The banking sector is one of the most targeted industries for cyberattacks globally. According to the Financial Stability Board, cyberattacks on financial institutions have increased by 400% since the COVID-19 pandemic began, highlighting the urgency for robust cybersecurity measures. Banks hold vast amounts of sensitive customer information, and a single breach could result in millions of dollars in losses, irreversible reputation damage, and hefty regulatory fines. In this article, we’ll explore the best practices for banking cybersecurity that can safeguard financial institutions against an evolving landscape of cyber threats. 

 

The Current State of Banking Cybersecurity 

Let’s start with the reality: banks are prime targets for cybercriminals. In fact, a 2022 IBM report revealed that the financial sector is one of the industries with the highest average cost of a data breach—reaching up to $5.97 million and it is the most frequently attacked industry, representing nearly 20% of all global data breaches. The risks are magnified by the complex IT environments in banking, where legacy systems coexist with modern cloud-based services, all while maintaining rigorous regulatory standards. The increasing reliance on digital banking, cloud services, and the integration of third-party vendors has only widened the attack surface, making cybersecurity a top priority for every bank across the globe. 

Take, for example, the 2016 Bangladesh Bank Heist. Hackers exploited weaknesses in the bank’s cybersecurity framework to transfer $81 million from its Federal Reserve account. The attack was sophisticated, but the vulnerabilities that allowed the breach were simple: inadequate firewall protections and outdated systems. 

This event underscores why bank cybersecurity best practices are essential. They protect not only the institution’s assets but also its trust and reputation. But what exactly can banks do to protect themselves from such attacks? Here are banking cybersecurity best practices that every financial institution should implement to safeguard their infrastructure and sensitive data. 

 

1. Implement Strong Multi-Factor Authentication (MFA) Across All Systems

Problem Addressed: Passwords are often the weakest link in any security system. Banks deal with millions of transactions daily, making them particularly vulnerable to credential theft and brute-force attacks. According to Verizon’s 2023 Data Breach Report, over 80% of breaches involving hacking exploited weak or stolen passwords. 

Best Practice: Banks must implement Multi-Factor Authentication (MFA) for all employees and customers. MFA adds an extra layer of security by requiring users to provide multiple forms of identification before accessing an account. This may include a combination of a password, a text message verification code, or biometric verification like fingerprints or facial recognition. This additional layer of security significantly reduces the risk of unauthorized access. 

Why It Works: Even if a hacker steals an employee’s or a customer’s password, they would still need the second verification factor, making unauthorized access much harder. According to Microsoft, MFA can block 99.9% of automated cyberattacks. 

 

2. Encrypt All Sensitive Data, Both in Transit and at Rest

Problem Addressed: Data breach and theft are major concerns in the banking industry. Whether it’s customer account details, transactional data, financial records, or personally identifiable information (PII), this information is a gold mine for cybercriminals. Without encryption, this data is easily accessible to attackers. 

Best Practice: Data encryption is one of the most critical bank security measures. Banks should implement end-to-end encryption for all data—whether it’s at rest or in transit. This includes encrypting databases, emails, and communications between financial applications. Modern encryption methods such as Advanced Encryption Standard (AES) are widely recommended. 

Why It Works: Encryption transforms sensitive data into unreadable code that can only be deciphered with the correct encryption keys. This ensures that, even if cybercriminals intercept the data, they cannot read or misuse it. 

 

3. Regularly Update and Patch Systems

Problem Addressed: Banks often operate with a mix of legacy systems and modern applications. Legacy systems, in particular, are more vulnerable to attacks because they no longer receive security updates from the vendor. 

Best Practice: Regular patch management is a crucial aspect of banking cybersecurity. By keeping systems up to date, banks can protect themselves from known vulnerabilities that hackers are quick to exploit. 

Why It Works: The Equifax breach of 2017 was a stark reminder of what can happen when patches are ignored. A known vulnerability in an outdated web application allowed hackers to steal 147 million personal records. 

 

4. Monitor Networks for Real-Time Threat Detection using AI and ML

Problem Addressed: Cyberattacks often go undetected for weeks or even months, allowing hackers to move laterally through a network and gain deeper access to sensitive systems. Traditional security systems may not detect sophisticated cyberattacks, especially in real-time. Banks need more advanced technologies to analyze vast amounts of data and detect anomalies. 

Best Practice: Banks must implement real-time network monitoring tools that can detect abnormal activity and trigger alerts before significant damage is done. These tools use AI and machine learning to identify patterns that indicate a breach, such as unusual login locations or abnormal transaction behaviors. 

Why It Works: According to Ponemon Institute, it takes an average of 287 days to identify and contain a breach, and every second counts in minimizing damage. AI-driven systems can analyze millions of data points in real time, helping banks detect and stop cyberattacks faster. For example, JP Morgan Chase uses AI to monitor over 150 million transactions daily, protecting its customers from fraudulent activities. 

 

5. Develop a Robust Incident Response Plan

Problem Addressed: No matter how strong a bank’s cybersecurity measures are, breaches can still happen. When they do, the speed and efficiency of your response determine the extent of the damage. 

Best Practice: A well-prepared incident response plan can mean the difference between a minor security event and a catastrophic breach. Banks should have a designated team trained to respond immediately to any cybersecurity incident, ensuring clear communication between stakeholders and swift action to contain the breach. This plan should include steps for containment, eradication, recovery, and communication. 

Why It Works: The SWIFT network hack of 2016 revealed how slow response times and a lack of coordination can lead to significant financial losses. Incident response plans ensure that everyone knows their role and how to act in the event of a breach. Studies have shown that organizations with IRPs in place can reduce the cost of a data breach by $2.66 million on average (IBM Security Report). 

