The way we handle money has changed. From paying bills with a few taps to transferring large sums across borders in seconds, banking today operates mostly online. But with this shift, a wave of new challenges has come, especially for the institutions we trust to move and protect our money.
Among the most pressing of these is cyber fraud.
In just one year, nearly 60% of banks, fintechs, and credit unions reported losing more than $500,000 to fraud. And in Europe alone, fraudulent credit transfers reached more than €1.13 billion in the first half of 2023. These figures highlight the ongoing digital threats banks face year after year, along with the growing responsibility to stay in line with cybersecurity regulations.
In the sections below, we’ll take a closer look at the risks banks are up against, the types of cyber fraud they’re most likely to face, and what steps they can take to stay ahead of the threat.
Cyber Fraud Risk Indicators for Banks
Spotting the signs of cyber fraud early can make all the difference when it comes to successfully mitigating the risks. For banks, understanding where the weak points are and how fraudsters tend to exploit them is the first step in building a stronger security strategy.
Below, we’ll discuss some of the most common cyber fraud risk indicators banks should watch for:
| Unusual transaction patterns | Spikes in activity, transfers at odd hours, or multiple small transactions that don’t match the customer’s usual behavior may point to fraud attempts. |
| Login anomalies | If accounts are being accessed from unfamiliar devices, locations, or IP addresses (especially in rapid succession), it could signal a compromised login. |
| Account takeover behavior | Sudden changes to contact details, followed by high-risk transactions, are a common tactic fraudsters use after gaining control of an account. |
| Use of remote access tools | The presence of remote desktop software or unexpected admin access on customer devices can indicate cybercriminals are operating behind the scenes. |
| Phishing attempts and social engineering patterns | Increased reports of phishing emails or calls targeting customers often precede coordinated fraud attacks. |
| Mismatched geolocation and device fingerprinting | When a transaction seems to come from a different region or device than usual, that mismatch can be a red flag. |
| Frequent failed login attempts | A surge in failed logins, especially across multiple accounts, may be a sign of credential stuffing or brute-force attacks. |
Common Types of Cyber Fraud in Banking
In the banking world, fraud often hides in routine transactions, familiar voices, or small changes that go unnoticed until it’s too late. Knowing the common types of cyber fraud gives banks and their clients a headstart in staying ahead of it.
Below, we’ll present some of the most frequent types of cyber fraud in the banking industry:
- Phishing and Vishing Scams – In this case, cybercriminals pose as trusted sources, like banks or government agencies, and send fake emails or make urgent phone calls. Their goal is to trick victims into giving away passwords, PINs, or account numbers, which are then used to steal funds or take over accounts.
- Account Takeover – This happens when a fraudster gains control of a customer’s online banking account, usually through stolen credentials or malware. Once inside, they can change security settings, move funds, or use the account to commit further fraud.
- Synthetic Identity Fraud – Here, criminals create fake identities using a mix of real and invented information, like combining a real Social Security number with a fake name. These identities are used to open accounts, build credit, and commit fraud over time without immediate detection.
- Insider Fraud – Fraud doesn’t always come from outside, however. Sometimes, employees misuse their access to internal systems for personal gain, manipulating transactions, leaking data, or helping others bypass security checks.
- Payment Fraud – This includes unauthorized transfers, invoice fraud, or redirecting payments to fraudulent accounts. Criminals often exploit weak verification processes or take advantage of time-sensitive transactions to act quickly and disappear before being noticed.
How Can Banks Prevent Cyber Fraud?
With cybercriminals growing more sophisticated and bolder, banks can no longer rely on outdated security strategies. They must adopt a well-structured, proactive cybersecurity approach that can reduce fraud risks significantly.
Below, we’ll explore a few practical, layered methods that individuals can use to protect their systems, customers, and reputation today.
Build Strong Foundations, Secure Every Endpoint and Network Layer
Every device that connects to a bank’s systems, whether it’s a branch computer or a customer’s smartphone, is a potential entry point for fraud. And because of the high amount of data being handled on a daily basis, these entry points must be secured at all times.
Banks should deploy advanced endpoint detection and response (EDR) tools to monitor activity in real time and isolate threats before they spread. On the network side, tools like intrusion detection systems (IDS) and firewalls should be kept up to date and tightly configured.
Together, they form a digital shield that can protect systems against many forms of cyber fraud, from malware to unauthorized access.
Test Human Vulnerabilities Through Social Engineering
While technology plays a big role, people are still the most common weakness that cybercriminals exploit. Phishing emails, fake support calls, and SMS scams all rely on human error. That’s why social engineering testing is an essential part of a strong security strategy.
These tests simulate real-life fraud scenarios (like a scam email requesting a password reset) and help banks identify how employees and systems respond under pressure.
Think Like a Hacker: Run Pen Tests and Red Teaming Exercises
No matter how strong our defenses are, cybercriminals will always try to find a way to breach them. That’s why it’s important for us to constantly look for vulnerabilities ourselves and patch them on time.
Regular penetration testing and red teaming exercises help banks find gaps in their defenses before criminals do. These exercises not only reveal weaknesses, but they also build resilience and improve incident response times. When every second counts, these skills are crucial.
Segment the Network to Stop Threats from Spreading
Imagine a vault where every door leads to the next, leaving all valuables exposed and vulnerable; that’s what many bank networks unintentionally look like. Once attackers get in, they can move laterally and access more systems, potentially compromising the whole infrastructure.
But network segmentation changes that.
It breaks the network into smaller, contained zones that limit how far attackers can go. This approach is especially useful for protecting sensitive systems like payment processing, customer databases, and authentication servers. Even if one part is breached, the damage stays contained, and recovery becomes faster and more manageable.
