A bank processes thousands of transactions per second. A wealth management firm holds millions in client assets. A payment processor moves money across borders in real time. A fintech startup holds sensitive customer data on cloud servers.

Financial services companies are not just attractive targets for cybercriminals. They are the primary targets.

The financial sector is attacked more than any other industry. The reason is simple. Money is stored here. Attackers follow the money.

Red Secure Tech offers a tailored service to meet your security needs with respect to your industry, such as compliance assessments and penetration tests.

I would like to discuss the major threats to the Security of Financial Services and how you can mitigate those risks.

Why Are Financial Services Such Vulnerable Targets?

There are a variety of reasons that make financial services vulnerable to attack.
1. Financial services companies directly handle money. Retailers typically hold only credit card information; however, banks actually hold the funds. Therefore, if a bank is attacked successfully, the attacker can drain all of the accounts very quickly.

2. Financial services companies have a very large attack surface. For example, online banking portals, mobile applications, ATM's, payment gateway services, trading platforms, Support Portals, internal networks, etc. are all examples of entry points.

3. Financial services companies are heavily regulated. Compliance with various regulatory frameworks such as PCI DSS, GDPR, and other country or regionally-based banking regulations create a significant number of [strict and onerous] security requirements. Not complying with these regulations can lead to large fines.

4. Customer confidence is critical. Once a financial institution suffers a data breach, it will cause that financial institution to lose customer confidence. In some cases, the customer will close their account and never return.

5. Downtime is undesirable for banks—when their online portals are unavailable, customers can’t pay bills or access funds; when trading platforms are out of service, millions of dollars can disappear in seconds.

6. Financial organizations typically have considerably older systems (mainframes), as well as software that is not easy to patch and protect.

Due to these factors combined, cyber criminals consider financial service companies as both a super-high-risk target and a super high-reward target; therefore, a professional vulnerability assessment from Red Secure Tech is very much worth doing, so you understand your unique risk profile.

Challenge 1: Ransomware in the Financial Sector

There have been recent increases in ransomware attacks against all types of financial institutions, not just individual banks, but against the entire infrastructural backbone that funds individual banks.

How it works:
When an attacker encrypts a bank’s primary systems, customers cannot access their accounts, transactions cannot occur, ATMs will not work, and mobile banking will be gone.
The bank faces a choice. Pay the ransom and hope to get their systems back, or refuse to pay and remain offline for weeks.

Reasons behind the increase:
1. Major banks have become willing to pay enormous amounts of money (ransom) for the sake of getting back to their prior functionality in as little time as possible.
2. Because of reason #1, ransomware groups will continue to target financial institutions.
3. Now, in addition to encrypting the data, the attackers also exfiltrate the customer’s data before it’s encrypted (double-extorted) and threaten to release it if the ransom is not paid.

What you can do to prepare for this:
1. Create immutable and offline backups that cannot be encrypted
2. Create segmentation in your networks so that if one area of your network is compromised that the attack does not spread to your core systems
3. Deploy endpoint detection and response (EDR) technologies on all endpoints
4. Conduct tabletop exercises to train your incident response team regularly.

If your financial firm experiences a security incident, Red Secure Tech offers emergency response to contain the damage and restore operations.

Challenge 2: Payment Fraud and Real-Time Transaction Abuse

Real-time payment systems like Faster Payments in the UK and similar systems worldwide have transformed how money moves. They have also transformed how fraud happens.

How it works:
A criminal has taken over someone else’s bank login information to pay himself from their bank account and take their money away before they have a chance to stop it by making an immediate transfer. Unlike credit cards, there’s no chance of getting your money back with this type of fraud. Once the criminal takes your money, there’s no recovering it.

There are several methods fraudsters can use:
1. Using stolen passwords (from other compromised accounts) to log into your account (this is called credential stuffing)
2. Using a type of attack that allows a fraudster to capture the authentication code you receive by phone/text, etc. (this is called man in the middle)
3. Manipulating the customer into approving a fraudulent transaction, typically through social engineering
4. Using a computer program that records everything you do on your computer, known as malware, to capture your session cookie after accessing your account (this is how malware operates).

Ways to reduce fraud losses when processing client payments:
1. Use a multi-factor authentication requirement for all transactions over a predetermined dollar amount.
2. Monitor for any unusual transaction activity using behavioral analytics.
3. Use a device fingerprinting tool to determine if an individual is accessing an account from a new/unknown device.
4. Educate consumers about the different types of fraud technologies, including how to protect themselves against becoming victims of fraud.
5. Implement transaction confirmation via a separate channel (call-back verification for large transfers).

