Cybercrime risks becoming the next big banking scandal. What can be done
to stop it?
Ask someone to picture a bank heist, and they are likely to imagine
thugs in balaclavas, bursting through glass doors and brandishing
weapons, and hostages cowering on the floor.
It is a vivid scenario, and one that Hollywood has done plenty to embed,
but ask a security chief at a major bank what worries him, and he is
more likely to think of a single computer programmer in a dark room
hundreds of miles away, or spies at a foreign intelligence service
attempting to tap into its reams of customer information.
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“It’s very inexpensive to launch an attack, [hackers] can build one thing and then use it to attack bank one, bank two, bank three and bank four the same way,” Mr Clancy says. Increasingly, cyberattacks are not the work of amateur coders, but of organised crime and foreign intelligence services, a development that raises the stakes for security agencies and regulators as well as the banks involved.
“The financial sector is, of course, part of the critical national infrastructure, and as part of a national security struggle it becomes more of a priority target,” says Brian Lord, a former GCHQ director. “As geopolitical tensions have increased, the threats take on a different dimension… Nation states are going out and collecting whatever information they can.”
bersecurity attacks, so many believe,
could be the next big banking scandal. If over-exuberance and risky
lending has been the biggest threat to the sector in the last 10 years,
the major worry over the next decade is that customers’ sensitive
financial data will be compromised on a wide scale, or that hackers
could bring down the financial system.
As the banking world, like
much of the rest of corporate society, moves towards internet-based
services and online data storage, the risk of hostile attackers
attempting to infiltrate the system increases. As a result, spending on
banks’ cybersecurity is increasing rapidly, even as budget squeezes
force bonuses to fall and branches to shut.
Last week, JP Morgan’s
chief executive Jamie Dimon pledged to double cybersecurity spending
over the next five years, after one of the biggest breaches in banking
history saw the records of 83m customers and small businesses at his
bank compromised. The JP Morgan attack has drawn special attention in
recent weeks. It is far from a one-off.
On any given
day, odds are that your bank has had to fend off a cyberattack.
Individual troublemakers, activist groups, sophisticated criminal
organisations and rogue states are all targeting the world’s biggest
financial institutions in an attempt to steal customer data, disrupt
services or simply cause havoc.
Cybercrime is forcing companies of
all sizes in almost every sector to take stock, but the financial
industry’s position at the heart of world economies makes it a
particularly attractive target. Attacks are on the increase, as the
exponentially rising number of digital connections between banks,
customers and third parties presents new weak points for hackers.
“This
has always been a focus for banks but the scale of the threat has
increased,” says Richard Horne, a cybersecurity partner at PwC. “The
financial system is now more vulnerable because of the interconnected
networks.”
Not only is hacking a bigger opportunity than ever, it
is also cheap, according to Mark Clancy, the chief executive of Soltra, a
cross-party collaboration of banks and regulators to automate
intelligence sharing.
The same piece of malicious software can be
thrown at any number of financial institutions at little cost,
multiplying a hacker’s chances of success. In the case of the JP Morgan
hack, which occurred over the summer but was only disclosed this month,
many of Wall Street’s largest institutions were targeted at the same
time, without success.
“It’s very inexpensive to launch an attack,
[hackers] can build one thing and then use it to attack bank one, bank
two, bank three and bank four the same way,” Mr Clancy says.
Increasingly, cyberattacks are not the work of amateur coders, but of
organised crime and foreign intelligence services, a development that
raises the stakes for security agencies and regulators as well as the
banks involved.
“The financial sector is, of course, part of the
critical national infrastructure, and as part of a national security
struggle it becomes more of a priority target,” says Brian Lord, a
former GCHQ director. “As geopolitical tensions have increased, the
threats take on a different dimension… Nation states are going out and
collecting whatever information they can.”
The JP Morgan attack has been attributed to the Kremlin. Pic: Alamy
The attack on JP Morgan may have been the work of Russia, American officials have privately indicated. Other intrusions, including an attack on HSBC last year that left millions of customers without access to online services, have been blamed on Islamic groups.
A series of “denial of service” attacks, in which systems are so flooded with connections that they are forced to cease operating, hit US banks including Bank of America and Citigroup in 2012, and was subsequently attributed to Iran.
