Southeast Asia is home to some of the world’s fastest-growing digital markets, led by the rapid digitalisation of the Asean nations in the wake of the pandemic. According to research by Google, Temasek, and Bain, Asean’s digital economy is set to exceed US$300 million ($396 million) by 2025 in gross merchandise value, with the digitalisation of financial services being a key growth driver.
However, this shift has also caught the attention of cybercriminals, constantly looking for ways to monetise cybercrime more effectively. Financial institutions are often the target of cyberattacks, being trusted entities that regularly manage personally sensitive and valuable data such as personal banking details, login credentials, or high-value business transactions. Theft of this data holds high potential for significant ransom payouts, can be leveraged for phishing attacks, or simply sold for profit.
This has made the financial services sector one of the most targeted industries by cybercriminals today. At home, Singapore’s financial services industry was the leading target of phishing attacks in 2022, with more than 80% of reported phishing sites found to be masquerading as financial institutions.
The growing implication of cyberattacks
Technological interconnections within the global financial sector can quickly see cyberattacks rapidly spreading through financial systems worldwide, making the consequences of a successful attack incredibly severe.
A key example is the 2016 cyberattack on Swift, the banking network that undergirds most global financial transactions. While the attack was successfully contained, it demonstrates the potential for disruption, especially for global business and financial hubs such as Singapore, potentially triggering a financial crisis.
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Financial institutions that fall on the wrong side of cyberattacks could also face regulatory implications. Singapore’s Financial Services and Markets Bill grants the Monetary Authority of Singapore the powers to enforce technology risk management requirements and increases the financial penalty for local financial institutions that suffered a security breach due to oversight to $1 million per incident.
Current trends and key risks in the financial landscape
Some technologies and common processes financial institutions use today can conceal cyber risks and increasingly expose them to emerging cybersecurity challenges.
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A notable trend is cloud computing, with increasing adoption of public cloud services among Singapore’s financial institutions. From a financial services perspective, moving processes to the cloud enables organisations to modernise their IT infrastructure, which is necessary to support the digitalisation of the industry. However, expansive cloud environments can expose adopters to various security threats such as data breaches, unauthorised access, compliance violations, and cloud misconfigurations.
The introduction of cloud services also increases the complexity of the supply chains at financial institutions. As these supply chains become more digital, deeply interlinked and global, the potential for weak spots inevitably increases. In related attacks, victims are typically breached through a compromised third-party vendor within their network. With a single point of failure required to breach a system, every participant in the supply chain, be it a manufacturer or distributor, adds further layers of cyber risks.
Improving cyber risk posture through process, technology, and education
A best practice is that every financial institution should adopt precautionary controls and basic cyber hygiene. Some examples are the segregation of duties and the principle of least privilege. The latter means granting the minimum access and permissions necessary for users and applications to perform their tasks. With today’s interconnected security environments often comprising numerous third-party vendors and hybrid employees connecting remotely, this is important to prevent unauthorised access to critical data or workflows where further attacks on the organisation may be launched.
Another effective method of enhancing financial institutions’ security is through multi-factor authentication (MFA) for privileged accounts, such as administrators, developers, and managers. MFA requires users to provide multiple authentication factors, such as a password, a code sent to their phone, or a biometric scan. This adds an extra layer of security that further reduces the potential for unauthorised access.
Data encryption is one of the most effective ways for financial institutions to protect sensitive data from unauthorised access or exposure. Encryption turns customer and business data into an unreadable format that can only be deciphered with the correct credentials, rendering it useless for cybercriminals in a data breach or theft. To optimise security outcomes, data should always be encrypted, regardless of whether it is in transit or storage.
The digitalisation of financial services vastly expands the size of the IT environment that needs to be protected, constraining security teams’ ability, especially amid an ongoing cybersecurity talent crunch. Automation tools and services can help financial institutions mitigate risks by monitoring, detecting, and responding to threats more quickly and accurately. Automation can also help ensure cybersecurity configurations across the organisation remain compliant with evolving regulations.
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Finally, everything starts from education. One of the biggest and often overlooked challenges to cybersecurity is human error, with many incidents stemming from employees unaware of common risks and best practices. Financial institutions should implement mandatory training for employees about cybersecurity risks and how to avoid them, with regular refreshers focusing on the latest trends to improve general cyber hygiene levels and establish a future-ready workforce.
The way forward
The strength of any cybersecurity strategy is as strong as the weakest link. After all, it takes only a single lapse — a compromised employee credential or excessive access permissions — to pave the way for a successful cyberattack.
With Singapore’s financial institutions being deeply entrenched in global financial flows and interconnections stretching around the world, curbing cybersecurity risks for the industry will require a holistic effort that spans technology and human education. In addition to developing internal capabilities, financial institutions may collaborate with managed service providers to further strengthen their cybersecurity risk posture, with such firms able to provide highly advanced competencies that ensure a proactive response to potential incidents.
With digital financial services experiencing double-digit growth across Southeast Asia, these trends make a robust cybersecurity strategy critical for long-term success and, arguably, the industry’s very existence.
Wai Kit Cheah is the senior director of Apac products and practices at Lumen Technologies
