Role of Cybersecurity in the BFSI Sector in India

The Banking and Financial Services Industries (BFSI) sector has been one of the pioneers in adapting technological developments. Both in terms of financial regulations and policies as well as on the technological front aiding the sector, BFSI today is more streamlined and updated than ever before. Clear and robust guidelines on cybersecurity, data privacy and other cyber-related threats have ensured that this sector remains compliant and ready for future risks.

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Importance of Cybersecurity in the BFSI Sector

In recent years, BFSI players like banks, investment banks, insurance companies, and other financial institutions are increasingly using the best safety solutions as they have become more dependent on technology and digitalization. With high exposure to cyberspace, cybersecurity has become a prominent facet. The importance of cybersecurity in the BFSI sector cannot be stressed enough.

- Banks and financial institutions deal with a huge number of customer assets and data. Safeguarding these consumer assets is of high significance.

- People are now going cashless, using online payment apps, credit machines, etc. This personal information can be used for immoral purposes.

- In case of cyber threat or invasion, banks and other financial institutions can suffer significant damage. They may have to route in substantial amounts of money to get client data back if it is seized. This may lead to losing credibility and trust in the eyes of the public.

- Bearing all insurance expenses till goods reach the final destination

Ways to Improve Cybersecurity in BFSI

Security audit

Auditing software should become a necessity and a continuous process. An audit may reveal the system’s pros and cons. Moreover, it helps provide recommendations for making the process safe and saving on costs.

Firewalls, anti-virus and anti-malware software

It is a possibility that the older version of the software may lack current virus signatures and regulations. Using an updated firewall and the latest cybersecurity technology, financial institutions and banks can block unwanted activity before it reaches other parts of the network.

Multi-factor authentication (MFA)

Not all users change their passwords regularly, and even if they do, it is with minor changes. The Multi-Factor Authentication (MFA) system provides an additional layer of security thus preventing attackers from gaining access to the network. For example, an OTP code adds another level of security.

Biometrics

It is an even more secure type of MFA, wherein user authentication is based on fingerprints, retina scans, facial recognition etc. to make secure transactions.

Automatic logout

This feature reduces risk by denying access to a user if the user isn’t active for a long time during the session. It automatically logs out the user after a few minutes of operation.

Awareness

All of the above solutions can only help to improve cybersecurity if proper education and awareness are provided to the users as well as persons working in the sector.

- Bearing all insurance expenses till goods reach the final destination

Cyber Insurance as a Risk Mitigation Tool

Despite various measures in place, the increasing cyber threats only highlight the gap in the need for cyber insurance, especially for the BFSI sector. The role of cyber insurance may come into the picture only after a cyber breach, but it remains an essential element in an organization's management and risk mitigation strategy. A robust cyber insurance may not only protect against cyber threats and cybercrimes but also, aid in financial cost coverage. Cyber insurance typically covers:

- Identity theft

- Cyber extortion

- Legal expenses

- Unauthorized transactions

- Data restoration costs

- Cyberbullying

- Malware intrusions

- Penalty

- Bearing all insurance expenses till goods reach the final destination

Conclusion

Cyber security in the BFSI sector cannot be negotiated. Due to the increased digitalization in the sector, there rises a need to have robust and foolproof cybersecurity in place. Cyber insurance can only make the players of this segment well-equipped to face the challenges.

Written By: PolicyBazaar - Updated: 18 January 2023

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