January 29, 2021 – The importance of cybersecurity for Smart Cities embarking on digital banking

By Alan Seow, Cyber Security Practitioner

The banking sector in Singapore (known of its Smart Nation vision) has been making headway in digital transformation with the granting of digital bank licenses. The 5G connectivity coupled with the adult population’s reliance on online banking as their only means for banking transactions has been increasing and it is not surprise to see that there is a likelihood we will see a surge in digital banking. Communication equipment provider like Huawei is also actively working/researching on 6G capabilities where it seeks to further establish its telecommunications prowess. As such, 6G is not far from the horizon and it will unlock even more opportunities and encourage more use of digital financial transactions.

There is therefore a demand for everything to go digital. With that being said, digital data has become the lifeblood of the financial industry on board for digital banking and it could well means “digital data is money”. With everything going digital, cyberattacks inevitably increase in tandem. During the COVID-19 pandemic, cybercriminals are taking advantage of the expanded attack surface presented through largely work-from-home (WFH) workforce. Cybersecurity is thus a key importance to the financial sector. The responsibility to ensure the safety and soundness of their own organization’s digital defense becomes paramount. Although no system connected to the internet network can be 100% secured, the ability to rapidly recover from a compromise can make a difference in the financial institution’s portrayal of its digital banking confidence to its customers.

Digital banking requires the adoption of new digital channels in automation. People are going cashless with the usage of Quick Response (QR) code scanner for making payment and transferring of money. They can do fund transfer with other countries using different currencies or apply loan/credit card digitally via a bank application. All these can be done by simply scanning a QR code; a simple click and verification to perform a transaction via a web browser or through a mobile phone app. However, being on internet brings convenience but it also significantly increases the attack vectors that can be used to attack the digital finance services to disrupt services and to even misdirect money transfers to the wrong accounts. In this context, cybersecurity is important to ensure adequate digital data protection.

Digital data breaches are serious problems and it will result in the loss of public trust. The cyber attacker of today can easily fraud his/her identity online via an email or in social media together with a fraud digital bank account and lead its customers to trust this fraud digital bank account, hence resulting a data breach. The banks have to activate their resources to recover fraudulent spent money and it may not work all the time. The action that occurs due to bank data breach is time-consuming, stressful and full of pressure. Consumers lost time and money. Affected customers need to cancel their cards, check statements and keep alert for complications arising from their cases (if any).

The cyber threat landscape continues to evolve and we can only see an uptrend number of cyberattacks across the sectors and this applies to the lucrative financial sectors as well. I have learned from an organization that, on average, they receive about 1500 cyber related attacks daily and their intrusion prevention system which is one of their key cybersecurity controls helps their business to keep their customer data safe. As a result, cybersecurity transformation became one of the key strategic programs being executed across the organization.

A sound cybersecurity posture is both critical and essential in securing the business interest of an organization (needless to mention digital banks) against loss of money and valuable customer information through cyber fraud and computer hacking attacks. The risks and impact are even more pronounced with today’s highly use of mobile and powerfully connected internet devices with more and more people globally conducting their purchases, banking and financial transactions online.

For a digital bank customer, apart from the risk of him/her losing money from accounts if hacked, affected customers may also experience widespread inconvenience in their inability to conduct financial transactions online. They may even be required to cancel bank accounts, wait for replacement credit cards, change online passwords etc. Ultimately, digital banks risk losing their brand reputation, the trust of their customers and even stand to lose business to industry competitors and rivals.