Challenge 3: Supply Chain and Third-Party Vendor Attacks

Financial services companies rely on dozens of third-party vendors. Payment processors, cloud providers, cybersecurity firms, IT support companies, customer service platforms.
If any of these vendors are compromised, the financial institution is compromised.

How it works:
A third-party vendor that has a connection to the bank's network is compromised by an attacker. The vendor could provide a number of types of services such as server management, IT support, or payments. The attacker uses that vendor's information to log into the bank’s systems.

Although the bank's security may be very high quality, that does not mean the vendor's security is also of high quality.

These are examples of incidents that have occurred:
1. An attack occurred involving multiple financial services provided (ie., banks), whereby user credentials were compromised from a managed service provider and subsequently used to gain unauthorized access to those services.
2. A hack against a cloud storage provider has exposed multiple customer technical info and numerous customer records from customers who use this cloud vendor.
3. There were numerous breaches of data from several online payment processors resulting in gaining access to many personal and sensitive customer/client/device information including customer credit card information.

Ways to help prevent future incidents:
1. Prior to using your vendor, have your vendor complete a written security questionnaire.
2. Ensure the vendor’s contract includes provisions for security (ie., multi-factor authentication, encryption, notification when a breach occurs, etc.).
3. Limit vendor access to only the minimal balance of systems required for them to complete their work.
4. Require the vendors to carry cyber insurance for liability in case of a security breach.
5. Audit the vendor at least yearly (or require them to furnish SOC 2 reports).

Red Secure Tech can perform penetration testing to help assess security controls in detail for any vendor being evaluated.

Challenge 4: Insider Threats

Insider threats don't always originate outside the company! Employees, contractors, or even executives may also pose an insider threat to your organization!

Examples of insider threats:
An angry employee with customer account access may transfer money from customer accounts into their own personal account, or, a careless contractor leaves a laptop with customer data unattended in their unlocked vehicle, or an employee who means well falls victim to a phishing email and gives their credentials to the wrong person.

There are three types of insider threats:
1. Malicious insiders who steal data or money with the intent to do so.
2. Negligent insiders who inadvertently expose data through their actions.
3. Compromised insiders whose credentials have been stolen by an external hacker.

How to protect your company against insider threats
1. Enforce least privilege access, which means that employees only have access to the systems and data they need to perform their jobs.
2. Monitor for unusual access patterns, for instance, a bank teller accessing the incoming email of your CEO would be looked at as unusual.
3. Enforce separation of duties, so that no one employee has the ability to initiate and approve a large monetary transaction.
4. Perform background checks on all employees with access to sensitive or critical systems.
5. Provide security awareness training to help employees reduce their mistakes due to negligence.
6. Implement data loss prevention (DLP) solutions, so that you can prevent unauthorized transfer of sensitive or critical data.

Challenge 5: Technical Debt and Legacy Systems

The majority of financial institutions operate using outdated core banking systems that are older than 20 years. These types of products were not built to withstand today's cyber security.

Example of how this works:
An example would be a bank using an outdated mainframe core processing system that was designed and developed in the 1990's, which has not been upgraded since then and can't be patched due to its obsolete vendor support. This creates a situation where an attacker can find a vulnerability in the old core processing system and exploit the vulnerability to gain access to a victim's customer's account.

How this is problematic:
1. Legacy systems cannot be patched or it is difficult to surprise IT personnel with improvement workflows for fixing vulnerabilities.
2. Legacy systems were developed prior to the time period when enterprise-level security controls like encryption, user-identity management and user-authentication were commonplace.
3. Legacy systems have also been consistently upgraded with new operating system versions; however, these upgrades don't include security improvements because they are not supported.
4. Legacy systems have extremely high implementation costs and high levels of uncertainty for deployment.

What you can do:
1. Reduce the number of users who can access the legacy system by isolating them from all other components by placing legacy systems on separate network segments.
2. Use virtual patching provided through web application firewalls to protect specific vulnerabilities for legacy systems.
3. Develop a plan for migrating away from using legacy systems to new modern core banking systems over time but do not expect to replace all legacy systems with modern core banking systems at once.
4. Implement compensating controls, such as increased monitoring and physical access barring, if you have to access legacy systems.

