Modernizing Financial Cybersecurity: From Reactive to Resilient

The financial services industry stands at the forefront of a relentless battle against cyber threats. As financial institutions increasingly rely on technology to protect, access, and restore vast amounts of sensitive data, the stakes have never been higher. A single breach can lead to catastrophic financial losses, reputational damage, and legal ramifications.

Let’s talk about how important cybersecurity is in finance; investigate the changing threat landscape, including advanced ransomware attacks and AI-driven threats; explore the regulatory requirements that financial organizations must adhere to; and identify the key pillars of cyber resilience that are essential for safeguarding against cyber risks.

Why Cybersecurity Is Critical for Finance

Sensitive information such as personal financial data, transaction details, and proprietary trading algorithms are prime targets for cybercriminals. A breach can lead to significant financial losses, legal repercussions, and reputational damage, making robust cybersecurity a non-negotiable priority. What makes the stakes so high in this sector, specifically?

• Regulatory compliance pressure: Financial institutions are subject to strict regulatory requirements to protect customer data, such as those from DORA, Payment Card Industry Data Security Standard (PCI DSS) and Network and Information Systems Directive 2 (NIS2). Noncompliance can result in hefty fines and legal action.  
• Trust and customer confidence: Customer trust is the lifeblood of financial services. Any breach, no matter how small, can erode this trust and cause customers to flee. Strong cybersecurity measures are essential to maintaining confidence that clients feel their assets and personal information are safe within the organization.
• Evolving threat landscape: Cyber threats are constantly evolving, with new tactics and technologies emerging. Financial institutions must stay ahead of these threats by implementing advanced security solutions and maintaining a proactive approach. This includes regular updates to security protocols and continuous monitoring of networks and systems.
• Economic impact of breaches: The economic impact of a cyber breach can be devastating. The cost of a data breach in the financial services sector averaged $6.08 million in 2024, marking a 3% increase from the previous year. Beyond the immediate financial loss, there are long-term costs such as legal fees, customer loss, and operational disruptions. Investing in cybersecurity is a cost-effective strategy that can help reduce these losses and protect the institution’s bottom line.
• Reputation and brand integrity: A cyberattack can severely damage a financial institution’s reputation. In an industry where trust is paramount, the fallout from a breach can be long-lasting. An effective cybers resilience strategy not only protects data but also safeguards the brand’s integrity and the institution’s standing in the competitive market.

The Evolving Threat Landscape: Ransomware and AI-Driven Attacks

Ransomware attacks have surged in the financial sector, targeting critical data and disrupting operations. In 2024, 65% of financial organizations were hit by ransomware attacks. These attacks encrypt valuable information, demanding a ransom for its release.

Financial institutions must stay vigilant, as the sophistication and frequency of these threats continue to rise, posing significant risks to both data integrity and business continuity. Here are some important topics to monitor:

1. Advanced AI-driven tactics: AI-driven malware can learn and adapt, evading traditional security measures with ease. These attacks are becoming more personalized and harder to detect, making them a formidable challenge. AI can analyze vast amounts of data to identify vulnerabilities and launch targeted strikes.
2. The role of Machine Learning: Cybercriminals are using ML algorithms to automate and refine their attack methods. These algorithms can predict patterns and behaviors, enabling attackers to bypass security protocols more effectively. Financial institutions need to fight this by using advanced AI and ML to help them find and respond to threats better.
3. Evolving defense mechanisms: To combat these advanced threats, financial institutions must adopt multilayered security approaches and continuous update their systems. Regular security audits and employee training are also crucial.
4. Compliance and regulation: Financialinstitutions must comply with stringent regulations to avoid penalties and provide customer protection. This means making strong security rules, checking risks often, and talking openly with regulators and customers.

Regulatory Drivers: DORA, PCI DSS, and NIS2

Regulatory bodies are increasingly focusing on cybersecurity, especially in the financial sector. Here are just a few that the sector needs to abide by:

• The Digital Operational Resilience Act (DORA): A comprehensive framework in the European Union aimed at strengthening the cyber resilience of financial institutions. It requires stringent security measures and regular assessments so that institutions can withstand and recover from cyberattacks.
• The Payment Card Industry Data Security Standard (PCI DSS): A set of security standards designed for the safe handling of credit card information. It aims to help reduce data breaches and protect customer financial data.
• The Network and Information Systems Directive (NIS2): Expands the scope of cybersecurity regulations, covering a wider range of sectors, including financial services. It requires institutions to implement robust security measures and report significant cyber incidents quickly. NIS2 aims to improve the overall security posture and foster a more resilient digital environment.

