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In his latest blog, Simon Viney discusses the challenges and opportunities the FS industry has faced since the start of the pandemic and how they can work to overcome these in the coming months and years, as highlighted in our new COVID Crime Index report
 
Thursday 29 April
Read time: 3 mins
COVID-19 is said to have pushed many companies “over the technology tipping point”, accelerating digital transformation as they rapidly adjusted to a new reality(1).  Banks and insurers were not excluded from this transition as they struggled to tackle surging levels of cyber crime and fraud.
 
To find out exactly how these financial institutions (FIs) and their customers were affected, BAE Systems Applied Intelligence commissioned research across the US and UK. The COVID Crime Index Report(2) reveals the challenges and opportunities the industry has faced since the start of the pandemic and takes an expert look at how they can work to overcome these in the coming months and years.
 
 

Cyber crime surges during lockdown


There’s been plenty of anecdotal evidence around escalating cyber crime and fraud, but what was the true picture for 2020? The 902 FI respondents we polled across the two markets were pretty unequivocal. Three-quarters (74 per cent) said they’d seen an increase in malicious activity since the beginning of the crisis. On average this amounted to a 29 per cent increase, driven by threats to corporate systems and data such as mobile malware, phishing, botnet attacks, ransomware and insider threats.
 
Disruption caused by COVID-19 restrictions provided the perfect lure for phishing attacks. Distracted remote workers and exposed infrastructure like unpatched virtual private networks (VPNs) and remote desktop protocol (RDP) endpoints offered additional opportunities for compromise. Overall, the vast majority (86 per cent) of FI respondents admitted the mass move to remote working made their organisation less secure, with over two-fifths (44 per cent) complaining of a lack of visibility into their networks.
 
 

Budget cuts led to more financial and security pain


At the same time, financial pressure forced many FIs to cut funding for IT security fraud and risk teams. On average, budgets were cut by 26 per cent between March 2020 and March 2021 — almost exactly the same amount that detected criminal activity rose by (29 per cent) during the period.
 
Although the two trends are not necessarily linked, 37 per cent of respondents claimed customers would be put at greater risk of cyber crime or fraud due to a drop in investment. Around the same number (36 per cent) warned of losing experienced security professionals and most (75 per cent) respondents said cyber crime losses experienced by their business over the period were down to pandemic-related crimes.
 
 

Consumers in at the deep end


The index also polled over 2,000 US and UK consumers to understand their experiences of the pandemic. Perhaps unsurprisingly, given the large numbers of first-time e-commerce users surging online, many suffered losses.
 
Half (50 per cent) of those we spoke to said they’ve been victims of cyber crime or online fraud in the past, a fifth (19 per cent) over the past year. A quarter (24 per cent) claimed it happened twice in a year and 15 per cent three times. Phishing, bank and card fraud, stolen data, fake SMS messages and phone calls, and ransomware were all commonplace, with COVID-19 often used as a lure.
 
Yet, while these incidents caused understandable stress and strain for many consumers, they’ve also increased their awareness of malicious online activity. Nearly a quarter (23 per cent) are now more concerned about cyber crime than they are physical crime. This is an important trend for FIs to note.
 
 

What the future holds


So what next for FIs looking to exit the pandemic with momentum? Many (77 per cent) are concerned about the continued rise in online threats over the coming year and a quarter (24 per cent) of consumers believe their FI could do a lot more to protect them from cyber crime.
 
So where are the opportunities for FIs? Certainly, in providing more transparency around current cyber crime and fraud campaigns, as well as investing in greater education and outreach to customers. But also, in bolstering and improving the FIs own security with a focus on people, process and technology. However, it also feels like more of a ‘step change’ is needed in how FIs, and wider society, deal with cyber crime.
There’s much to learn from the events of the past year. The FIs that do this well will be best placed to succeed in the future.

 
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Download 'The COVID Crime Index: What was the true cost to Financial Services and consumers?'
 
Simon Viney

About the author

 

Simon Viney is Cyber Security Financial Services Sector Lead at BAE Systems Applied Intelligence

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FOOTNOTES

(2) Research methodology: BAE Systems Applied Intelligence commissioned two surveys: one of 902 financial services organisations (referred to as FIs), and one of 2,003 consumers. These were carried out in both the US and UK markets by Atomik Research, an independent creative market research agency that employs MRS-certified researchers and abides to MRS code. The research fieldwork took place March 3 – 10, 2021.
 

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