Verify Everything through a Zero Trust Model
In traditional security models, users and systems inside the network are trusted by default. But, as we’ve seen in many cases lately, cyber threats often come from inside or use stolen credentials.
That’s why it’s wise to implement a Zero Trust Architecture (ZTA).
ZTA operates on the principle of “never trust, always verify,” requiring every user, device, and application to prove its legitimacy before access is granted. Implementing ZTA involves continuous authentication, identity-based access control, and granular policy enforcement.
For banks, this means greater visibility, tighter control, and fewer blind spots, especially in hybrid and remote work environments.
Monitor for Insider Threats
Cybercriminals don’t always attack from outside. Sometimes, it could be someone who knows the system well enough to exploit it. Whether it’s an employee abusing their access or a third-party contractor leaking data, insider threats are real and often go undetected.
To enhance your security inside and out, it’s advisable to always monitor for unusual activity, such as:
- Access outside working hours
- Attempts to download large files
- Changes to user privileges
Don’t Overlook Your Partners: Assess Third-Party Risk
Banks rely on a wide range of third-party vendors, from cloud providers to payment processors. But every connection to a vendor is also a potential entry point for fraud, whether intentional or not.
The best way to prevent attacks through these partners is to regularly conduct third-party risk assessments.
Professionals can evaluate vendors based on their cybersecurity posture, data handling practices, and response plans. Where possible, banks should also require external parties to meet specific cybersecurity standards and report any incidents that could affect shared systems or data.
Plan for the Worst with a Strong Incident Response Program
Even with the best defenses in place, no system is completely immune to cyber fraud, and that’s because cybercriminals are constantly coming up with new ways to breach our systems.
Therefore, your security strategy should include a clear incident response plan.
A strong plan defines roles, escalation paths, communication protocols, and post-incident reviews. When an attack occurs, it’s essential for your staff to know how to react, because every second can make a difference during that kind of emergency.
Enhance Security Around Mobile Banking Apps
Mobile banking is convenient, but like any other piece of technology, it also introduces new risks. Cybercriminals often target mobile apps through fake interfaces, malware, or credential harvesting.
Banks should secure their mobile apps using techniques like:
- Code obfuscation
- Biometric authentication
In-app fraud detection tools that track unusual activity, like logins from unfamiliar locations or multiple failed attempts, can be very effective. However, it’s important to keep these applications updated to make sure they are ready to face current digital threats.
Conduct Regular Cybersecurity Audits
Because cyber threats are constantly evolving, it’s important to conduct regular security audits and adapt your security strategy to current risks.
Cybersecurity audits go beyond technical checks. They examine policies, procedures, vendor management, employee training, and more. A good audit will highlight strengths, flag outdated practices, and recommend improvements.
For banks, it’s an opportunity to stay aligned with industry standards, meet regulatory requirements, and continuously adapt to a changing threat landscape
The Role of Cybersecurity Regulations in Mitigating Cyber Fraud Risks
Cybersecurity regulations play a vital role in helping banks and financial institutions mitigate the risks associated with cyber fraud. Key regulations like the GDPR (General Data Protection Regulation), PSD2 (Payment Services Directive 2), and PCI DSS (Payment Card Industry Data Security Standard) are designed to protect sensitive data, secure payment processes, and ensure that institutions follow strict security measures.
Here’s how these three regulations are similar to each other:
- The GDPR focuses on building better defense around personal data by enforcing strong security practices and transparency in data handling. This regulation helps prevent breaches and ensures that customers’ information is handled securely, reducing the risk of fraud.
- PSD2 requires stronger customer authentication for online payments, making it more difficult for cybercriminals to gain unauthorized access. It also encourages secure data sharing between financial institutions, fostering an environment where collaboration can help detect and prevent fraud more effectively.
- PCI DSS sets clear standards for securing payment card data, verifying that financial institutions maintain the highest levels of security for card transactions.
As data sharing between institutions becomes increasingly important in tackling cyber fraud, these regulations promote a cooperative approach to detecting and preventing fraudulent activity.
Mitigate Cyber Fraud Risks with CyberGlobal
Cyber fraud is one of the biggest threats that financial institutions face today. These attacks are not only becoming more frequent but also more sophisticated, putting individuals at serious risk. Banks have suffered significant financial losses, sometimes in the millions, and the consequences go far beyond just financial damage.
At CyberGlobal, we recognize these risks and are committed to helping you build a stronger security strategy for your business. Our mission is to provide you with the tools and technology needed to combat cyber fraud and identify potential threats before they escalate.
No matter the size or location of your business, we bring the same level of expertise used by global brands like Mercedes Benz and Red Bull to protect your organization.
Our range of specialized services include:
- Penetration Testing: Our experts simulate cyberattacks to find vulnerabilities, helping you prevent fraud by strengthening your systems.
- Social Engineering: We test your employees’ susceptibility to phishing attacks, a common method for cyber fraudsters to gain unauthorized access.
- Threat Intelligence: Our tools and professionals can provide real-time alerts and insights, helping you recognize emerging fraud patterns and defend against evolving threats.
- GRC Services: We help you implement governance, risk management, and compliance frameworks to protect your systems against cyber fraud while ensuring your business meets industry standards.
While advanced technology is essential, it’s our people that truly make a difference.
We work closely with you as an ally, providing expert support at every step, so you can focus on running your business with peace of mind. Don’t let cyber fraud threaten your business.
Reach out to us today, and together we can build a stronger shield for you and your team!
