Cybersecurity Guide

Securing financial services: A focus on cybersecurity

Written by Steven Bowcut – Last updated:
In this guide

Cybersecurity in the financial sector in 2025 is not a static state but an ongoing battle against increasingly sophisticated adversaries. Financial institutions must be agile, adaptive, and proactive in their security strategies.

They need to invest in advanced technologies, cultivate a strong security culture, and navigate a complex regulatory landscape to protect their assets, maintain the trust of their customers, and ensure the stability of the financial system.

The stakes are high, and the need for vigilance and innovation in cybersecurity has never been greater.

Financial industry overview

The projected landscape of 2025 reveals financial institutions deeply reliant on technology, delivering unprecedented convenience and efficiency.

Crucially, this digital dependency intensifies cybersecurity risks, making proactive and robust defenses an absolute necessity. The threat landscape is no longer a simple reactive game; it’s a dynamic, multi-faceted challenge requiring constant vigilance and innovative foresight.

Check out this episode of the Cybersecurity Podcast with Christopher Mitchiner from the University of North Georgia.

The cyber threat landscape facing financial institutions in 2025 is not just evolving; it’s undergoing a significant transformation driven by technological advancements and the increasing sophistication of threat actors.

  • AI and ML are a double-edged sword: While financial institutions use AI/ML for better security, cybercriminals are also leveraging these technologies for more convincing phishing attacks, automated vulnerability exploitation, and adaptive malware. This creates an ongoing need for innovative defenses.
  • Ransomware is more targeted and impactful: Ransomware attacks are evolving beyond just data encryption to include data exfiltration (double extortion). The rise of Ransomware-as-a-Service (RaaS) makes these attacks more accessible, and there’s an increasing focus on targeting critical infrastructure within financial institutions.
  • The attack surface is expanding with IoT and OT: The growing use of IoT and Operational Technology (OT) devices in finance introduces new security weaknesses, as these devices often lack strong security and can be entry points for attackers to reach critical systems.
  • Deepfakes and synthetic identity fraud are rising threats: Advancements in deepfake technology enable attackers to create realistic impersonations for social engineering and fraud. Synthetic identity fraud, using a mix of real and fake information, is also becoming more sophisticated.
  • Quantum computing is a future concern: Although not an immediate threat, the potential of quantum computing to break current encryption methods is prompting financial institutions to start planning for a transition to quantum-resistant algorithms.

Cybersecurity within the financial services industry

To be sure, the financial services industry needs more qualified cybersecurity professionals. All business sectors struggle with the current cybersecurity skills shortage, but financial services companies are often high-profile targets and must be particularly vigilant when it comes to cybersecurity.

As the gatekeepers of valuable customer PII, financial institutions are subject to an ever-increasing number of cybersecurity rules and regulations. With pressure from regulatory agencies and the need to protect brand reputation, financial firms are motivated to provide significant investment and collaboration to improve cybersecurity preparedness, response, and resiliency across the sector.

Learn more about cybersecurity terms

Consumers have little direct risk from cyberattacks on financial institutions. As long as they use reasonable safeguards to protect their information, consumers are protected by US federal law that requires banks to refund customers if they notify the bank within 60 days of an errant transaction appearing on their statement. 

Banks themselves, however, have fewer assurances from the federal government. The US Department of the Treasury’s Financial Stability Oversight Council is charged with monitoring the stability of our nation’s financial system. Critics claim that this council is not doing enough to plan for cyberattacks that may threaten the solvency of major banks.

Navigating A Complex Web

CIRCIA’s Impact and Implementation – The finalization and implementation of CIRCIA will have a significant impact on how financial institutions report cyber incidents. The 72-hour reporting window for significant incidents and the 24-hour window for ransomware payments will require organizations to have robust incident detection and response capabilities in place. This regulation signals a greater emphasis on transparency and information sharing with government agencies.

Digital Operational Resilience Act (DORA)’s Ripple Effects – While primarily focused on the EU, DORA’s requirements for operational resilience testing, third-party risk management, and incident reporting will influence global standards and impact US financial institutions with European operations or clientele. We may see a convergence of regulatory expectations around operational resilience.

Increased Scrutiny on Third-Party Risk Management – Regulators are increasingly focusing on the cybersecurity practices of third-party vendors. Financial institutions will need to demonstrate due diligence in selecting and monitoring their vendors, ensuring they meet stringent security standards. This includes conducting regular security assessments and audits of their partners.

State-Level Variations and the Push for Federal Standards – The patchwork of state-level data privacy and cybersecurity laws adds complexity for financial institutions operating across multiple states. There may be a growing push for more unified federal standards to streamline compliance efforts and create a more consistent regulatory environment.

Focus on Operational Resilience and Business Continuity – Regulators are moving beyond simply requiring cybersecurity measures and are increasingly emphasizing operational resilience. This means ensuring that financial institutions can withstand and recover from cyber incidents with minimal disruption to critical services. This includes robust business continuity planning and regular testing of those plans.

What makes cybersecurity challenging within the financial services field?

