monitor encryption: Detect and remediate unencrypted resources across your cloud environment with Wiz’s security insights.
9. Monitor and log cloud activity
Continuous monitoring and logging are essential for maintaining visibility into cloud operations and detecting unusual activities that may indicate a security threat. Proactive log management helps financial institutions strengthen their security posture and respond to incidents swiftly.
Set up centralized logging: Aggregate logs from all cloud services into a unified system for streamlined analysis.
Review activity logs regularly: Analyze logs to identify anomalies, unauthorized access attempts, or potential vulnerabilities.
Leverage Wiz for correlation: Use Wiz to connect activity logs with security posture insights, enabling anomaly detection and prioritizing response actions.
10. Conduct regular security audits
Regular security audits are crucial for identifying vulnerabilities, addressing risks, and ensuring compliance with evolving security standards. These audits help financial institutions maintain cloud security and adapt to new challenges.
Schedule periodic audits: Conduct regular reviews of your cloud environment to evaluate security measures and detect gaps.
Engage third-party assessments: Include external security experts for unbiased evaluations and compliance validation.
Use Wiz for streamlined preparation: Leverage Wiz’s consolidated security view to simplify audit processes, identify gaps, and plan remediation efforts effectively.
Examples of financial institutions doing cybersecurity right
Blackstone, the world’s largest alternative asset manager, tackles advanced cloud-native security
Lili, an all-in-one banking app, achieves PCI DSS compliance by remediating its most critical risks and perform deep architectural reviews
Tide, a financial platform for micro small and medium enterprises, uses a unified cloud security platform to keep its infrastructure and customers’ data safe, and automate its approach to securing its containerized environment
Revolut, one of Europe’s best-known money applications, enhances its response to potential cyber threats with clear, concise reporting that creates focus in a large, fast-moving engineering team
Aon, a risk management and insurance brokerage firm, automates risk identification and compliance reporting, while successfully fast-tracking remediation and M&A integration
Bridgewater Associates, an asset management firm, unifies its hybrid and multi-cloud security posture
Protecting customer data in the cloud
Financial institutions have a large amount of sensitive data they need to protect in the cloud in order to gain their customers’ trust. It can be challenging to understand where your sensitive data is, how it can be accessed, and how different risks come together to result in a risk of a data breach.
Wiz’s unified cloud security platform makes it easier for financial institutions to stay secure in the cloud by offering:
Sensitive data protection: Wiz can automatically identify and classify sensitive data, such as customer PII and financial transaction data. It can then be used to create policies to protect this data from unauthorized access or disclosure.
Comprehensive risk assessments: Wiz provides a unified view of all cloud assets, including workloads, infrastructure, and configurations. This allows financial institutions to identify and prioritize security risks across their entire cloud environment.
Deep risk analysis: Wiz uses a variety of techniques, including machine learning and graph analysis, to deeply understand the relationships between cloud assets and identify complex risks that traditional cloud security tools may miss.
Prioritized remediation: Wiz prioritizes remediation actions based on risk, business impact, and other factors. This helps financial institutions to focus their efforts on the most important risks and reduce their overall risk exposure.
Compliance and reporting: Wiz helps financial institutions to comply with a variety of industry regulations, including PCI DSS and HIPAA. It also provides comprehensive reporting capabilities that can be used to track and demonstrate compliance over time.
Multi-cloud enablement is at the heart of our transformation strategy and security is paramount. Wiz helps us visualize our entire cloud environment and drive actionable insights, in minutes. They’ve made cloud security an enabler for Morgan Stanley and helped us break down the barriers between security and development teams.
Katherine Wetmur, Co-CTO, Morgan Stanley
Learn why Wiz offers the best cloud security solution for financial services, or see for yourself by scheduling a demo.
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