February 27, 2021

Kunal Sawhney: How UK Financial Services Companies Are Struggling with Cyber-Attacks

Written by Kunal Sawhney,  CEO, Kalkine Group

The corona-virus pandemic has forced shoppers to opt for online transactions and make digital payments. The cash network is most endangered as many Brits have adopted new and latest technologies that allow con-tactless payments. The consumers now enjoy the convenience of making payments both domestic and international sitting at home just by using their phones or laptop. As these transactions have grown substantially in recent years, the cyber-attacks have also become more frequent than before.

Internet is the latest entrant in the list of necessities for most of us. It has made our lives simpler and more convenient in terms of making transactions. However, cyber-attacks can really take wash away your hard-earned money.

In recent decades, banking has evolved substantially with new technology continuously being adopted. There has been considerable investment in banking through crowd-sourcing, piloting, collaborations and partnering to develop revolutionary banking solutions. At the same time, the attack on the network server could be routed through financial and technological interconnections and eventually bringing down the entire system causing disruption in services.

Moreover, companies and individuals might lose access to deposits and might even struggle for liquidity.
The high frequency of attacks can be equated to powerful hacking tools, which are readily available at a cheaper price. Moreover, mobile-based services that have a deeper penetration in the masses. The major challenges that the regulatory bodies and other law enforcement agencies face are that these attacks can be initiated from across the border. Fighting cyber-attacks should be a shared responsibility for all the countries.
The cyber-attacks are typically carried out with an intent to conduct fraud electronically or stealing information with an objective to sell it in the grey market.

The banking system facilitates digital money and stores online data using networks. The banking system’s network is attacked by cyber criminals who often lead to a data breach or financial loss. As cyber-criminals can access the bank server, they are able to steal customers information and make false transactions on their behalf.
In 2015, RBS banking group customers struggled to log on to their bank account as they were expecting a salary credit for almost an hour. Later, it was revealed that the bank suffered a cyber-attack on their online services.
In 2016, cyber criminals managed to steal around $100 million from the central bank of Bangladesh.
In 2017, a similar incident took place in Europe when HSBC’s customers struggled to access their internet banking facilities in the wake of a cyber-attack.

According to a report by leading software company VMWare, the cyber attacks against banks have gone up monumentally, during the peak of unprecedented crisis in 2020.
However, customers seem to have a hedge against cyber-attacks as the banking authorities have directed banks to refund customers against unauthorised transactions. Under the law, customers might be able to recover their lost money. However, the rising frequency of attack can push the bank towards insolvency. It is important to note that a bank deposits portfolio comprises of time and demand deposits. If all the customers reclaim their money at once, the bank will go bust.