The importance of Penetration Testing in Banking and Finance

Since the pandemic, the banking, financial services, and insurance (BFSI) industry and their affiliates are witnessing a consequential surge in cyber attacks, making it one of the most targeted sectors by cybercriminals. This problem is especially true for India’s BFSI sector, which is reportedly Asia’s top cybersecurity target as of 2022. Many attribute this increase in exploitable vulnerabilities to the rising demand for remote work and digitization.

Cybersecurity professionals are deeply committed to helping BFSI organizations avoid financial and reputational damages through an ongoing effort to identify the most notable emerging vulnerabilities, address weaknesses, and effectively combat threats. In such an industry, a successful attack could place immense risk on its stakeholders’ personally identifiable information (PII) while compromising the industry’s large cash balances. This article aims to explore penetration testing and help you decide if it’s the solution to your BFSI organization’s cyber security needs.

What is penetration testing?

A Penetration test is a planned self-purported attack an organization performs on its systems and networks to detect the presence of any exploitable vulnerabilities that could potentially be damaging if left untreated. Pen testers use this practical methodology to identify previously unknown vulnerabilities within organizational systems such as application protocol interfaces, frontend & backend servers, and web application security. The ultimate goal of a pen test is to identify issues and quickly apply appropriate software updates and patches to mitigate them.

Why do banks and financial institutions require a pentest?

Let us explore some security risks facing BFSI institutions that necessitate continuous penetration testing.

Sensitive data

A 2022 survey conducted in the USA found that a majority of the respondents favored choosing a financial institution that prioritizes the security of its sensitive data. The BFSI industry relies significantly on customer names, locations, contact details, credit card details, and social security data, enabling them to operate, perform financial transactions, earn public trust, and improve service quality. Penetration testing helps organizations securely safeguard, store, and transmit such information by uncovering previously unknown threats to their systems and processes and providing the necessary means to mitigate them.

Breaches result in financial losses

When attackers successfully breach a BFSI organization’s systems, they may gain access to its sensitive data and perform various unauthorized tasks before they are detected. For instance, when a customer’s banking data and private credentials get compromised, malicious actors can leverage them to access the victim’s financial account and perform unauthorized transactions. In such instances, the organization may undergo reputational damage and be subject to regulatory penalties. Alternatively, penetration testing for financial institutions can help them avoid these potentially damaging repercussions by ensuring that the business infrastructure, including its applications and databases, is secured against all existing and emerging threats.

Reveal vulnerabilities

Vulnerabilities typically arise through inconsistent processes, negligence, lack of safety measures, misconfigurations, outdated software, or faulty updates. Sometimes these vulnerabilities can stay undetected for a long time before they are detected and mitigated. Often, by this time, intruders may have already purported lasting damage to the organization. On the other hand, periodical pen tests and system deep scanning are effective techniques to identify these vulnerabilities early on and apply the necessary solutions or patches to ensure they don’t pose a problem in the future.

Show real risk

An experienced penetration tester should be able to provide you with an informative system report on all potential vulnerabilities, provide actional recommendations to strengthen your cyber security, and reduce your overall attack surface. These reports help you differentiate between high-risk and low-risk threats to help you quickly identify and address the most pressing issues. With this information, BFSI organizations can prioritize, act on, and handle threats that immediately place the organization in danger of a data breach before moving on to those with a lower priority level.

Test cyber security

A pentest is the best way to test how effective your response time is toward identifying and addressing an ongoing attack. It accurately mimics a real-world attack scenario and gauges how effectively you can defend yourself from them before any actual harm occurs. Pen tests can help you devise a strong protection strategy against future attacks and keep intruders at bay.

Ensure business continuity

Downtimes, where the BFSI organization and its stakeholders lose access to their resources, communications, and network availability, can profoundly hinder the business’s operations. Scheduling and conducting periodic pen tests will decrease the likelihood of these operational disruptions ensuring the organization maintains continuity in its access to its data and applications.

