By Donna Parent
In a recent 60 Minutes interview, Jay Powell, Chair of the Federal Reserve, stated that cyber risk is the largest threat to the Fed and to financial institutions throughout the U.S. It’s not difficult to understand why. Today’s digital age, paired with the ongoing development of new technologies, have provided a breeding ground for cybercriminals to capitalize upon, across physical and mobile devices.
Between freelance hackers and organized crime rings, both within and outside the U.S., financial services firms fall victim to cyberattacks 300 times more frequently than any other industry. Hackers and criminal organizations are generally in the cybercrime business to make money, whether by directly stealing funds or by capturing and selling personally identifiable information (PII) on the dark web. While motivations may vary, the fallout of a successful data breach can span anything from consumer criticism and complaints, to massive financial losses and damage to general business operations.
Cyberattack Aftermath: Vulnerabilities
From a purely monetary perspective, cyberattacks cost financial services firms $18 million per firm to remediate — 50 percent more than businesses in other industries. Not to mention, the breach rate in the financial services sector has tripled in the past five years, according to the Cost of Cyber Crime Study by Ponemon Institute. But, the effects are much farther reaching than lost dollars.
It can take most victims nearly three months to find out that their identity has been compromised, and some take more than three years to understand the full depth of the violation. One in three victims of a data breach later go on to experience an identity crime. These victims are your account holders, employees and even partners. Once their PII has been stolen, there’s no expiration date on its potential for future misuse. This exposure can lead to a slew of issues for them and for your bank, both in the immediate aftermath and down the road — that is, if they remain your customer.
According to Javelin Strategy & Research, three in five customers trust their bank to keep their information safe, take steps to prevent account fraud and protect them from loss in the case of fraud. That’s a tremendous amount of responsibility. And, when a data breach results in unauthorized access to financial accounts, there is a strong chance that account holders will switch banks — consumer sentiment around trust, security and betrayal can boil over quickly. To make matters worse, 20 percent of those who switch never indicate to their bank or financial institution the reason for the move.
Identity Crime Is a Highly-Personal Attack
When someone has their identity stolen it impacts every facet of their life. Whether missing time at work, damaging personal relationships or undergoing mental and physical stress, victims of ID theft can have their world turned upside-down. The Identity Theft Resource Center’s 2018 Aftermath study found that more than 77 percent of people reported severe emotional distress in addition to financial losses and other collateral damage.
On average, it takes a victim six months and 100 to 200 hours of work to restore their identity. In some cases, recovery can take years. Individuals who experience identity theft want nothing more than to quickly return to their pre-theft condition. However, without the proper resources in place, the road to restoration is a long one full of paperwork, telephone calls, emails and general frustration.
Gain a Proactive Approach to Protecting Account Holder Loyalty
It’s clear that cybercrime isn’t going away. In fact, it’s only getting worse. Identity theft has become the fastest-growing crime of the 21st century. Consumers need help to avoid the crippling effects of fraud, and banks play a significant role in protecting their account holders.
For starters, all bank employees should undergo comprehensive training on cybersecurity and data privacy in the workplace. Employee negligence remains one of the primary causes of data breaches, and all it takes is one wrong click to download malware onto company systems or expose credentials. Financial malware attacks increased 16 percent in 2018 versus 2017, reports Kaspersky Labs. Ensuring that all devices are secure — including employees’ mobile devices — is also critical.
Financial institutions are well equipped to handle individual instances of fraud that impact customer accounts, but many are unable to protect their account holders from the long-term collateral damage associated with lost or stolen personal information. For this reason, banks are adopting a lifecycle approach to identity theft protection. They want solutions that can provide comprehensive monitoring of personal and confidential information, while also having expert restoration services.
By implementing identity protection across the entire digital footprint, banks can add value while driving revenue, improving loyalty and securing the financial health of account holders — building customers for life. In turn, you’ll be viewed as a valuable partner in protecting everything your customers have spent their life building, while gaining peace of mind knowing that you’ve got their back.
Donna Parent is chief marketing officer of Sontiq, a high-tech security and identity protection company arming businesses and consumers with award-winning products built to protect what matters most. Sontiq’s brands, EZShield and IdentityForce, provide identity monitoring, restoration and response products and services that empower customers to be less vulnerable to the financial and emotional consequences of identity theft and cybercrimes.