Financial Services Cybersecurity: Key Threats & Solutions

Digital transformation has impacted the customer experience in almost every sector, but some of the most dramatic changes can be seen in financial services. Financial institutions have rapidly shifted their services to include technologies such as cloud computing, artificial intelligence, and APIs. Customers can now view their financial information on any device, deposit checks with their phone, process payments with the click of a button, and invest with the help of AI-powered financial advisors. 

These developments come with one downside: Cyberattacks have also progressed, using equally advanced technologies to exploit vulnerable systems and steal critically sensitive information. Financial systems are a prime target for attacks due to the value of financial data and other information attached to it. This means financial services companies must rise to meet new challenges presented by cybercriminals. 

We’ll cover the current cybersecurity landscape, common threats, and technologies institutions can use to mitigate these threats.

The Financial Services Cybersecurity Landscape

The financial services sector is a big target right now. Financial institutions handle a vast amount of sensitive data, most of it highly valuable to attackers. Personally Identifiable Information (PII) can be found in financial records, transaction details, and proprietary business intelligence. This data is very attractive to cybercriminals because they can use it to commit financial fraud, steal identities, or sell information on the dark web. 

Financial institutions, including banks and credit unions, can also struggle with supporting legacy systems while facilitating a growing number of third-party integrations. Outdated IT infrastructure is harder to secure, which can create exploitable weaknesses (AKA opportunities for cybercriminals). While third-party vendors can improve an institution’s technological offerings, they can also expose the organization to a larger attack surface. If a vendor experiences a data breach, the impact can reach all customers in the software supply chain. 

Geopolitical issues can also play a significant role. State-sponsored and terrorist groups looking to cause widespread disruption often target the financial services industry, which can cause economic destabilization and shake public confidence. In fact, estimates show 8.3% of attacks on global critical infrastructure are on financial firms.

As cybercrimes impacting the financial sector become more sophisticated, the potential for disruption is on the rise.

7 Key Cybersecurity Threats Facing Financial Institutions

Threats to financial institutions are becoming more complex as the technological landscape continues to develop. Understanding which threats are prevalent (phishing, ransomware, DDoS attacks, insider threats, etc.) can help institutions defend against them.

1. Phishing and Social Engineering

Financial organizations are consistently one of the primary targets of phishing attacks. In Q1 2025, over 30% of all phishing attacks were on financial institutions and online payment companies, up from 23.3% in the previous quarter.

Phishing is a type of social engineering in which a cybercriminal pretends to be someone they’re not—often using email, text, or phone calls—to gain access to sensitive information or systems. Threat actors use deception to trick individuals into revealing credentials, financial data, or account numbers, or to authorize fraudulent transactions. They may also direct victims to malicious websites, convince them to transfer funds to fraudulent accounts, or prompt them to download malware. In 2021, a phishing scam that targeted just 790 Singaporean bank accounts led to at least $13.7 million in losses.

Criminals may also conduct spearphishing, where they target one or a few individuals with more specific information. AI has led to an increase in fake videos and calls that are designed to sound or look like a person the target knows.

2. Ransomware

When it comes to ransomware, even the world’s largest bank isn’t immune. In 2023, the cybercriminal group LockBit successfully hit the U.S. unit of the Industrial and Commercial Bank of China with a ransomware attack. This severely disrupted the bank’s operations, forcing the institution to move U.S. Treasury trades via a USB stick. Other entities disconnected from ICBC during the incident and processed trades manually, demonstrating how susceptible financial institutions of all types can be to ransomware. With ransomware, cybercriminals encrypt a target’s systems or data, making them unusable or inaccessible until they pay a ransom. Attackers may also leverage double extortion, in which attackers increase pressure on victims by threatening to publish or sell sensitive data if they don’t receive a ransom payment.

3. Advanced Persistent Threat (APT)

An advanced persistent threat (APT) is a long-term cyberattack, usually carried out by large criminal organizations or nation-states, in which criminals establish a covert presence in their target network. They remain undetected as they extract sensitive data, disrupt operations, or conduct espionage. Without proper visibility across the attack surface, it can be difficult for financial institutions to uncover these covert operations before it’s too late.

