The Evolving Cybersecurity Landscape and How to Prepare for 2024

Issue 10 cover of the PACB Magazine, Hometown BankerWritten by: Joseph P. Harford, CSDS
Founder and President, Reclamere, Inc.

As seen in the Pennsylvania Association of Community Bankers Magazine, Hometown Banker, Issue 10.

Reclamere, with its inception in 2001 and its headquarters in Tyrone, Pennsylvania, is privileged to contribute an article addressing The Evolving Cybersecurity Landscape and How to Prepare for 2024, for the Pennsylvania Association of Community Banks (PACB). Specializing in Data Security Consulting (DSC) and Information Technology Asset Disposition (ITAD) services, Reclamere has become a beacon in information security. With a focus on secure information lifecycle management, the company offers a suite of services encompassing risk assessment, compliance consulting, certified data destruction, and compliant hardware disposal. Recognizing the critical importance of safeguarding sensitive information, Reclamere is a trusted ally for businesses navigating the complexities of information lifecycle compliance and governance. In particular, the company places significant emphasis on the banking sector, where protecting sensitive data is not just a matter of compliance but a cornerstone of reputational integrity. As Reclamere continues to evolve with technological advancements, its commitment to enhancing cybersecurity and ensuring compliance remains unwavering, making it an invaluable partner in the journey towards a secure digital future for community banks in Pennsylvania.

Cybersecurity is paramount for Pennsylvania community banks, as it is for financial institutions worldwide. The banking industry, including community banks, faces cyber threats that can severely affect the institution and its customers. Here’s a brief overview of the importance of cybersecurity for Pennsylvania community banks:

Blog post cover image with text reading: "The Evolving Cybersecurity Landscape and How to Prepare for 2024"Protection of Customer Information: Community banks handle sensitive customer information, including personal and financial data. Cybersecurity measures are essential to safeguard this information from unauthorized access, identity theft, and financial fraud.

Financial Transactions and Operations: Community banks conduct numerous financial transactions daily. Cybersecurity is crucial to ensure the integrity and confidentiality of these transactions, protecting the bank from financial losses and maintaining the trust of customers.

Regulatory Compliance: Financial institutions, including community banks, are subject to various regulations and compliance standards. Cybersecurity measures help banks meet these requirements, such as those outlined in the Gramm-Leach-Bliley Act (GLBA) and the Payment Card Industry Data Security Standard (PCI DSS).

Risk Mitigation: The banking industry is a prime target for cybercriminals seeking financial gain. Cybersecurity measures help mitigate the risk of data breaches, ransomware attacks, and other cyber threats that could result in financial losses, legal consequences, and damage to the bank’s reputation.

Maintaining Trust and Reputation: Trust is a fundamental aspect of the banking industry. A cybersecurity breach can erode customer trust and damage the reputation of a community bank. Protecting against cyber threats is crucial for maintaining the confidence of customers and stakeholders.

Operational Continuity: Cyberattacks, such as ransomware, can disrupt a bank’s operations and lead to downtime. Cybersecurity measures, including robust backup and recovery plans, are essential for ensuring operational continuity and minimizing the impact of potential disruptions.

Collaboration with Third-Party Providers: Community banks often rely on third-party vendors for various services. Cybersecurity extends beyond the bank’s internal systems to include the security practices of these partners. Community banks need to assess and ensure the cybersecurity posture of their third-party providers.

Education and Training: Cybersecurity awareness and training programs are vital for bank employees. Educated staff members are better equipped to recognize and respond to potential threats, reducing the risk of human error leading to security breaches.

Cybersecurity is critical to Pennsylvania community banks’ overall risk management strategy. Implementing robust cybersecurity measures helps protect customer information, ensures regulatory compliance, mitigates financial and reputational risks, and contributes to the overall stability and trustworthiness of the banking institution.

You already know that community banks play a vital role in the economies of Pennsylvania and other regions. Here are some key points highlighting the importance of Pennsylvania community banks in local economies:

Local Lending and Small Business Support: Community banks are deeply connected to the communities they serve. They are crucial in providing loans and financial support to local businesses, including small and medium-sized enterprises (SMEs). This support helps stimulate economic growth and job creation within the community.