Often the goal of these attacks, unlike with traditional bank infiltrations, is not to steal money, but simply to disrupt financial systems. “It’s considered retaliation, many of these attacks are at such a level that they can only be done by nation states,” says Dr Alastair MacWillson, a former Accenture security director who has advised the World Bank, the European Commission and US and UK governments on cybersecurity, and is now on the advisory board of Parker Fitzgerald, the financial services consultancy.
Given that banks are under almost constant risk of being attacked, what can they do to protect themselves? And do they need to be put under more pressure to protect consumers?
The answer is not a simple one. The biggest banks’ systems are so vast and complicated as to be incomprehensible, a reality that inevitably creates weakspots. The wave of consolidation in the last two decades has seen banks’ systems untidily meshed together, exacerbating the problem. “Many organisations have incredible levels of complexity, and disparate systems if they’ve merged that are basically multiple versions of the same thing, Dr MacWillson says. “The security technology is equally complex, they have never really invested in reducing that complexity.”
One MP who sits on the Commons Treasury Committee responsible for overseeing financial regulation, says many bank systems are “like a pile of spaghetti”. “Although every bank will take security extremely seriously, many of them have extremely old IT,” he warns.
This complexity, according to Dr MacWillson, is an almost insurmountable problem, no matter how much money is thrown at it: “They have bought every bit of security technology out there… but these legacy problems are just too hard to fix.”
If there are always going to be gaps in banks’ armour, how then, can hackers be kept out? Banks are under pressure to improve security, not only due to the threat of a breach hitting their reputation, but also because it can affect their bottom line.
Fines for banks that fail to protect customers have been floated privately by regulators, who continue to see cybersecurity as a major issue. MPshave held recent meetings with officials including those at the Bank of England to discuss cyber vulnerabilities. Regulating banks’ defence mechanisms is no easy task. By the time politicians and regulators have agreed on a system of defence, new forms of attack would make it obsolete.
“The idea that a regulator offer a total specification is a fool’s errand,” says one MP. A security expert talks of cybercriminals working in terms of “seconds, minutes and hours, while banks deal in days, weeks and months”.
How then, do banks and authorities deal with a target that is constantly moving, often faster than the companies? In 2011 and 2013, the BoE conducted two comprehensive cyber resilience exercises, in which Britain’s biggest banks were subjected to simulated attacks from a hostile state.
The conclusion of the latest trial, conducted last November, was that the biggest risk to banks’ cybersecurity systems was a dearth of collaboration between institutions.
“There is no cross-sector infrastructure in place currently for communication to other financial institutions outside the core systemic wholesale and retail firms,” the Bank said in its conclusions.
A recent report from the British Bankers’ Association warned of “an element of lack of awareness and cultural resistance” to co-operation.
This communication breakdown is starting to change. In June, the Bank launched a cybercrime unit, CBEST, that will bring together intelligence from banks, security agencies and the Government to assess the scale of threats, and create bespoke tests to see whether systems are up to scratch.
This is a model being used elsewhere. Soltra, in some ways a US version of CBEST, has been adopted by 45 institutions and is coming to Europe in the coming weeks. Mr Clancy says it has seen “a lot of interest already from the banks and building societies in the UK”.
Other experts warn that information sharing is a double-edged sword. Mr Lord, who spent two decades at GCHQ before moving to the security group PGI, says the more that sensitive data is centralised, the more attractive that system is to a hostile organisation.
“The value [of this] to a hostile actor is potentially greater than the sum of its parts,” he says. And despite the billions being invested and constant attempts from regulators, experts agree that cybercrime is a threat banks will never be fully safe from.
“I think many banks have just said 'we’ll never manage to do this’. People realise that we’ll never have perfect infrastructure, so what’s their alternative?” says Dr MacWillson. These sentiments were shared by Mr Dimon last week, who warned that there is no absolute defence to the type of attack that has hit JP Morgan. “We don’t want to be sitting here saying you will absolutely be protected because it would put you in a false sense of security,” he said.
How seriously banks take cybersecurity, and how much they devote to defences, will depend on whether attacks affect their bottom line.
It is too early to tell whether JP Morgan’s breach has affected the bank, and the world is perhaps still waiting for a scandal that will make customers stand up and take note. But on any given day, it could be just around the corner.
FONTE:
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