Informed third-party opinion

A practical strategy for conducting productive pen tests is to employ the services of an external penetration tester. This approach allows organizations to simulate a real-world attack closely through an external party and attain an unbiased opinion on their security systems, practices, and threat responses. Additionally, an unbiased external report is more likely to be followed by all organizational stakeholders with reduced friction over one generated internally.

Compliance

Pen testing helps you adhere to recognized and updated cyber security standards such as ISO 27000 series, NIST SP 800-53, and COBIT to uphold the highest level of information security. A pen test can accurately identify most non-compliance issues that could lead to a damaging attack by accurately simulating a real-life attack scenario.

Threats facing financial service organizations today

Here are some of the primary weaknesses that BFSI organizations and their systems face today:

Unencrypted data

When you fail to encrypt your sensitive data uniformly across the organization, you leave it vulnerable to data breaches. Most modern businesses that fail to assign appropriate encryption methodologies find that it’s merely a matter of time before they undergo an attack. When a data breach does occur, data encryption ensures that the stolen information is useless to the attacker without the encryption key known only to the BFSI organization.

Ransomware and Malware

One of the most significant threats to the BFSI industry is malware and ransomware attacks. These attacks commonly affect multiple BFSI organizations regardless of their size. The malicious actors behind these attacks use social engineering tactics and Remote Desktop Protocol (RDP) attacks to acquire sensitive employee credentials. Identifying and mitigating these vulnerabilities makes it easier for BFSI organizations to stop unauthorized accessors and prevent attacks.

When organizations fail to engage in preventative measures, they often prefer to pay a hefty ransom and avoid reputational damage rather than combat it. Giving in to the attacker’s demands increases the success rate of malware attacks. It consequentially encourages them to improve their attack scale and frequency, affecting the entire BFSI industry. Instead, avoid the pitfalls of a publicized data compromise by deploying continuous penetration testing that will help you apply suitable safeguards to fend off intruders.

Cloud providers

While BFSI organizations increasingly utilize cloud-based services over local storage, their service providers are becoming popular targets for breaches. The primary purpose behind this attack is to attempt and gain access to the sensitive information stored by the organization onboard various cloud service platforms. The problem is that cloud solutions with inadequate authentication or encryption security place the BFSI information at serious risk from malicious attackers. A penetration test is a valuable tool to identify these vulnerabilities and enhance the BFSI sector’s cloud security.

Insecure third-party vendors and services

Integrating third-party vendor software suites with your systems and networks can make you subject to the same vulnerabilities as their software. When you have one or many outsourced services, evaluating their security standards and testing them periodically for vulnerabilities is of utmost importance.

Phishing

Due to its efficacy and simplicity, phishing, a popularly used form of social engineering, is becoming a rising problem in the BFSI industry. Here, malicious actors gain access to sensitive employee or customer credentials by impersonating banking officials through email or other forms of communication. Occasionally, phishing attackers strategically duplicate critical parts of the BFSI website and replace them with malicious forms to trick unsuspecting employees into providing confidential information to the attacker. Another type of phishing attack involves assailants attaching infected malware embedded in emails as links that infect and compromise the BFSI organization’s system when clicked on. A penetration test helps detect any malware and stops them from doing more harm.

Ensure security with SecureLayer7’s pentest services

Our offerings include infrastructure pentest, Web and mobile app, network, and cloud pen tests that help your financial institutions learn how to detect and tackle breaches from intruders and protect themselves from malicious actors. Regularly administering penetration tests helps businesses stay effectively safeguarded. And SecureLayer7’s PTAAS solution provides BFSI organizations with the latest tools and updated penetration tests to help you stay one step ahead of intruders with the latest safeguards.

Securelayer7 is a leading penetration testing partner that offers numerous banking, finance, and insurance organizations state-of-the-art web apps, mobile apps, and cloud penetration testing to safeguard themselves effectively and their data from existing and emerging cyber tests. Contact us to find out how Securelayer7 can help Cyber test your bank and stop attackers from infecting your networks.