The handheld “communicator” from Star Trek is often credited as inspiring Martin Cooper, the developer of the first mobile phone, the Motorola DynaTAC. The communicator’s design, particularly its flip-cover style, can be seen in the aesthetics of later mobile phones, such as the Motorola StarTAC. With technology developing at a rapid pace, things that previously may have been viewed as purely science fiction are increasingly becoming a reality. For community financial institutions (CFIs), this digital transformation presents a double-edged sword: the same tools that offer value and enable innovation, convenience, and accessibility also expose CFIs to new and evolving risks and vulnerabilities. We look at the cyber threat landscape and emerging risks and discuss ways in which CFIs can futureproof their cybersecurity. The Cyberthreat Landscape: Complex, Coordinated, and ConstantCFIs are facing a growing web of interconnected, complex, and escalating cyber and fraud risks. These risks are orchestrated by a variety of threat actors who are more diverse, motivated, and well-equipped than ever before. These include:
Organized cybercriminals, who often operate within global cybercrime networks and use ransomware, phishing, and malware in pursuit of financial gain.
State-sponsored groups or nation-states usually carry out targeted attacks for political, economic, or strategic purposes, often with the aim to disrupt or destabilize their target or extract intelligence.
Hacktivists and extremist groups seek to make ideological statements through website defacements or denial-of-service attacks.
Insider threats occur when employees’ actions, whether intentional or accidental, cause harm and are increasingly costly and difficult to detect. Common insider threats include mistakenly responding to scams and deliberately stealing — or facilitating the theft of — data, intellectual property, or money.For CFIs, it’s no longer a question of if an attack will happen, but when. When it does, the impact can be significant, from reputational damage and loss of customer trust to regulatory penalties, loss of operational capability, and more.Evolving Cyber ThreatsWhile threats such as ransomware attacks continue to increase exponentially and dominate the headlines, there are various other emerging threats that CFIs need to be aware of:
Organized cybercriminals, who often operate within global cybercrime networks and use ransomware, phishing, and malware in pursuit of financial gain.
State-sponsored groups or nation-states usually carry out targeted attacks for political, economic, or strategic purposes, often with the aim to disrupt or destabilize their target or extract intelligence.
Hacktivists and extremist groups seek to make ideological statements through website defacements or denial-of-service attacks.
Insider threats occur when employees’ actions, whether intentional or accidental, cause harm and are increasingly costly and difficult to detect. Common insider threats include mistakenly responding to scams and deliberately stealing — or facilitating the theft of — data, intellectual property, or money.For CFIs, it’s no longer a question of if an attack will happen, but when. When it does, the impact can be significant, from reputational damage and loss of customer trust to regulatory penalties, loss of operational capability, and more.Evolving Cyber ThreatsWhile threats such as ransomware attacks continue to increase exponentially and dominate the headlines, there are various other emerging threats that CFIs need to be aware of:
- Emerging technologies. Although advances in technology offer significant potential benefits to organizations and institutions, they are also increasingly being used by malicious actors to exploit vulnerabilities. For example, cybercriminals are using AI to create authentic phishing emails and deepfakes, automate attacks, and bypass traditional defenses. The looming impact of quantum computing threatens current encryption standards, posing long-term risks as many criminals are stealing data now with the plan to encrypt it later when the technology matures. Transitioning to the cloud provides an increased attack surface for cybercriminals and can expose CFIs to new vulnerabilities through potentially weak identity controls, poor configurations, and unsecured APIs.
- Supply chain risks. With increased interconnectivity between organizations and the use of third-party technology providers, CFIs are becoming more vulnerable to third-party and supply chain attacks. Cybercriminals are increasingly targeting third-party vendors and service providers to gain access to the systems and data of organizations across a supply chain. A compromised vendor can become the weak link that exposes a CFI to more far-reaching cyberattacks.
- The cyber-fraud fusion. As more business operations go digital, cybersecurity threats and the risk of financial fraud are converging. Cybercriminals are taking advantage of weak spots in digital systems to commit serious financial crimes. CFIs face attacks that mix social engineering, data breaches, and transaction manipulation. In response, many institutions are bringing together teams from different departments to work more closely to build stronger defenses against these connected dangers.
Seven Things CFIs Can Do Today to Be Secure TomorrowTo future-proof their institutions, CFIs must proactively employ various ongoing cybersecurity strategies:
- Make cybersecurity a board-level priority. Cybersecurity is a key business risk and should be treated as such. CFI leaders must set the strategy, review cybersecurity resilience, allocate resources, and embed cybersecurity into core operations.
- Prepare for when, not if. Because cyber threats are ever-present and can affect organizations of all sizes at any time, all levels of CFI employees should operate under the mindset that an attack will happen. Holistic cybersecurity practices and tools are key, including layered defenses and robust incident response plans (IRPs).
- Invest in advanced detection and response methods. To ensure they’re as secure as possible, CFIs should adopt zero-trust principles (including multi-factor authentication, continuous verification, and network segmentation), deploy AI-powered threat detection systems, and begin transitioning to quantum-resistant encryption protocols. Implementing strong encryption, validating access controls, and monitoring traffic for anomalies can help secure APIs and cloud environments.
- Create a security-conscious culture. Cybersecurity is everybody’s responsibility. CFIs should provide ongoing education and training to help staff be better able to recognize and respond to phishing, social engineering, and even insider threats. Implementing strong identity and access management controls can further support organizational resilience.
- Develop and test incident response plans. CFIs are expected to have an IRP in place in the event of a cyberattack. These plans should include communication protocols and business continuity strategies. CFIs might also consider conducting regular penetration testing and breach simulations.
- Secure the supply chain. Institutions should strive to build strong, transparent relationships with their suppliers and ensure they have cybersecurity standards, including breach notification protocols, and third-party risk assessments in place.
- Engage in information sharing and collaboration. In a fast-changing landscape, expertise, resource pooling, and knowledge-sharing between organizations is crucial for CFIs to be able to understand and respond to evolving cybercriminal methods and deploy new prevention and response solutions.
Digital evolution provides immense opportunity but also introduces new vulnerabilities for organizations. Cybersecurity is not a checkbox exercise for CFIs — it is an ongoing, evolving necessity. To ensure they are best positioned to prevent cyber threats and respond to the future cyber threat landscape, institutions need to be proactive and agile, stay abreast of how the threat landscape is evolving, understand where the threats are coming from, adopt modern technologies, and foster a culture of cybersecurity.
