The unprecedented growth of cyber crime on financial institutions is alarming. According to the An FBI report it has been revealed that over 400 reported cases of account takeovers by cyber criminals is with an actual loss of approximately $85 million.
A disappointing outcome of such cyber crime is the unimaginable burden on the banks, which puts customers money at high risk. Financial institutions clearly need to identify such threats and potential solutions to prevent the heavy burden of such unsafe events.
Challenges of Cyber Crime
Cyber Criminals are expert in designing special technology extremely difficult for identification by financial institutions and can easily sway naive customers. Such criminals are highly cautious not to spread their malicious intentions too far to be easily caught and instead use new tricks at regular intervals to trap users.
Financial criminals create attractive messages to run across banking websites. Upon clicking such ads, cyber criminals can easily access login details and passwords. These details are majorly misused for conducting fraudulent transactions and transferring lump sum amount of money to various other accounts.
ATM services are also prone to fraudulent activities by cyber criminals using various tricks to intercept confidential data in the card including the user's pin number. This way criminals can create fake cards to withdraw money from the individual's account.
Many financial institutions are concerned with the increasing frequency and new sophisticated methods used by cyber criminals. Financial threats are increasing costs to design resources and technology to combat cyber crime taking place on a large-scale. Electronic banking is one of the frequently used technologies by customers. Banks and ATM vendors are under constant pressure to handle attacks on mediums such as internet and ATM machines which today are primary sources to access cash.
Financial criminals find it very convenient to attack a single line of business like wire transactions. Frauds on such mediums facilitate the attacker for illegal activities such as money laundering which happens quickly and goes unnoticed. Many FI's are failing to employ necessary resources to deal with money laundering and maintain Bank Secrecy Act due to continual criminal challenges.
Small and mid-sized financial institutions need to be cautious in keeping their business open to certain industry type. A special risk management strategy needs to be adopted for long-term loans such mortgage, auto financing, energy lending all of which involve high levels of risk.
Viable solutions
At a macro level, financial institutions need to focus on seven major areas of risk management which include: Risk management for new products and services, capital planning, commercial real estate concentration, underwriting of industrial loans, interest rate risk, compliance with anti-money laundering schemes and consumer laws, technology and operational risks.
For consistent highly secured operations, financial institutions should outsource services to reliable security companies. This will also reduce the financial burden and cut down additional costs ad efforts to maintain an in-house security department for cyber crime.
With ever-increasing fraudulent activities, there is a dire need to buy advanced technologies and design specific applications to prevent all types or risks. These will abundantly minimize costs that arise from perilous acts such as hacking or money laundering.
To mitigate risks, it is essential for all financial institutions to increase awareness and access the appropriate resources to minimize risk of cyber threats. It is imperative to combat criminal activities by complying with regulations and keeping in mind the level of risks from all angles.
By monitoring financial crimes, a financial institution can immensely prevent criminals from attacking any channel that facilitates transactions to and fro the users. An integrated approach enables an organization to collect and analyze data from multiple areas of potential risk.
Cross channel, investigations can help minimize redundant procedures. Combined data can also help prevent malicious strategies an acts as a force multiplier to eliminate similar investigations and easily trap similar cyber attack on varied channels.
Software providers of bank websites and ATM services should be fluent with software updates to provide full security to customers. Essentially, financial institutions should not wait for a malware to strike but ensure that systems are highly secured to prevent the attack of malicious criminals.
Combating cyber crime is not a one day job or a prevention task after such a problem has occurred. Increased awareness and appropriate use of security resources are key measures to combat cyber crime. Financial institutions should prioritize prudence and formulate apt security measures to effectively combat any type of cyber crime.