As an associate director within IBM Security Services, Cory Hamilton oversees IBM’s global financial services business. This task includes monitoring the state of cybersecurity within banks, financial markets and insurance companies. His day-to-day role is to work with the global 2000 C suite to enable their digital transformations through security programs, enhancements, advancing their maturity, software technology deployment and service delivery. global advice. Hamilton also has an internal role which sees him leading the global practice within IBM.
How is the current political instability globally affecting cybersecurity and the rate of FinTech-related attacks?
You cannot ignore the geopolitical climate of the Russian war in Ukraine. We have certainly seen various attacks within the financial space as well as within the government. In Ukraine and Russia, banks have certainly been affected on both sides or in both countries. We’ve actually seen some of the largest distributed denial of service attacks ever reported due to this kind of political instability.
We have not seen widespread retaliatory attacks on the West or the Western financial banking system due to the wars. But we have certainly seen an increase in organized crime in general.
The onslaught of attacks are no more, immature people in basements. These are highly functional organizations that focus on organized criminal activity in cyberspace.
There is also the political climate of inflation resulting from the era of COVID 19. The political instability, as well as the global economic landscape in which we find ourselves, have certainly been an environment conducive to more impactful violations, by a increase in the number of violations we are seeing.
The fintech and banking sectors have become much more interconnected over the past two years. What do you think of open banking and integrated finance in terms of levels of vulnerability to cyberattacks? Have these innovations made it easier for cybercriminals?
In terms of open banking and integrated finance, organizations are implementing those largely driven by customer demand. Increasing the availability and ease of processing transactions is an opportunity for organizations to increase their market share and better serve their customers.
It has certainly been a challenge when it comes to securing this for several reasons. Firstly, thanks to open banking, when you open up through the use of APIs, customer data and potential processing data, there is a risk that as it becomes more open you give by nature gives others access that traditionally would not have this. The fintech space, thanks to open banking, has been pushed down by regulation. Many fintech providers are unregulated or certainly not at the same level as traditional banking organizations.
Essentially, you have startups that are really growing from scratch in a matter of weeks, and they’re succeeding because they have a new tool, a new process, something that’s very quick and easy – and can take that customer on a journey. They focus on speed to market and ease of solution.
Well, if you have speed and ease, that doesn’t necessarily make it the safest thing. And usually these organizations, the fintech vendors, provide applications, provide software, but they’re not security companies.
You can either have it [success] very quickly, but ease of use and security may be lacking. It’s a delicate balance that we see where fintech, certainly due to limited regulatory requirements for controls, may not have the same level of security or practice the same protocols and repeat the same scenarios as a banking institution more traditional.
IBM recently released the Cost of a Data Breach report. It says a year after the Biden administration issued an executive order on cybersecurity centered on the importance of zero trust to bolster the nation’s cybersecurity, only 21% of critical infrastructure organizations surveyed have adopted a model. zero trust security. 17% of these critical infrastructure breaches were due to a business partner compromise, highlighting the risks posed by trusted environments. What does this mean for companies in the future, especially in light of the expansion of IoT and digital ecosystems?
This year, The Cost of a Data Breach in 2022, is our 17th year of publishing this report and the Biden administration’s cybersecurity executive order pushing for critical infrastructure and zero trust. On this subject of the Biden administration’s cybersecurity executive order pushing for critical infrastructure and zero trust, I will say that critical infrastructure is a wide bucket.
It’s not just financial services. It is also health, manufacturing and energy. The financial services industry likely accounts for the majority of the 21% that have adopted a zero trust model. Financial services have always had the most to lose. Since the beginning of banking, they have always had a currency, they have had this money, the attackers go where the money is. It’s only in the last decade that IOT devices have started creating data.
But data is the wealth everyone is looking for. It is the new currency of the 21st century. When it comes to the expansion of the IOT and the digital ecosystem, that’s definitely a concern… It’s an opportunity to improve security. Traditional organizations through the buildup of the Internet, made the connections, then added security after the fact.
Today, as organizations move to the cloud through the use of regulated clouds or industry-specific clouds, security is built into the design.
Challenges that other critical infrastructures that are less mature (such as healthcare, manufacturing, and energy) as these legacy IOT systems come online, we’re going to see a significant leap in security posture of these organizations due to the shift from legacy infrastructure that was never intended to be connected online, is now moving to the cloud and therefore incorporates security by design, as well as regulated cloud structures.
So what types of breaches are most likely to occur specifically within fintech now and possibly in the future?
In terms of cybersecurity, fintech is one of the areas that is likely to see the most success. But the most popular infiltration method is phishing – and it’s going to happen. As people join some of the new fintech technologies, they may not be as familiar with how this organization contacts them. A simple phishing email like, “Hey, it’s such and such an organization. Just want to confirm that… Please reply with your account number and passwords so we can make sure this transaction goes through,” is very common.
Stolen and compromised credentials are absolutely a concern for organizations as they may not have a very robust security program. The security staff could be one or two staff members working within this fintech. Cloud misconfiguration is certainly also a concern for fintech.
In terms of ransomware and malware, this is a concern. We’ve seen instances where ransomware attacks have occurred, although I wouldn’t say fintech is more susceptible to a malware or ransomware attack than a traditional bank.