4. Distributed Denial of Service (DDoS) Attacks

The bandwidth of a financial institution can also be targeted with distributed denial of service (DDoS) attacks. In these attacks, victims are flooded with traffic via bots beyond their capacity to disrupt critical services,= distract organizations while other malicious activities are happening, or damage customer confidence in the security of an institution’s systems. Financial service providers have seen the greatest year-over-year increase of DDoS attacks compared to all other industries, according to FS-ISAC.

5. API Vulnerabilities

Application programming interfaces (APIs) enable communications between applications, partners, and services. Today, as institutions embrace digital transformation projects and integrate with more digital tools, APIs account for 71% of all internet traffic.

While these APIs can improve virtual processes, they also create new vulnerabilities for financial organizations. Attackers can gain access to systems, inject malicious code, gain visibility over data, and conduct brute-force attacks through insecure or misconfigured APIs. 

6. Insider Threats

Malicious insiders can be a threat to any industry, including financial services. In May 2025, cryptocurrency exchange Coinbase confirmed that several customer support agents had been bribed to disclose sensitive user data, including names, account details, and partial Social Security numbers.

While less than 1% of customers were affected, the breach underscores the damage insider actions can cause to customer trust and financial integrity. Coinbase responded by terminating the implicated employees, collaborating with law enforcement, offering reimbursements, and posting a $20 million reward for information leading to the perpetrators.

To protect sensitive financial data and personal information, it’s important to limit employee access to only what’s necessary for their role and immediately revoke that access once employment ends. A zero-trust security framework can prevent cyber incidents caused by both malicious insiders and human error, which is among the top cybersecurity risks in the financial industry.

7. Third-Party Vulnerabilities

Sometimes, it isn’t a threat coming from inside the company that’s the problem. Instead, a third-party vulnerability can cause an issue. Any vendor in the software supply chain can pose a problem, including cloud hosting, software development, customer support, and payment processing providers. Cybersecurity experts working in financial services must regularly evaluate each piece of the supply chain to strengthen security posture and implement proper frameworks.

The Importance of Cybersecurity for Regulatory Compliance 

Strong cybersecurity practices are regulatory requirements for financial institutions. The Gramm-Leach-Bliley Act (GLBA) is a U.S. federal law that mandates financial institutions protect the privacy of consumer financial information. The General Data Protection Regulation (GDPR) set by the European Union also sets strict laws for any financial institutions that handle EU residents’ personal data. Both of these regulatory standards can be partially satisfied by cybersecurity best practices.

Financial services firms can face even more compliance demands depending on the geographic area they occupy and serve. For example, the New York Department of Financial Services (NYDFS) Cybersecurity Regulation mandates that institutions operating in New York have a robust cybersecurity program in place. 

Ramifications of non-compliance with regulatory bodies can include hefty fines and penalties, lawsuits, and reputational damage. Financial institutions can experience interruptions of service or losses of license, while board members can even be held personally liable for gross negligence. Compliance is not optional. Cybersecurity must be a priority.

Cybersecurity Solutions for Financial Services

Luckily, there are many options for organizations looking for cybersecurity solutions. From tried-and-true methods to emerging technologies, financial institutions can equip themselves with the following approaches for a strong defense against financial services cybersecurity threats.

For more financial services cybersecurity and cloud assurance, listen to Episode 29 of TierPoint’s Cloud Currents podcast, featuring Sameer Airyil, Executive Director of Cloud and Cybersecurity at JPMorgan Chase:

Artificial Intelligence and Machine Learning

Artificial intelligence (AI) and machine learning (ML) can enable more sophisticated threat detection and result in faster detection and response times to incoming cybersecurity threats. AI/ML-enabled tools can analyze large sets of data to find anomalous behaviors and prevent potential threats. Automating security processes with these security solutions can speed up the time to remediate a threat and reduce the manual time necessary to find and contain criminal attempts. 

Encryption and Data Protection

Encryption is necessary to protect data both in transit and at rest, which refers to when data is being transferred and when it has reached its destination. This is made possible by converting data into a coded format and preventing unauthorized access, so that even if it is accessed, it is unreadable and unusable to attackers. Data loss prevention (DLP) is another important data protection measure. It monitors data in various states to ensure it is not being accessed by unauthorized users. 

