In 2023, cybercrime continues to be the primary concern of many financial institutions, with crooks causing trillions of dollars in worldwide damages annually. Based on data from 88 banks in 30 countries, the EY/IIF survey published in early 2023 reveals that 72% of Chief Risk Officers worldwide consider cybersecurity in the banking sector as the primary risk for the upcoming years.
Banks and other financial institutions are ineluctably vulnerable targets of cyberattacks, given their extensive repositories of valuable data and rapid digital transformation that lacks adequate security measures.
Hence, in this era of relentless cyber threats, ensuring the safety and integrity of mobile banking apps is prioritized. This guide explores the common mobile banking fraud cases and essential strategies aimed at enhancing mobile banking app security.
Why Are Mobile Banking Apps Vulnerable?
What makes m-banking different from other categories of applications is its capability to connect to the bank’s backend system through open banking APIs. While adopting open-source APIs can significantly accelerate the development process, it also implies a heightened risk of security breaches that cannot be entirely mitigated with a standard set of security measures.
When it comes to banking app security, there are some “layers of protection” in which the cyberthreats can arise:
- Device errors: Cyberattackers may get access to private data on a smartphone, which often occurs with improperly built software. This leads to the stealing of personal data and credit card information, which may be used for financial fraud or extortion purposes.
- Unsecured data transit: At this phase, intruders can intercept confidential information during its transmission. A mobile banking app continuously requests the bank’s server for financial activities like making payments or updating the account balance. If an insecure protocol is used for the data transfer process, users’ personal information becomes vulnerable to exploitation by malicious individuals.
- Server flaws: In this case, errors can result in unauthorized individuals gaining access to the information stored on the app’s server. Attackers may do it by exploiting security weaknesses in the backend APIs.
Common Fintech Cyberattacks That Banks Should Beware
Fraudsters exploit security weaknesses in mobile banking apps in various ways, with particular intrusions being more common than others. Here are common categories of cybercrimes that banks and financial institutions should pay attention to during the banking app development and maintenance:
1. Banking Trojans
As reported by Mortgage Professional America (MPA), this nation ranks as the fourth most frequently targeted location globally for banking app malware, with over one in three banks under attack. This means among 34 banking apps, 13 are currently facing threats from malicious programs referred to as Trojans.
Banking Trojans are among the most common mobile cyber threats today as they take advantage of mobile users’ carelessness in downloading “siloed” apps from unknown sources that might conceal malware.
Here’s how banking Trojans work:
- They can hide bank-related SMS messages containing passwords from the user and immediately redirect them to an intruder, who then utilizes the stolen information to initiate unauthorized money transfers to their bank account.
- Similarly, banking trojans can operate automatically, through time, transferring money to the accounts of criminals.
- Or the malware instantly replicates the banking apps and, after acquiring the login credentials for accessing the mobile Internet banking, they do the same.
Three of Australia’s “big four banks” – Commonwealth Bank, ANZ, and Westpac are under attack from four sophisticated trojans, including malware Cabassous and Coper, MPA reported. Several other financial institutions are also facing the same challenges, such as the Bank of Queensland, Bendigo, and Adelaide Bank.
2. Fake Banking Apps
These apps impersonate the real mobile apps of banks and are designed to trick users into entering their login credentials. There are two distinct kinds of fake banking apps: phishing apps and IRL Fake Banking Apps.
Criminals have plenty of ways to distribute their fake banking apps, including promoting them on alternative app marketplaces and on different sites. They share malicious codes through third-party IT service providers, social media platforms, messaging apps, or phishing email campaigns.
If a customer downloads a fake app or clicks on malicious links and enters their personal details, the scammers will gain access to their real online banking account. This program may potentially end up being a virus that allows hackers to access the user’s other financial accounts and steal all the money.
3. Infrastructure Breaches
These attacks often target servers, where the underlying technological systems, networks, and hardware that support banking operations are compromised or breached. Infrastructure breaches can take various forms, including data center breaches, network intrusion, cloud security incidents, etc.
As an example, last year, Australian health insurer Medibank made one of the largest data breaches in Australia’s history. According to the Australian Computer Society, in its half-yearly report, Medibank claimed that its systems were accessed unauthorizedly through a stolen username and password of 9.7 million customers. The report of Medibank also indicates that the perpetrator used the stolen login credentials to gain access to the bank’s network through a misconfigured firewall that did not necessitate an additional digital security certificate.