A thorough security audit from Red Secure Tech will help you identify and proactively address any potential vulnerabilities found within legacy system.

Challenge 6: Cloud Misconfigurations

Financial services companies are moving to the cloud at record speed. They are also making mistakes that expose customer data.

How it works:
A cloud storage bucket was created for a project that was recently constructed. The cloud storage bucket was established and had been left public internet accessible. An attacker scanned and discovered an open cloud storage bucket and stole from the bucket customer financial records, transaction history and account information.

Reasons for this incident:
1. There is a level of complexity within cloud environments which makes operating them complex and makes it easy to misconfigure.
2. Developers want to get their developed and deployed as quickly as possible over taking the time to create secure.
3. Security teams are not part of every single cloud implementation and use case.
4. Automated scanning solutions designed to look for misconfiguration are often not in place.

What you can do:
1. Use Infrastructure as Code type tools to define all resources you need in the cloud. This will allow you to audit and ensure the resources' configurations are repeatable.
2. Implement either automated scans to determine which are publicly accessible in storage.
3. Impose the principle of least privilege for any and all permissions to the cloud.
4. Regularly audit the resource configurations in the cloud, using tools like Azure Security Center or AWS Trusted Advisor.
5. Require that any resource deployed to production goes through a security review.

Red Secure Tech can perform a vulnerability assessment that includes a cloud configuration review for clients in financial services.

Challenge 7: Regulatory Compliance Overload

Financial services firms have to comply with an overwhelming number of regulations. Each of these regulations has its own security requirements, therefore keeping track of them all is a full-time job. 

Some of the major regulatory changes affecting financial services include:
1. PCI DSS (Payment Card Industry Data Security Standards) regulates security for payment card processing.
2. GDPR (General Data Protection Regulation) regulates the security of data for customers of European Union countries.
3. Regulation of payment service providers in the Europe, as a result of the EU Payment Services Directive (PSD2).  
4. Security regulation of all service organization by the Service Organization Control Report (SOC 2).  
5. Information security requirements established by various municipal regulations including but not limited to FCA (UK); SEC & FINRA (USA).

The challenges related to regulatory compliance are numerous:
1. The requirements for each regulation are different.
2. A compliant company can still be breached (compliance does not equal security).
3. Auditing uses up resources that could be better spent on actual security improvements.
4. Regulations change frequently and require constant updating.

As a financial services organization, you can overcome these obstacles by doing the following:  
1. Create a single compliance framework that maps the requirements of multiple different regulations to establish a way for one control to meet the requirements of many different regulations;  
2. Automate compliance monitoring where feasible (many tools are available for continuously checking compliance violations);  
3. Consider compliance as a baseline; therefore, go beyond the minimum compliance requirement;  
4. Collaborate with legal counsel to determine which specific regulations apply to your particular organization.

Red Secure Tech offers penetration testing and security assessments that meet the specific requirements of financial regulations, which will assist you in demonstrating your compliance.

Challenge 8: AI-Powered Social Engineering and Deepfakes

AI is being used to create more believable social engineering attacks.

How they do it:
An attacker uses AI to impersonate the voice of an executive working for a company and calls an employee in charge of finances to make an urgent request to wire transfer money. The employee recognizes the voice and wires the funds as requested.

Why this is increasing:
1. Voice cloning requires only seconds of audio.
2. Phishing mails using AI to generate these emails results in perfect grammar and personalization.
3. False videos of people giving instructions have been created by deepfake.

What you can do:
1. Have a unique verbal authorization as a signature for any transfer of funds.
2. Have both signatures on all transfers greater than $10,000.
3. Verify all requests for payment by contacting the person requesting the funds directly (don't rely on the phone number included in their email, or text message).
4. Before processing anything referred to as “Urgent Payment” be sure to check with your staff for approval
5. Create new approval limits based upon the dollar amount of the requested transfer – this will allow for controlling the amount of funds that can be transferred without multiple approvals.

How to Build a Security Program for Financial Services

Here is a practical framework for addressing these challenges.

Immediate Priorities

1. Multi-Factor Authentication 
Enable MFA - without exception – on all user accounts; regardless if they belong to an employee, customer, vendor, or administrator. Use Authenticator applications and/or Hardware Keys in place of SMS messages wherever possible.

2. Immutable Backup 
Implement a backup solution that is impossible for ANYONE to delete or change - including administrators - and that has been tested regularly. Off-line backups should also be maintained.

3. Network Segmentation 
Separate customer systems from your internal network. Separate your payment processing solutions from any General IT functions you may have. Separate your development environment from Production environment.

4. Vendor Risk Management 
Document every vendor who has access to your company's data/network. For new contracts, provide security questionnaires to each vendor and reference their security policies in the purchase order/contract documentation.

Short Term Priorities

1. Behavioral Analytics 
Deploy a tool that monitors user behavior on their behalf e.g. A customer logging in using a different device than usual - or An employee accessing files they do not normally access - or A transaction taking place outside of normal business hours on your website.

2. Incident Response Plan 
Clearly outline each step you need to take when responding to a breach - Practice your plan through A Tabletop Exercise - Update and revise the plan after conducting A Tabletop Exercise.

3. Customer Education 
Teach customers how to identify phishing attempts against them, how to use MFA and how to report any suspicious activity they may find on their account(s). Numerous attacks occur against customers directly; therefore, it is in your best interest - as well as theirs - for continued education regarding Internet Security.

Long Term Priorities

1. Cloud Security Program
Automated scans will be performed to detect any cloud misconfiguration errors. All cloud environments must use an infrastructure as code approach. There will be a requirement for a security review of any newly deployed cloud components. 

2. Legacy Migration Plan
Identify legacy systems that will remain unpatched/unsecured. Develop a plan to migrate legacy systems to more modern platforms. Secure and isolate legacy systems until they are replaced. 

3. Zero Trust Architecture
Treat any potential attack as if it is occurring within your network. Every access request (internally) must be verified. You must authenticate/authorize every resource prior to accessing it.

To schedule a comprehensive security assessment customized for your company's unique risk factors and regulatory requirements, contact Red Secure Tech.

The Bottom Line

The Financial Services industry has additional and intense security challenges when compared to other industries due to the cash they manage, the reliance on legacy systems, the complexity of regulations facing them, and the fact that they continue to be targeted by sophisticated attackers.

All of this said, the financial services industry can properly secure itself as a result of the actions they take to engage their Trust Structure.

Some of the tactical steps that can be taken include: using multi-factor authentication wherever possible at each account, implementing immutable backup solutions for your data, segmenting your networks, managing vendor risk, using behavior analytics, and practicing your incident response plans.

Compliance is not enough. An organization should view security as more than just a checkbox or something you achieve today – security requires continuous improvement.

The attackers are not waiting to implement their attacks on a financial services organization; therefore, neither should your organization wait to act upon addressing and mitigating its security risks.

Contact Red Secure Tech to learn more about our cybersecurity services for securing your financial services company.

FAQ Section

What is the greatest risk facing financial services companies in 2026? 

The biggest current threat is ransomware targeting financial system infrastructure and third-party vendors through supply chain attacks. Real-time payments are becoming increasingly popular, creating additional opportunities for fraud as systems for instant payments expand.

How do small companies in the finance industry have access to better security? 

There are many low-cost options for many security controls. For example, most platforms now offer no-cost solutions for multi-factor authentication (MFA). Additionally, open-source security tools provide alternatives to proprietary (pay) security products. Many cloud service providers also provide built-in security features for their clients. Red Secure Tech can provide affordable tailored security assessments specifically focused on small finance firms.

Are fintech firms more secure than traditional banks?

There is a mixed bag of responses. Some fintech firms have newer architecture and robust security, while others are highly-casual and cut corners on the deployment of security measures. Many traditional banks have more experienced security programs and more net-worthy legacy systems; therefore, some of the most secure fintechs have a more substantial relative to their size and that of their competitors.

How frequently do financial services organizations need to perform penetration tests? 

At a minimum, the PCI DSS (Payment Card Industry Data Security Standard) and other regulations require that they be conducted at least annually. Many organizations are now testing every three months or so after they make major changes to their systems; additionally, an increasing number of organizations are engaging in ongoing testing through bug bounty programs. Red Secure Tech provides penetration testing services in accordance with the standards established by the financial services industry. 

How do attackers typically gain unauthorized access to financial organizations?

Credential theft and phishing schemes account for most of the ways in which attackers have initially accessed an organization. An attacker can gain access to the employee's credentials by either using phishing attacks or credential stuffing. Once they obtain an employee’s credentials, they can access systems normally. It is for this reason that multi-factor authentication (MFA) is so important.