To align with DORA, PCI DSS, and NIS2, financial institutions must integrate these frameworks into their security policies. This involves continuous monitoring, proactive threat hunting, and regular updates to security protocols. By doing so, institutions can make progress on their compliance journey and protect their data from evolving cyber threats.

Key Pillars of Cyber Resilience

Maintaining a strong security posture relies on vigilance across these pillars of cyber resilience:

• Data integrity is crucial. It enables data to remain accurate and unaltered throughout its lifecycle. By using strong data validation and monitoring tools, financial organizations can find and stop illegal changes, keeping their customers and stakeholders’ trust.
• Rapid recovery is essential in the event of a cyberattack. Financial institutions should have well-defined cyber recovery plans and regularly test them. This includes identifying your minimum viability – those critical systems and data that can be restored quickly and allow you to resume operations, helping minimize downtime and financial losses. Read more in our Guide to Cyber Recovery Preparedness for the Financial Services Industry.
• Compliance with cybersecurity regulations is non-negotiable. Financial institutions must stay informed about evolving standards like DORA, PCI DSS, and NIS2. Regular training and audits allow all employees to be aware of and adhere to these regulations, reducing the risk of noncompliance penalties.
• Proactive monitoring is key to identifying and mitigating threats before they escalate. Advanced security information and event management systems can detect unusual activities and alert security teams in real time.

How Commvault® Cloud Enables Resilience

Threat Detection: First Line of Defense

Commvault Cloud offers advanced threat detection capabilities, leveraging AI and ML to identify and respond to cyber threats. By continuously monitoring data and network activities, it can detect unusual patterns and potential breaches, allowing financial institutions to take action and help reduce data loss.

Immutable Backups: Safeguarding Data

Commvault Cloud provides immutable backups, so that critical data remains protected. These backups are indelible, providing a reliable recovery point in the event of a ransomware attack. This feature is vital for maintaining data integrity and business continuity.

Compliance Search: Meeting Regulatory Standards

Commvault Cloud includes a robust compliance search function, enabling financial institutions to locate and review data to assist with regulatory requirements. This feature helps in conducting thorough audits and reducing the risk of noncompliance with standards.

Secure Data Management: End-to-End Protection

With Commvault Cloud, financial institutions can manage their data securely from end to end. It offers comprehensive data protection solutions, including encryption, access controls, and secure data storage. These features help protect sensitive information, improving the overall security posture and customer trust.

Practical Steps for Implementation

Start by assessing your current security measures. Identify any gaps or vulnerabilities in your system. This foundational step will help you understand where you need to strengthen your defenses and allocate resources effectively.

• Develop a comprehensive security strategy that aligns with regulatory requirements and industry best practices. It should include multilayered security, regular updates, employee training, and clearly defined roles and responsibilities.
• Implement advanced security solutions like AI and ML into your defense strategy to help detect and respond to threats. Commvault Cloud has robust threat detection and immutable backups, which provide an additional layer of protection.
• Conduct regular security audits to maintain compliance with regulations, help identify new risks, and verify that your security measures are up to date.
• Educate employees about the importance of cybersecurity so they can recognize and respond to threats. Encourage a culture of security awareness, where employees are proactive in reporting suspicious activities and following security protocols.
• Test cyber recovery plans regularly to make sure they’re effective. Updates should be made based on the results of these tests and any new threats that emerge.

Financial institutions must remain vigilant and proactive. The stakes are high, and the threats are sophisticated, but with the right strategies and tools, organizations can protect their data, maintain customer trust, and comply with regulatory requirements.

Commvault Cloud offers a robust suite of solutions that can significantly enhance an institution’s cyber resilience. By integrating these solutions and following the practical steps outlined, financial organizations can build a strong defense against cyber threats. Learn more about Commvault Cloud for financial services.