Web Application Firewall (WAF)

A web application firewall (WAF) shields web applications from attacks such as cross-site scripting (XSS), SQL injection, and other web-based vulnerabilities. Before a malicious request can reach an application’s server, a WAF will filter, monitor, and block traffic. 

Identity and Access Management (IAM)

Identity and access management (IAM) solutions can create rules and processes for access based on user roles and responsibilities. For example, some departments may need access to certain tools, while others do not. IAM solutions will enforce the principle of least privilege, only granting access to necessary resources. IAM also involves implementing multi-factor authentication (MFA) and zero-trust architecture, requiring authentication every time a user tries to access the network and applications.

The foundational risks are still fundamental to how you manage risk, whether it’s in cloud, whether it’s on prem…

[Consider] privilege access management, making sure you have the drift deviations kept to a minimum for your cloud resources, being able to quickly fix things when you detect them and not let them fester, and being able to do that in a fashion which does not impact production or environments.”

– Sameer Airyil, Executive Director of Cloud and Cybersecurity at JPMorgan Chase & Co.

Security Awareness Training

Human error plays a significant role in many different cyber incidents. This is why it’s necessary to train your employees to spot common cybersecurity threats before they cause problems in your systems. Financial services firms can implement training on common phishing scams, simulated attacks, and policies and training for password hygiene and reporting suspicious activities. This shifts non-IT employees from a passive to an active role, strengthening your cybersecurity posture.

Vulnerability Assessment and Penetration Testing

Vulnerability assessments scan your systems for known vulnerabilities, alerting the organization to necessary patches or configurations. Penetration testing simulates real-world attacks to uncover vulnerabilities along the way, helping teams to implement proactive measures to counter existing security weaknesses.

Incident Response Planning

Even with strong preventative measures in place, attacks can still occur. Incident response plans are an important component of all cybersecurity strategies. The plan should include steps financial institutions will take to:

• Prepare for an incident
• Detect activity
• Contain threats
• Remove bad actors
• Recover from cybersecurity events

Continuous Monitoring and Threat Intelligence

Cybercriminals can strike financial institutions at any time. Continuous monitoring ensures that an organization’s IT infrastructure, applications, data, and systems are surveilled in real-time to find and respond to security threats. Monitoring can also capture and identify anomalous behavior and uncover vulnerabilities in your IT environment. 

Threat intelligence works alongside continuous monitoring to keep organizations up-to-date on the latest cyber threats. This can help cybersecurity teams prioritize actions and stay one step ahead of bad actors in the face of evolving threats.

Financial institutions may choose to work with a managed detection and response (MDR) provider to implement these approaches while further strengthening their security posture. MDR combines human expertise with automated technology to proactively detect, contain, respond to, and recover from incoming threats.

Future Trends in Financial Cybersecurity

As technological innovation becomes more sophisticated, the financial services cybersecurity landscape will continue to be challenged. New technologies offer greater efficiencies and improved customer experiences, plus they can support cybersecurity measures. However, they also introduce new attack surfaces and cybercrime activity. 

One of the most significant trends, embedded finance, provides an example of how cybersecurity may need to shift to meet new needs. Financial services are now being seamlessly integrated into non-financial platforms and customer journeys. Customers can make a purchase on an e-commerce site with a “buy now, pay later” feature or receive a loan for a car right at the dealership. As these potential attack surfaces grow, cybersecurity strategies need to grow with them. 

Embedded finance is also a contributor to flow complexity. The flow of PII across multiple, sometimes disparate systems can increase complexity and raise concerns regarding data protection and privacy. Financial institutions can also encounter problems with identity and access management (IAM), API security, and more sophisticated fraud techniques, such as AI-powered deepfakes. 

The spread of responsibility over private financial information is also placing greater regulatory requirements on third-party vendors and supply chains. The NYDFS Cybersecurity Regulation is a good example of this, and we are likely to see other, new regulations follow suit in the coming years.

Strengthen Your Financial Services Cybersecurity with TierPoint

All industries share some common cybersecurity challenges. However, each one has its own idiosyncrasies and specific vulnerabilities that must be addressed by experts.

At TierPoint, we understand the current and emerging security concerns that organizations in the financial services industry face. We can help you balance user-friendly products and services with strong, proactive security solutions. Learn more about our financial cybersecurity services and speak with a member of our team today.