Cybersecurity is of particular concern for the financial services industry because, well, as the adage goes, “that’s where the money is.” Today’s world is rife with complicated and sophisticated schemes to relieve other people of their money.

Still, nothing is quite as appealing to the criminal mind as to electronically divert funds from someone else’s account into one they control. As attacks increase, regulators take notice and take measures to increase the pressure on the industry to find solutions.

Regulatory and compliance requirements are, at once, a significant challenge for the financial sector and the single most important reason that consumers trust the industry with their money.

In an informative blog post on the KirkpatrickPrice website, author Ashlyn Burgett points out that in just the last two years, and in addition to existing cybersecurity laws, the financial industry has been saddled with the following regulatory oversight:

  • New York State Department of Financial Services Cybersecurity Requirements Regulation for Financial Services Companies Part 500 (NY CRR 500) of Title 23.
  • US Securities and Exchange Commission (SEC) issued interpretive cybersecurity guidance.
  • National Cybersecurity Center of Excellence (NCCoE) released the NIST Cybersecurity Practice Guides SP 1800-5, SP 1800-9, and SP 1800-18.
  • 24 US states passed bills or resolutions related to cybersecurity.

Third-party vendors are a big part of the financial sector, generally. The industry is but an amalgamation of multiple business partners working together to provide the appearance of a cohesive set of services.

Managing vendor risk is a critical challenge the financial services industry faces. Behind the scenes at every large, well-known financial service provider are many smaller companies providing a myriad of business services.

The process of vetting, auditing, and managing each of these companies introduces additional cyber risk to the equation. More and more consumers demand cashless and frictionless financial services. They want apps that are easy to access, yet secure.

They want to send and receive funds electronically with just the click of a button but need those transactions protected against attacks. It can be a challenge for financial services companies to keep abreast of the latest in computer and application security technology—this all fuels the industry’s need for highly skilled security professionals. 

Cybersecurity solutions for the financial services industry

  • Advanced Threat Detection and Response: Implementing solutions that can detect and respond to sophisticated threats in real-time, including those powered by AI.  
  • Employee Training: Educating employees about the latest social engineering tactics and ensuring they follow security best practices.  
  • Incident Response Planning: Developing and regularly testing comprehensive incident response and recovery plans.
  • Zero Trust Architecture: Adopting a “trust no one, verify everyone” approach to security.  
  • API Security: Securing Application Programming Interfaces (APIs) is crucial as open banking and digital services become more prevalent.  
  • Cloud Security: Implementing robust security measures for cloud environments.  
  • Third-Party Risk Management: Thoroughly assess and manage the cybersecurity risks associated with third-party vendors.  
  • Compliance: Staying up-to-date with the evolving regulatory landscape and ensuring compliance with all applicable laws and regulations.

Conclusion

In summary, the cybersecurity landscape for the financial sector in 2025 is marked by the continuous evolution of both threat actors and regulatory demands.

Consequently, financial institutions must adopt a dynamic and multi-layered approach to cybersecurity. This involves a persistent focus on enhancing advanced threat detection capabilities, empowering employees through ongoing training, refining incident response protocols, and ensuring strict compliance with the ever-changing regulatory environment.

By prioritizing these elements, financial organizations can effectively protect their assets and maintain the critical trust of their customers in this dynamic environment.

Further reading 

Frequently asked questions

Why is cybersecurity crucial for the financial services industry?

Cybersecurity is paramount for the financial services industry because it deals with vast amounts of sensitive financial and personal data. Protecting this data is essential to maintain trust, ensure regulatory compliance, and prevent financial losses.

What types of cyber threats do financial institutions face?

Financial institutions are often targeted with phishing attacks, advanced persistent threats (APTs), ransomware, data breaches, and Distributed Denial of Service (DDoS) attacks. These threats aim to steal funds and sensitive data or disrupt services.

How can financial institutions enhance their cybersecurity measures?

Financial institutions can bolster cybersecurity by implementing multi-factor authentication, using end-to-end encryption, conducting regular security audits, training employees, and investing in state-of-the-art security infrastructure.

Are there specific cybersecurity regulations for the financial sector?

Yes, many regions have specific cybersecurity regulations for the financial sector, such as the Payment Card Industry Data Security Standard (PCI DSS) and the Bank Secrecy Act (BSA). Compliance with these regulations is mandatory to operate legally and avoid penalties.

How do cyberattacks impact the reputation of financial institutions?

Cyberattacks can severely damage the reputation of financial institutions. A breach can lead to a loss of customer trust, which can result in reduced business and potential legal repercussions.

What role does employee training play in financial cybersecurity?

Employee training is a critical component of cybersecurity in the financial sector. Many cyber incidents occur due to human error or oversight. Regular training ensures employees are aware of the latest threats and best practices.

How do financial institutions handle data breaches?

In the event of a data breach, financial institutions should immediately contain the breach, notify affected customers, cooperate with law enforcement, and take measures to prevent future incidents. Transparency and swift action are key to maintaining trust.

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