Personalized Service and Local Relationships: Community banks are known for their customized approach to customer service. They build strong relationships with local individuals and businesses, fostering a sense of trust and community. This personal touch can be essential in local economies where individuals and businesses prefer a more personal banking experience.

Community Development and Investment: Many community banks invest in local community development projects. Whether through direct investments, grants, or partnerships, community banks contribute to improving infrastructure, affordable housing, and other initiatives that enhance the overall quality of life in the community.

Support for Agriculture: In states like Pennsylvania with a significant agricultural sector, community banks often provide essential financial services and support to local farmers. This includes agrarian loans, financing for equipment, and other services that contribute to the stability and growth of the local farming community.

Financial Inclusion: Community banks can promote financial inclusion by providing services to individuals and businesses that may be underserved or overlooked by larger financial institutions. This inclusivity helps strengthen the economic fabric of the community.

Stability and Resilience: Community banks, being locally focused and often more conservative in their business practices, contribute to the overall stability of the local financial system. Their conservative lending practices and focus on relationship banking can contribute to resilience in economic downturns.

Job Creation: Through the support of local businesses and entrepreneurs, community banks contribute to job creation within the community. Small and medium-sized enterprises, often supported by community banks, are significant contributors to employment.

Pennsylvania community banks are integral to the economic well-being of their local communities. Their contributions extend beyond traditional banking services, encompassing support for local businesses, community development, and fostering financial inclusion. The relationships they build and the services they provide contribute to the overall economic vitality and stability of the regions they serve. Therefore, these lenders’ cybersecurity posture and incident preparedness position are crucial for this community balance.

Reclamere will provide insights into common cybersecurity threats the PACB ecosystem often faces. It’s important to note that the threat landscape is dynamic, and new threats will emerge over time. For the latest and most accurate information, community banks should stay informed through industry reports, cybersecurity organizations, and regulatory updates. In 2023, some of the common cybersecurity threats included:

Phishing Attacks: Phishing attacks remain a significant threat. “A new report from Vade Secure has found that phishing attacks rose by 173% in the third quarter of 2023. The financial services industry saw the highest number of phishing URLs last quarter, 121%.” Cybercriminals use fraudulent emails or messages to trick bank employees into revealing sensitive information, such as login credentials or customer data. All employees must have thorough cybersecurity onboarding and regularly scheduled security awareness training.

Ransomware Attacks: Ransomware attacks involve encrypting an organization’s data, with cybercriminals demanding a ransom for its release. Financial institutions are attractive targets due to the sensitive nature of the data they hold. Recently, cybercriminals have resorted to encrypting data and then threatening the organization that they would inform regulators of the organization’s cyber security incident.

Distributed Denial of Service (DDoS) Attacks: DDoS attacks aim to disrupt online services by overwhelming a system with traffic. Financial institutions may be targeted to disrupt customer access to online banking services.

Insider Threats: Insider threats involve individuals within the organization who misuse their access to sensitive information. This could be intentional or unintentional, underscoring the importance of employee training and monitoring.

Supply Chain Vulnerabilities: Cybersecurity risks can extend to third-party vendors and service providers. Community banks may be vulnerable if their partners or vendors have weak cybersecurity measures. “As reported by TechCrunch, in 2023, the MOVEit vulnerability led to a gigantic chain of record-breaking breaches. This single vulnerability cost businesses over $9.9 billion, with over 1000 businesses and over 60 million individuals affected.”

Community banks must invest in robust cybersecurity measures, conduct regular risk assessments, and stay updated on the latest threats and best practices. Collaborating with industry groups, sharing threat intelligence, and engaging in continuous staff training are critical components of a comprehensive cybersecurity strategy. Another area in which many community banks engage is contractual relationships with a Managed Security Services Provider (MSSP).

An MSSP is a third-party service provider that offers outsourced monitoring and management of security devices and systems to protect an organization from cybersecurity threats. MSSPs provide various security services and solutions to help businesses enhance their security posture. By outsourcing security management to an MSSP, community banks can access advanced cybersecurity expertise and technologies without the need for significant in-house resources. MSSPs are crucial in helping their banking partners stay ahead of evolving cybersecurity threats and protecting sensitive data and systems.

