FinTech Fundamentals: Cybersecurity in Banking Has Never Been More Important

Updated on January 6, 2023

Protecting Accountholders and Strengthening Trust

“Cybercrime is the greatest threat to every company in the world.” - Ginni Rometty, IBM Chairman, President & CEO.

Today’s consumers entrust their primary financial institutions to protect their personal data and financial information. So, when data breaches happen, it’s easy for accountholders to rethink their relationship with the institution that jeopardized their private information.

In fact, Pew Research Center discovered 64% of Americans have personally experienced a major data breach in their lives and feel they’ve lost control of their personal information.

As a result, accountholders wonder if major corporations and government agencies can actually protect their consumer data. Financial and healthcare industries store more valuable information than any other industry, making the financial and healthcare sectors bigger targets for hackers who want valuable, personal information.

We are entering a new age.

With millions of people digitally connected today, cybersecurity is an unfortunate and unavoidable factor of living in the new digital era. Understanding cybersecurity trends within the financial services sector will help you prevent impending attacks, safeguard against millions of dollars in damage, and maintain both your clients’ trust and your financial institution’s reputation.

Here’s What We Know

• Financial services firms fall victim to cybersecurity attacks 300 times more frequently than other industries. 

• In 2021, an estimated 83% of companies suffered more than one

• 95% of cybersecurity breaches happen from human error (almost never stemming from the IT department) with 48% of malicious email attachments being office files.

• An additional 1,862 data breaches affected almost 294 million Americans.
• It’s no surprise that security and trust are top of mind for businesses and individuals, yet 72% of consumers struggle to believe their primary financial institution works with their best interest in mind.

What A Cybersecurity Breach Will Cost You

Money

If your bank or credit union finds itself under cyberattack, expect to pay out.

In 2021, losses totaled $6.9 billion in cybercrime and $5.8 billion in fraud. Financial firms paid an average of $6 million per breach – making this the most expensive breach cost behind the healthcare sector.

The cost of each stolen record averaged $150 per record while the average share prices for finance and payment companies fell by 7.27% after a cyberattack. Additionally, breaches at organizations with fully deployed security, AI, and automation cost $3.05 million less than breaches at organizations with less resilient AI and automation defenses deployed.

Reputation

Cybercrimes not only compromise personal data but put your financial institution’s reputation at risk, too. 

In fact, 65% of data breach victims indicate they lost trust in organizations that allowed their personal data to be compromised, with an even larger percentage (80%) willing to stop doing business with the company. 

An interactions marketing survey also found:

• 85% of people tell others about their experience after a data breach.
• 33.5% complain about it on social media.
• 20% contact the business directly. 

Losing the trust of your current accountholders plus the reputation of your brand can have devastating effects on your bank or credit union and take years to recover reputation-wise – especially if the data breach was poorly managed.

Business

Security Magazine reports 52% of consumers switch companies if they can get the same product or services with more trusted security measures in place.

When asked to rank the most important factors consumers take into consideration when buying financial products, “Trust with the brand” (45%) ranked second – outranking even price (43%).

When you couple these statistics with the fact that the majority of Americans believe major banking and financial cyberattacks will happen within the next few years, it’s more important than ever before to assure your accountholders your financial institution has safeguards in place to withstand future attacks and protect their personal data.

Shining a positive light on the conscientious efforts you’re taking to successfully protect your clients’ personal data will not only build your reputation, but help you gain the business of consumers looking to do business with trusted financial institutions. 

As we head into the new year, it’s imperative your financial institution understands the latest cybersecurity trends to minimize your cyberattack risks, protect your accountholder’s private information, and ultimately guard your financial institutions good reputation.

Cybersecurity Resources

Learn more about how you can keep your bank or credit union safe from a cyberattack. Visit jackhenry.com and check out the cybersecurity resource page for articles, webinars, videos, and morre.