The digitalization of business and the growth of the banking sector has spawned both a wide range of new opportunities and new vulnerabilities. With millions of transactions processed every day, financial space has become the most enticing target for cyberattacks.
Cybercriminals constantly look for new weaknesses in the system to plague unsuspecting individuals and numerous financial organizations, endangering not only businesses and customers but the industry as a whole.
Despite the existing regulations, threats continue to increase in frequency and complexity, and the banking and finance environment is still exposed to multiple risks. Cybersecurity has become an even more important aspect since the very foundation of banking lies in facilitating trust and credibility.
Therefore, it’s no wonder that the industry seeks new approaches and solutions to strengthen cyber resilience and protect consumers’ data and money without sacrificing reliability and convenience.
The Most Common Attacks on Digital Banking
With the all-around digitalization, cybercriminals have found numerous gaps to breach data. Therefore, it’s crucial to identify all the ways fraudsters attack the financial system. These are the biggest dangers to take note of in 2021-2022.
Unencrypted sensitive data is a goldmine for hackers. Of course, data encryption doesn’t guarantee complete protection from the hands of bad actors. However, even if devices and servers are stolen or hacked, data encryption ensures that assaulters will not decipher it. Thus, encrypted data adds another level of security, significantly reducing the risks of becoming a temptation for dishonest players.
Phishing refers to fraudulent attacks disguised as communication from official agents. A deliberately misleading message is designed to pressure the person reading it to take immediate actions, such as following a tricky link or revealing confidential information. With this information, criminals can make online purchases, skim off money, or commit sensitive data theft.
Planting malware on businesses’ devices is one of the most unsophisticated methods cybercriminals use to seize access. They target individuals with weak security competence and send them a message or other attachment that includes a harmful application. In this case, the goal of the attack isn’t to steal the customer data but to restrict access and claim a ransom to regain it.
Insecure third-party services
Many banks and financial institutions implement third-party services to offer their clients a better customer experience. However, if these third-party players don’t take strict security measures, a business will suffer considerable losses.
Spoofing is one of the newest types of cyber threats. Cybercriminals create a website similar to the original banking website that operates the same way. When users enter their credentials to log in, assaulters steal them to use them later.
Banking with Electronic Money Institutions as the Core Solution
It goes without saying that a solution to cyberattacks lies in a multi-layered approach, resulting in the improvement of several aspects, such as consumer awareness, staff education and training, and technologies capable of detecting suspicious behavior.
However, as is known, traditional banks are slow for many reasons at adopting new advancements, including cybersecurity measures. Therefore, more and more security-conscious businesses looking for uncompromising data and account protection seek help from new players who can satisfy all their needs. And here is the point where fintech space is starting to take center stage.
Electronic Money Institutions are organizations permitted to provide financial services to third parties and hold their funds on special accounts. Being more agile and technology-focused, EMIs are a great alternative to conventional institutions.
And even though they also have vulnerabilities, the way they control the banking process makes them better placed to deal with cybersecurity issues than their traditional opponents:
- Adherence to the Law. Apart from risk-resilient technologies, EMIs follow numerous governmental regulations to ensure financial security. They are obliged to keep their customers’ details private and guarantee the safety of funds and transactions, which makes them safer or even the safest players in the financial landscape.
- Reduced bureaucracy and compliance control. EMIs provide better compliance, resulting in implementing the latest and advanced compliance practices with less paperwork.
- Focus on aspects that really matter. Free from spending huge amounts on offline branches, EMIs have more resources to focus on innovation and customers’ needs, including privacy and protection.
- Agility and flexibility. EMIs have no limits when it comes to security solutions. They accumulate the best practices to offer their customers a variety of options and successfully balance safety and user-friendly experience. Besides, they can quickly adjust to changes in the market and develop stringent cybersecurity measures to confront new threats.
Of course, as for today, Electronic Money Institutions can’t entirely replace traditional giant corporations, but for smaller and mid-sized businesses, they seem to be a great solution.
Bank Money Vs. E-Money: What is Actually Safer?
Banks have also made several steps towards asset protection. According to the recent EU legislation, each European Union member is obliged to set up at least one Deposit Protection Scheme on a national level to guarantee that customers will not lose their money if a bank collapses due to some reasons, including cyberattacks. However, this does not guarantee the complete protection of sensitive data.
EMIs, in turn, though providing users with bank cards, accounts, and other related services, are not banks by their nature. But since they deal with various money operations, they are controlled by the financial authorities at the national and supranational levels.
The Verifo’s license, for example, has been issued and regulated by the Central Bank of Lithuania, a member of the European System of Central Banks. According to the rules inflicted by these establishments, all customer funds are kept in a separate account at the Central Bank of Lithuania, so they are guaranteed to be safe and available for withdrawal at any time. Thus, the probability that money will be stolen from the bank account is reduced to zero.
Furthermore, like many other EMIs, Verifo provides its clients with the optimum combination of the latest payment processing technology and next-generation security. The innovative architecture of Verifo promises that the products offered will only improve, and customers will be more and more successful.
In addition, Verifo constantly seeks new ways to strengthen the security shield of its platform and cooperates with the best market participants in the niche of cybersecurity. One of Verifo’s partners is HyperOps – a managed hosting and cloud computing services provider with deep expertise in security and support.
Thereby, EMIs (including Verifo) have gone the extra mile with their policies and regulations to ensure 100% security. At the same time, the cases when banks do not pay the money back are still a frequent occurrence.
The Bottom Line
Cybercrimes are an increasing threat to digital finances, and cybersecurity in the financial ecosystem is something that cannot be compromised. With the rapid expansion of digitalization in the banking industry, various financial institutions have become more prone to attacks of different kinds. That is why it is of great significance for industry players to maintain trust with customers and guarantee the full protection of assets and sensitive data.
EMIs (Electronic Money Institutions) have firmly settled in the fintech market not only for their customized offers and unique services but largely due to their security contribution. Being regulated and controlled from all sides and levels, EMIs have proved to be the most reliable place for businesses to deal with transactions and open accounts.
Nevertheless, even though fintechs compete with banks for market share, both players should work closely to better prevent and detect cybersecurity threats and share best practices and additional information to address the growing challenges posed by cybercrime.