As we have seen in the past, cybersecurity incidents can have significant and multifaceted impacts on both customer trust and the financial stability of a community bank. According to an article by the 2022 ABA Banking Journal, data breaches cost financial intuitions an average of $5.97 million in 2021 and 2022, according to a report released by IBM Security. Here’s an overview of these potential consequences:

Reputation Damage: Cybersecurity incidents can lead to a loss of trust among customers. News of data breaches or other security incidents can damage a bank’s reputation, making customers question the institution’s ability to protect their sensitive information.

Customer Confidence Erosion: Customers may lose confidence in a bank’s security measures, significantly if personal and financial information is compromised. This erosion of trust can result in customers seeking alternative banking options.

Loss of Customer Loyalty: Customers may choose to switch to other banks that they perceive as having more robust cybersecurity measures. Losing customer loyalty can have long-term consequences for the customer base and revenue.

Negative Public Perception: Negative publicity surrounding a cybersecurity incident can create a perception that the bank is incapable of ensuring its customers’ security and privacy. This public perception can impact the bank’s image for an extended period.

Legal and Regulatory Scrutiny: Following a cybersecurity incident, regulatory authorities may investigate the bank’s security practices, leading to potential legal consequences. This scrutiny can further damage the bank’s reputation and erode customer trust.

Financial Losses: Cybersecurity incidents can result in direct economic losses, including costs associated with investigating the incident, implementing security improvements, and compensating affected customers. Regulatory fines may also contribute to financial strain.

Operational Disruptions: Disruptions caused by cybersecurity incidents, such as downtime for online services, can lead to a loss of revenue. The inability to conduct regular business operations can impact the bank’s financial stability and hinder customer satisfaction.

Increased Operational Costs: Investing in cybersecurity measures and recovery efforts can increase operational costs. This includes expenses related to hiring cybersecurity experts, implementing new security technologies, and conducting forensic investigations.

Insurance Premiums: Following a cybersecurity incident, insurance premiums may increase as insurers reassess the risk associated with the bank. Higher premiums contribute to increased operational costs and impact the overall financial stability. Overall, it is becoming more challenging to secure either a renewal of an existing policy or to have a new policy issued. “According to IBM Security’s Cost of Data Breach 2022, the severity and cost of cyberattacks, especially where ransomware is involved, have been key drivers of cyber insurance costs. The average data breach cost is now $4.35 million, a 12.7% increase since 2020.”

Cybersecurity incidents not only pose immediate threats to the security of customer data but also have far-reaching consequences on customer trust and a bank’s financial stability. Community banks must prioritize robust cybersecurity measures to protect their customers and their long-term viability in an increasingly digital and interconnected economic landscape.

Like any financial institution, community banks can face various vulnerabilities in their technological infrastructure. Identifying and addressing these vulnerabilities in an annual third-party security risk analysis (SRA) is crucial for ensuring the security and resilience of the bank’s systems. Some of the most common vulnerabilities identified in 2022-2023 include:

Outdated Software and Systems: Running outdated software, operating systems, or hardware can expose community banks to known vulnerabilities. Regular updates and patches are essential to address security flaws and protect against exploits.

Insufficient Patch Management: Inadequate patch management processes can leave systems vulnerable to known security vulnerabilities. Community banks should have robust procedures for timely and systematic patching of software and systems.

Weak Authentication Mechanisms: Weak or easily guessable passwords, lack of multi-factor authentication (MFA), and improper credential management can be exploited by attackers to gain unauthorized access to bank systems.

Inadequate Network Security: Weaknesses in network security, such as misconfigured firewalls, insecure Wi-Fi networks, or insufficient segmentation, can expose the bank’s internal systems to unauthorized access or attacks.

Social Engineering Attacks: Employees may be susceptible to social engineering tactics, such as phishing or pretexting, which can lead to unauthorized access or disclosure of sensitive information. A blog post from Embroker Insurance Services states, “ In 2023, social engineering tactics will be a key method for obtaining employee data and credentials. Over 75% of targeted cyberattacks start with an email. Phishing is one of the top causes of data breaches, followed by stolen credentials and ransomware.

Third-Party Risks: Community banks often rely on third-party vendors for various services. These vendors’ weak security practices can introduce vulnerabilities into the bank’s systems and data.

Lack of Continual Security Awareness Training: Insufficient training on cybersecurity best practices for employees can result in unintentional security lapses. Educating staff about potential risks and how to identify and respond to security threats is essential.

