Fraud Risks in Banking and Finance (And What to Do)

The COVID-19 pandemic has changed life as we know it. State-wide lockdowns and other preventive measures have become a norm, ultimately affecting people from all walks of life. In the case of organizations, companies across all industries have been forced to adopt a remote working setup.

As of today, Pew Research Center, state71% of workers are doing their job from home all or most of the time. If given a choice, 54% of those whose responsibilities can be done remotely say they want to keep telecommuting even after this global crisis ends. While various corporate sectors continuously improve their digital transformation efforts, cybercriminals also make the most out of the situation by searching for vulnerabilities. 

If your company is operating within the financial space, knowing how to handle sensitive information such as credit card numbers and social security details is just as important as identifying different cybersecurity threats.

6 Major Fraud Risks in Banking and Finance

1: Identity theft

It’s important to know that identity theft grew in numbers in the past year. Without a proper cybersecurity defense in place, a few clicks are all it takes to steal and abuse an individual’s identity for unauthorized purchases and loans. For both your teammates and customers, regularly advise credit report monitoring to ensure that all transactions are official and implement data protection strategies to safeguard any confidential information collected in your business.

2: Account takeover

Sometimes, threat actors go beyond using someone’s identity. Aside from being copied, data can now be changed altogether. This manipulation removes the original owner’s access to their account and gives the fraudster complete control over it.

Usually, the changes that lead to a takeover are unrecognizable. No matter how big or small the edit in information is, biometric-based authentication is the perfect precautionary measure against these fraudulent transactions.

3: Mobile fraud

Online banking has surged in popularity in recent years. However, with its rapid growth in usage comes new schemes your business and customers should be on the lookout for, such as phone hijacking or one-time password (OTP) attacks. Since online banking typically authenticates via SMS, bad actors can hack a number or crack the OTP code to access a fund. 

Once these hackers are in control, they can easily intercept and divert an e-transfer and eventually drain one’s savings. To stay on top of things, you have to give your smartphone the same level of security as you would for your own computer. In addition to requiring multi-factor authentication, installing antivirus software and being attentive to the clicks you make will keep you safe from harm.

4: Phishing attacks

In IBM’s 2020 Cost of a Data Breach report, 19% of malicious data breaches were reportedly caused by compromised credentials. With an average cost of $4.27 million, this makes stolen data the most expensive type of breach. These crimes can be easily carried out as it is also easy for your clients and employees to click on proxy websites or fake email attachments.

Regardless of your security measures and policies, know that your business can still be vulnerable to this issue. While there is no universal key to stopping an individual from falling for phishing attempts, preventive solutions like double-checks and refreshers on anti-phishing best practices can go a long way. 

Multi-factor authentication that relies on a factor with a biometric element can also be a powerful handicap to would-be phishing attacks. Even if a bad actor steals credentials, the challenge of stealing fingerprints or facial geometry is exponentially more difficult. While still possible, most hackers would prefer to move on to easier targets than spoof a biometric authentication system.

5: Ransomware attacks

In today’s digital era, data is the world’s most valuable resource. Malicious actors deploy multiple tactics to extort or steal as much of it as possible, especially in the banking and finance industry.

Ransomware is a type of malware that can take over a company’s data bank, systems, or servers unless the rightful owner pays a large payout. A robust cybersecurity strategy is a great start to keep sensitive information safe. Monitoring system and network changes while guarding admin privileges will be the best ways you can prevent such instances. 

6: Insider threats

Cyber breaches don’t always start from the outside. You must cover all grounds and check for insider threats.

With 34% of businesses globally getting hit by insider threats every year, banking and financial institutions need to be extra vigilant. Calling out suspicious performance is one preventive measure, but remember that these risks don’t necessarily have to be malicious. Poor data handling can also lead to a major cybersecurity breach and cause huge financial damage.

Only assign access to sensitive data to your company’s most trusted employees to ensure that no information will be manipulated or exposed to the public. Having your most knowledgeable staff in line means network security will be of utmost importance in every operation.

Ready for Any Risks

As the world continues to work on the digital space, your business has to prepare for the fast-paced advancements and ever-growing dangers that come with it. Now, more than ever, invest in cybersecurity and gear up with controls that can safeguard both your company’s resources and your customers’ data.

Partner with a team of experts for the perfect solution that can help prevent financial fraud-related issues and other hazards that may threaten the stability of your business. Contact Q5id to learn more about our identity proofing systems and other cybersecurity solutions!

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