Key Security Strategies For App Developers In The Banking Industry
Given the significant growth of security threats in the mobile banking segment, financial institutions should respond by constantly maintaining and updating their digital products to protect customers from fraud, whether they opt to create a banking app internally or engage mobile banking application development companies. Here are some top strategies for BFSI businesses to address potential vulnerabilities:
1. Add Two Factor Or Multi-Factor Authentication Feature
By generating one-time passwords or biometric authentication methods like facial recognition or fingerprints, you can add an extra layer of protection for mobile banking apps. Here is how the implementation of two-factor and multi-factor authentication functions can bolster the defenses of banking apps against various common cyber threats:
- Phishing: Two-factor authentication protects against unauthorized access if the username and password are stolen through a phishing attack.
- Stolen passwords: As poor password hygiene makes passwords easy to steal, a two-factor authentication feature can make your banking app robust enough to eliminate this threat.
- Social engineering: Sophisticated hackers are now utilizing social media platforms to execute attacks by tricking users into voluntarily providing their credentials. However, with the stronger authentication feature, unauthorized access to the bank account can be detected.
2. End-to-end Encrypt Sensitive Data
Numerous entities, such as payment cards, merchants, card brands, and issuing banks, play an essential role in online transactions. The exchange of loads of sensitive data valued at billions of dollars has become a hotspot for cyber attackers.
End-to-end encryption is a solution to this massive threat since it prevents unauthorized individuals from accessing or manipulating the data. All sensitive data, including user credentials and financial transactions, should be encrypted at various levels, including data transmission, storage, and user authentication, to provide comprehensive protection.
When data is encrypted, it is scrambled into an unreadable format, which can only be deciphered with the correct decryption key. This ensures that even if the data is intercepted, it remains unreadable, ensuring data confidentiality.
3. Reduce Manual Testing Flaws With Automated Security Testing
The mobile app security landscape is ever-changing, with new cyber threats emerging daily. Whenever new security parameters are implemented, there is always someone seeking ways to circumvent them.
To mitigate the ever-evolving vulnerabilities effectively, it’s essential to perform regular testing to ensure that your mobile app’s security measures remain effective and adaptable. Implementing automation testing helps eliminate the potential errors associated with manual testing processes and the need for additional resources, which can otherwise be time-consuming and costly.
Additionally, automated mobile banking app security testing offers the advantage of accelerating time to market, providing a competitive edge for banks. By adopting automation testing at an early stage, you may detect potential security vulnerabilities and issues more swiftly, allowing for timely resolution before the app’s release.
4. Conduct Regular Security Audits and Testing
The dedicated software development team should conduct thorough security assessments, including penetration testing and code reviews, to identify potential weaknesses. Penetration tests, often performed by independent security experts, are a method of simulating real-world attacks on your mobile banking system to identify and fix vulnerabilities. Testers attempt to exploit vulnerabilities to gain unauthorized access and provide recommendations for remediation.
Besides, you should conduct code reviews to identify security flaws and vulnerabilities within the application’s source code. This process helps ensure secure coding practices are followed.
Additionally, third-party security audits can provide an unbiased evaluation of the app’s security measures. By regularly auditing and testing the app, developers can stay one step ahead of potential threats and ensure the ongoing security of their banking apps.
5. Stay Compliant with Industry Standards
Ensuring that your banking app adheres to industry standards for mobile security not only safeguards it against the most recent threats and vulnerabilities but also serves as evidence of your proactive efforts in securing both your organization and your customers.
It is essential to ensure your software development team is familiar with mobile app security best practices and frameworks such as the OWASP Mobile Top 10. This list is widely recognized as the most popular and powerful awareness document for web and mobile application security. It reflects a comprehensive consensus on the most noteworthy security weaknesses in web applications. Besides, PCI-DSS is also another compliance mandate for banks with cards and is administered by the Payment Card Industry Security Standards Council.
6. Ensure the Software Development Team Possesses Security Certifications
For banks and financial institutions, especially those that choose to offshore their banking app development projects, partnering with trusted IT service providers becomes an even more critical consideration.
There are many cyberattacks that occur due to the software team’s lack of alignment with security best practices and standards. Offshore developers may not always be fully aware of a bank’s security requirements or the specific threats that the financial industry faces.
The best practice here is collaborating with offshore partners who adhere to industry-specific security standards and certifications, such as ISO 27001 or SOC 2. In KMS Solutions, we integrate international security standards into our software development life cycle (SDLC) to ensure the team has a common commitment to safeguarding sensitive financial data.
Read more: What is Fraud Detection and how it is applied in Mobile Banking
Final Thoughts
As mobile banking continues to grow in popularity, ensuring ironclad security becomes paramount. Both app users and developers must be proactive in implementing security strategies to protect against evolving threats. By prioritizing security, the mobile banking industry can continue to thrive, providing users with convenient and secure financial services.
Don’t compromise on the security of your financial transactions. Implement these strategies today to safeguard your mobile banking experience. Protect your financial transactions with our secure banking app, contact us now!