Insecure Mobile Banking: With the rise of mobile banking, vulnerabilities in mobile applications and devices can be exploited. Community banks need to ensure the security of their mobile banking platforms and educate users on safe mobile banking practices.

Data Encryption Weaknesses: Inadequate encryption of sensitive data during transmission or storage can lead to data breaches. Community banks should implement robust encryption protocols to protect customer information.

Inadequate Incident Response Plans: Without a well-defined incident response plan, community banks may struggle to respond to and mitigate the impact of cybersecurity incidents effectively. Having a robust plan in place is crucial for minimizing damage. A study conducted by the Ponemon Institute found “that most organizations surveyed are still unprepared to respond appropriately to cybersecurity incidents, with 77% of respondents indicating they do not have a cybersecurity incident response plan applied consistently across the enterprise.”

Community banks should conduct regular security risk analysis (SRA), implement a layered security approach, and stay informed about emerging threats to mitigate these vulnerabilities and enhance the overall cybersecurity posture. Continuous monitoring, threat intelligence sharing, and collaboration with industry peers can also strengthen defense mechanisms.

Like any financial institution, community banks should adopt a comprehensive cybersecurity strategy to safeguard their systems, data, and customer information. Here are some cybersecurity best practices specifically tailored for community banks:

Develop and Implement a Comprehensive Cybersecurity Policy: Create and enforce a cybersecurity policy that addresses the unique risks and requirements of the community bank. Ensure the policy covers data protection, access controls, incident response, and employee training.

Regularly Conduct Risk Assessments: Perform regular risk assessments to identify and evaluate potential cybersecurity risks. This includes assessing system vulnerabilities, third-party relationships, and potential insider threats.

Implement Multi-Factor Authentication (MFA): Require multi-factor authentication for accessing sensitive systems and data. MFA adds a layer of security by requiring users to provide multiple forms of identification.

Secure Endpoint Devices: Ensure all endpoint devices, including computers, laptops, and mobile devices, are secure. This includes deploying endpoint protection software, keeping devices up-to-date, and enforcing security policies.

Encrypt Sensitive Data: Encrypt sensitive data both in transit and at rest. Encryption helps protect customer information and financial data from unauthorized access, even if a breach occurs.

Regularly Update and Patch Systems: Keep all software, operating systems, and applications updated with the latest security patches. Systematically apply updates to address vulnerabilities and enhance overall system security.

Implement Network Security Measures: Secure the network infrastructure with firewalls, intrusion detection/prevention systems, and proper network segmentation. Regularly monitor network traffic for unusual activities.

Conduct Security Awareness Training: Provide ongoing cybersecurity training for employees to raise awareness about potential threats and educate them on best practices for secure behavior. Ensure that employees understand the risks associated with phishing and social engineering attacks.

Manage Third-Party Risks: Assess the cybersecurity practices of third-party vendors and partners. Ensure they meet the same security standards to prevent indirect vulnerabilities throughout the supply chain.

Establish and Regularly Test an Incident Response Plan: Develop and maintain a robust incident response plan that outlines the steps to be taken during a cybersecurity incident. Regularly test and update the plan to ensure its effectiveness.

Monitor and Audit Systems: Implement continuous monitoring of systems for suspicious activities and conduct regular security audits. Monitoring helps detect anomalies early, while audits help identify and address security gaps.

Engage in Threat Intelligence Sharing: Participate in threat intelligence sharing forums or organizations. Sharing information about emerging threats and vulnerabilities helps community banks avoid potential risks.

By adopting these cybersecurity best practices, community banks can enhance their security posture, protect customer information, and minimize the risks associated with evolving cybersecurity threats. Regularly reviewing and updating these practices in response to changes in the threat landscape is also essential.

As of the writing of this article, I can provide insights into potential future trends and threats to community banks in cybersecurity. Remember that the technology landscape is active, and new developments will advance. Here are some potential future trends and threats for discussion amongst your community bank’s senior leadership teams:

Future Trends

Ransomware Sophistication: Ransomware attacks will likely become more sophisticated, with attackers employing advanced techniques and encryption methods. Community banks must enhance their defenses and focus on robust backup and recovery strategies. The Harvard Business Review reports, “ransomware attacks have already surpassed one every 14 seconds and are expected to increase to every two seconds by the end of 2031.”