 

6. Train Employees and Customers on Cybersecurity Awareness

Problem Addressed: Human error remains one of the leading causes of security breaches. Phishing attacks, in particular, often target bank employees, tricking them into revealing credentials or downloading malicious software. And customers falling victim by using weak passwords. 

Best Practice: Banks should invest in ongoing cybersecurity training for their employees and customers, ensuring that they are aware of the latest threats and know how to respond. This includes training on how to recognize phishing attempts, the importance of strong passwords, safe use of banking apps, and the proper handling of sensitive information. 

Why It Works: Studies show that employees trained in cybersecurity are far less likely to fall for phishing attacks. In fact, IBM’s 2023 Cost of a Data Breach Report found that trained employees can reduce the likelihood of breaches by 70%. And according to Verizon’s 2020 Data Breach Investigations Report, over 22% of data breaches in financial institutions involved social engineering, with phishing being the primary tactic. 

 

7. Monitor and Manage Third-Party Vendor Risks

Problem Addressed: Banks rely heavily on third-party vendors, from payment processors to cloud service providers. These vendors often have access to critical systems, making them a potential entry point for attackers. 

Best Practice: Banks must ensure that third-party vendors comply with strict security protocols. This can be achieved through regular vendor audits and ensuring compliance with cybersecurity standards. 

Why It Works: By monitoring the security practices of vendors, banks can ensure that third-party risks are minimized. According to Forrester, third-party breaches account for 63% of breaches in the financial sector. 

 

8. Implement Strong Access Controls and Privilege Management

Problem Addressed: One of the biggest risks banks face is employees and systems having access to more data or system functions than they need to perform their job. This unnecessary and unrestricted access to sensitive systems and data increases the risk of insider threats and the attack surface for hackers to exploit vulnerabilities and cause significant damage. 

Best Practice: Banks should enforce least privilege access, ensuring that employees and third-party vendors have only the permissions necessary for their job functions. Implement role-based access controls (RBAC) to limit access based on roles within the organization and regularly review audit access levels and remove outdated or excessive permissions. This limits the potential damage from insider threats or compromised credentials. 

Why It Matters: Verizon’s 2021 Data Breach Investigations Report found that privilege misuse was responsible for a significant percentage of breaches in the financial sector. Least privilege access helps reduce the risk of unauthorized data access or accidental exposure. 

 

9. Regular Vulnerability Assessments and Penetration Testing

Problem Addressed: Vulnerabilities within IT systems often go unnoticed until they are exploited by cybercriminals. Banks that do not regularly assess their vulnerabilities are operating blind. 

Best Practice: Conduct regular vulnerability assessments and penetration testing to identify and fix weaknesses before they can be exploited. These assessments simulate real-world cyberattacks to test how well the systems stand up to threats.  

Why It Works: Regular testing helps banks stay one step ahead of hackers. By proactively identifying and fixing potential issues, banks can reduce their exposure to cyber risks and avoid expensive remediation efforts down the line. According to Gartner, vulnerability management should be part of every bank’s cybersecurity strategy to minimize the risk of breaches. 

 

10. Adopt Zero Trust Architecture

Problem Addressed: The traditional “castle and moat” approach to security—where anyone inside the network is trusted by default—no longer works in today’s world of cloud services, mobile devices, and remote work. Banks need to protect data both inside and outside the organization. 

Best Practice: Implement a Zero Trust Architecture, where no one—whether inside or outside the network—is trusted by default. Every user, device, and network connection is verified before being granted access to the system. This approach ensures that if an attacker manages to get inside the network, their movement is restricted and closely monitored. 

Why It Works: As Gartner emphasizes, Zero Trust is becoming a vital part of the best practices for banking cybersecurity. With financial institutions increasingly adopting cloud-based services and remote work policies, Zero Trust ensures robust security across all platforms and environments. 

 

11. Ensure Compliance with Regulatory Standards

Problem Addressed: Banks operate under strict regulations, including GDPR, PCI-DSS, and others. Failure to comply with these regulations can result in heavy fines and legal penalties, as well as reputational damage. 

Best Practice: Regularly review and update security protocols to ensure compliance with all relevant data protection regulations. Use automated tools to track compliance across your systems, ensuring that all necessary checks are in place. 

Why It Works: Compliance with regulatory standards is not just a legal obligation but also a critical component of a bank’s cybersecurity strategy. According to a Forbes report, non-compliance can cost organizations millions of dollars in fines, making it crucial for banks to stay compliant with evolving regulations. 

 

Conclusion: Strengthening Bank Security for the Digital Age 

Implementing these bank cybersecurity best practices isn’t just about protecting assets—it’s about maintaining trust, ensuring compliance, and safeguarding customer data with more secure and resilient infrastructure, safeguarding against both internal and external threats.. From encryption to real-time monitoring and vendor security, adopting these best practices will help banks stay ahead of cybercriminals and keep their infrastructures secure.  

In today’s digital-first world, it’s not just about preventing the next breach—it’s about being ready for it. The future of banking cybersecurity lies in automation, proactive defense, and comprehensive incident response planning. The banks that prioritize these will emerge as leaders in cybersecurity resilience. 

For banks looking for a comprehensive cybersecurity solution, platforms like SE-VULTRAC offer centralized vulnerability tracking, automated compliance monitoring, and real-time security management. To learn more about how SE-VULTRAC can strengthen your bank’s defenses, visit SecurEyes today. 

 

Before you go, we would like to extend our CyberSecurity Leaders Guide to you. This guide is designed to help you, as senior leaders and cybersecurity experts, navigate the future of cyber threats, understand the evolving regulatory guidelines, and implement strategies to keep your institution secure.