The Cost of Cybersecurity to Banking – Banking with Confidence
Cybersecurity and the American Financial System
Banks are the core financial system for most citizens in the United States, holding/protecting currencies, granting loans, and exchanging currencies every second of the day. They are the foundation of money management and are at risk of a cyber attack just as much as anyone else. It is fair to say banking institutions, overall, have a reputation for wise investments and do not make a move unless they see a substantial financial benefit. They are, after all, in the business of making money.
Recently, JPMorgan Chase shared that they spend about $600 million in cybersecurity fees per year alone. This may seem like a hefty amount to some, but when you consider what is at risk they realized this is a small price to pay to avoid financial, reputational, and other highly damaging loss. Yes, financial loss is not the only thing JPMorgan has to worry about. When a breach occurs from a cyber attack, their systems hold a plethora of sensitive information which can be stolen and sold; a risk that, in itself, would leave the company’s reputation in shambles. After all, who wants to do business with a company who could lose their personal information or portfolio value? This revelation is causing other financial institutions to reevaluate their cybersecurity budget, as cybercrime is currently one of the largest threats to the American financial system. When was the last time you evaluated your cybersecurity budget? All enterprises, including banks, are at risk with a need for protection from the threats we cannot physically see.
What is Being Done About Bank Weaknesses?
Every type of cybersecurity breach originates from some form of vulnerability, or weakness. Fortunately, most large banks have the resources to cover all their needs, yet sadly not all small firms have this capital available. Smaller banks typically spend less on cybersecurity and therefore could become more susceptible to being exploited as a backdoor entry point into the Federal Reserve’s systems, such as Fedwire and the Federal Reserve’s payment settlement system. This would take the breach from an attack on a bank to an attack on the federal government financial system, potentially leading to dire consequences.
To avoid this catastrophe, the federal government is putting new regulations in place, with the input of bank leadership, to create a collaborative defense, recovery, and reporting system. Banks are evaluated with information from the Shared National Credit Review to assess loans and stability. As multiple decision makers are coming together the new regulations for banks will be significantly more advanced and rigorous, safeguarding American citizens and corporate assets.
It is easy to look at a problem and decide it is not yours to fix. It is not so easy to fix a problem that undoubtedly became yours when you trusted the wrong institution or person to handle it. With new regulations coming down for all business, watching for banks that address cyber issues will be easier, but malicious minds will continue to find dubious ways into sensitive systems. Do not let your assets disappear into thin air, take action and advocate to increase cybersecurity budgets and protection!