Extended Use of AI and Machine Learning: AI and machine learning will play an increasingly prominent role in cyber-attacks and defenses. Attackers may use AI to automate and enhance their tactics, while community banks can leverage these technologies for advanced threat detection and response.

Continued Growth of Digital Banking: With the ongoing growth of digital banking, community banks must prioritize the security of online and mobile banking platforms. This includes securing customer data, preventing unauthorized access, and addressing emerging threats specific to digital channels.

Focus on Supply Chain Security: Cybersecurity threats may extend beyond community banks to their supply chain partners. Attacks targeting third-party vendors could indirectly impact community banks, emphasizing the need for comprehensive supply chain security measures.

Increased Regulatory Scrutiny: Regulatory requirements around cybersecurity are likely to evolve. Community banks may face increased scrutiny and requirements to comply with new or updated regulations, necessitating ongoing efforts to stay compliant.

Zero Trust Security Architecture Adoption: Adopting a Zero Trust security model, which assumes no inherent trust and verifies every user and device attempting to connect to the network, may become more widespread. This approach enhances security by implementing strict access controls.

Focus on Insider Threat Mitigation: Insider threats, whether intentional or unintentional, may become a more significant concern. Community banks must implement strategies and technologies to detect and mitigate insider risks, including employee training and monitoring.

Future Threats

Advanced Persistent Threats (APTs): APTs, which involve prolonged and targeted attacks by well-funded adversaries, may pose a significant threat. Community banks should be prepared to defend against persistent and sophisticated attacks on their systems.

Quantum Computing Risks: The advent of quantum computing poses opportunities and threats. While it could potentially break current encryption methods, community banks must stay informed about quantum-resistant encryption and security measures.

Cybersecurity Skills Shortage: The shortage of skilled cybersecurity professionals will persist, making it challenging for community banks to build and maintain strong cybersecurity teams. According to the latest Cybersecurity Workforce Study from ISC2, “the cybersecurity workforce shortage has risen to a record high of just under 4 million despite the cybersecurity workforce growing by almost 10% in the last year.” Banks must strongly consider outsourcing the cyber expertise required to protect their data and investing in training and workforce development to address this gap.

Mobile Banking Vulnerabilities: With the increasing use of mobile banking apps, threats targeting mobile devices may rise. Community banks must implement robust security measures to protect customers using mobile platforms.

Social Engineering and Phishing Evolution: Social engineering and phishing attacks will likely evolve with more sophisticated tactics, making it challenging for individuals to recognize malicious attempts. Community banks should invest in ongoing employee training to address this growing threat.

Community banks must stay abreast of these trends and threats, continually assess their cybersecurity posture, and adapt their strategies to mitigate emerging risks. Regular training, sharing threat intelligence, and collaboration with industry peers can strengthen their cybersecurity defenses.

While the cybersecurity challenges outlined may seem daunting, it’s crucial to recognize that the PACB ecosystem can fortify its cybersecurity posture over time with strategic planning, effective resource management, and steadfast commitment. Every step taken towards enhancing cyber security measures is a step towards safeguarding the trust of clients and the stability of operations. The journey to a resilient cybersecurity framework is achievable through continuous improvement, employee training, and staying attuned to emerging threats. Community banks can address the current landscape and position themselves as leaders in navigating the evolving cybersecurity terrain by fostering a culture of vigilance and adaptability. The commitment to strengthening cybersecurity is an investment in the future, ensuring that these financial institutions thrive securely in the digital age.

In conclusion, the imperative for robust cybersecurity within Pennsylvania community banks has never been more pressing. The risk landscape expands as technology evolves and financial institutions embrace digital transformation. Safeguarding sensitive customer information, ensuring regulatory compliance, and protecting against the growing sophistication of cyber threats are paramount. A proactive and comprehensive cybersecurity posture is not merely necessary; it is an investment in the trust of customers, the resilience of operations, and the long-term viability of community banks. By prioritizing cybersecurity measures, community banks in Pennsylvania can navigate the evolving threat landscape with confidence, reinforcing their commitment to security and maintaining the integrity of the financial services they provide to the communities they serve.


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