Data Security: Who’s Winning the Cyber War?

The growing sophistication of cyber attacks and the proliferation of vulnerabilities resulting from the rise of mobile computing are forcing financial institutions to rethink data security and embrace new fraud-fighting techniques and technologies, including real-time monitoring.

Data security has long been a priority for financial services firms. But a wave of very public cyber attacks by international hacker groups such as Anonymous, combined with an already distrustful public following the financial crisis, has forced financial services firms to step up their network security to prevent data breaches and regain clients' trust. While victims of some of the more notable attacks and data breaches of 2011 were large consumer companies and government agencies — including Sony, PBS, the U.S. Senate, and even the CIA and FBI — security experts say financial services firms, traditionally a popular target of fraudsters, are increasingly a target of criminal hackers.

Citibank, for example, discovered a data breach on May 10, 2011, from a hack attack, the consumer fraud website PrivacyRights.org reported. Two weeks later, Citigroup officials concluded that the data thieves had captured included the names, account numbers and email addresses of about 360,000 customers.

"The reality is that the people who are looking to commit fraud are targeting anybody who has Internet access to applications to allow money to be moved," comments Ben Knieff, Director of Product Marketing at Nice Actimize, a provider of financial crime, risk and compliance solutions. Outside of the retail banking area, hackers could target asset managers, wealth managers, even investors who have access to online assets, relates Knieff.

And, security professionals say, cyber attacks have become relentless -- and more sophisticated than ever. According to reports, hackers can even purchase crime-ware kits on the Internet based on the number of machines they want to infect for as little as $400 to $700.

While five years ago financial services firms mainly saw hackers using "relatively simplistic methods to target customer accounts, attack patterns have shifted," says Lou Steinberg, CTO at TD Ameritrade. In addition, many hackers, such as Anonymous, now have social agendas, he notes.

Hackers, according to Jason Milletary, technical director for malware analysis on the Dell SecureWorks' Counter Threat Unit (CTU) research team, a provider of security information services to financial firms, use a variety of techniques to distribute malware — malicious code on computer systems designed to steal personal information and passwords or to take control of the machine for distributing spam without the owner's knowledge. They may leverage social engineering (by making an email appear to come from a friend or colleague to entice the user to open the document, for example) to try to get users to reveal passwords. Hackers also look to exploit weaknesses in applications to steal clients' credentials.

"We see an evolution of the malware so they can elude detection," says Milletary. The top malware threat experienced by the 900 financial customers that use Dell Secure Works' intrusion prevention system, he reports, is Black Hole, a type of crime-ware developed in Russia to hack computers via malicious scripts planted on compromised websites.

"Now we see much more sophisticated organized rings that profile us and the other financial services institutions. They try to understand where we might have weaknesses," TD Ameritrade's Steinberg says. "Hackers are playing offense, and we are playing defense."

Keeping Up With the Mobile Threat

As a result, financial services IT department are shoring up their defenses, using security technology more proactively than ever before to protect their clients' assets and corporate secrets. But preventing cybercrime has become more challenging for banks and Wall Street firms as they increasingly offer new products via mobile devices, including Apple's iPad.

"The attack surface has gotten broader and more complex," explains Steinberg, who points out that hackers now can penetrate the perimeter via the web, mobile devices and even voice-over-IP telephony networks. "As banks and online brokers offer bill payment and more new products via mobile devices, that opens up new opportunities for a fraudster to take advantage of," he says.

To protect customer data, historically, IT and security departments looked at putting barriers around data, differentiating between what was inside the company versus what should be kept outside. "If data was on laptops and portable devices, it had to be encrypted," says Chet Wisniewski, senior security adviser for security software firm Sophos. "And if it was inside [the firewall], they didn't need to encrypt it because it was in a vault."

With the explosion of the mobile channel, however, that is an artificial approach that no longer works, Wisniewski contends. "As soon as we start carrying out these phones and tablets, there is no inside and outside," he says, noting that employees may be sitting in an airport or a Starbucks while accessing data. Complicating matters further, Wisniewski adds, companies are looking at moving data into the cloud as a cost savings measure, so data is freely moving beyond the enterprise. (For more on mobile device security, see related sidebar, this page.)

Since the boundaries between what's inside the company and what's outside the company are blurred, financial services firms are shifting their approach, according to Wisniewski. Now they seek to determine which data is sensitive and to ensure that it's protected. "Regardless of whether the data is on a PC desktop inside your building or on an iPhone, the approach is, you classify the data as to its importance and make sure it's protected, and that gives you the ability to make it portable," says Wisniewski.

Not all data is the same, adds TD Ameritrade's Steinberg. With so much data, and so many ways to attack it, TD Ameritrade classifies data based on its sensitivity, he says. "Knowing my favorite flavor of ice cream is not the same as knowing my Social Security number, and so different levels of protection get assigned to different levels of information," illustrates Steinberg. "If you try to protect everything, you protect nothing. What we'd rather do is classify our information and assign our best controls — our best protective measure — against the most important, most sensitive data."

Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio