Since the Covid pandemic intensified digitalization and remote working, the banking sector is becoming more vulnerable to cybercrime, according to S&P Global Ratings.
In a report titled “Cyber Risk In A New Era: The Effect On Bank Ratings,” the ratings agency stated that cyberattacks can affect credit ratings primarily through reputational damage and potential financial loss. Banks and other financial organizations are potential targets for cyber attackers because they hold valuable personal data and serve specific financial or economic requirements and sectors.
Credit Analyst Irina Velieva stated, “Cyber attacks have had only a limited effect on bank ratings to date but can trigger more rating actions in the future as cyber incidents become more frequent and complex.”
Meanwhile, S&P stated, “Although it is crucial to learn from previous attacks and strengthen cyber-risk frameworks in real time, the appropriate detection and remediation of attacks takes precedence because the nature of threats will continue to evolve.”
According to the report, the cyber defense will become a more critical aspect of organizations’ overall risk management and governance frameworks, necessitating increased expenditures and more advanced tools. The internet banking system is made up of many different programmes, networking devices, internet service providers, and other organizations. All of them are possible points of entry for attackers.
As per the RBI’s annual report for 2019-20, the amount involved in banking frauds increased 2.5 times from Rs 71,500 crore in 2018-19 to Rs 1.85 lakh crore in 2019-20.
Various banks and financial institutions rely on merchants and fintechs to provide third-party services. If outsider merchants don’t have adequate security in place, the bank could find itself in hot water. Spoofing is also common when hackers create a website that appears and performs exactly like a financial institution’s website’s URL.
When customers enter their login information on a spoof website, the information is stolen and used by those fraudsters later. There are chances that cybercriminals can commit fraud using a person’s personal and financial information. A bank’s privacy breach might result in the bank’s customers’ information being sold or purchased on the dark web by other attackers.
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