Building strong banking cloud security: Risks to know and ways to stay safe

Strong banking cloud security becomes the number one priority as more financial institutions rely on cloud computing to satisfy growing operational requirements. Banks wield huge amounts of sensitive financial and customer information, making them a prime target for cyber attacks. In fact, the finance sector is the second most targeted industry, according to Statista. To protect your assets, maintain compliance, and safeguard customer trust, investing in cloud security services is no longer optional, it’s essential. So, how do you defend your bank against common threats, and what practices can help you establish proactive security? Let’s find out.

Key threats to banking cloud security and how to avert them

Although banks struggle with the same cloud-related risks as other sectors, certain threats are more prevalent in the finance industry. Staying conscious of them, our experts note, can define whether your organization becomes part of a cybercrime statistic. Let’s explore seven common attack tactics and how you can stop them from succeeding.

1. Ransomware attacks

For financial institutions, information is both the greatest asset and the most difficult thing to guard. Data breaches can cost banks hundreds of millions of dollars, in addition to devastating reputational damages. Malicious actors target banks with ransom software designed to steal personal information and financial data. If an affected institution refuses to pay the demanded ransom, attackers threaten to expose the breach along with the stolen records. Ransomware can also encrypt critical files or disrupt systems that support key operations, indefinitely stalling a bank’s functioning.

Ransomware often enters through phishing emails or unaddressed vulnerabilities in your cloud infrastructure. It’s notoriously difficult to combat once inside the system, but with the right expertise, it’s much easier to prevent. Here are several measures to make your banking data security more resilient to blackmail:

• Implement strong email filtering: stop malicious emails automatically before they land in an employee’s inbox;
• Conduct extensive phishing resistance training: teach your staff to recognize suspicious requests and report them through appropriate channels;
• Avoid relying on a single cloud: distribute critical workloads across multiple environments to minimize the impact if one platform gets compromised;
• Create and isolate backups of critical assets: separate backups from production environments to ensure recovery without paying ransom in case an incident does occur.

Additionally, maintaining business continuity in case of a ransomware attack requires reliable failover and recovery mechanisms. For example, when N-iX designed and implemented a disaster recovery strategy for a large international bank, the process involved several comprehensive steps:

• We created a secure cloud landing zone on Amazon AWS to migrate backups from on-premises;
• We implemented Cisco Firewall for security;
• We set up AWS Direct Connect Gateway and AWS Transit Gateway for connectivity;
• We used AWS S3 to allow quick restoration of data in disaster scenarios.

As a result, the client obtained a backup cloud storage and was able to protect the data of more than 2M customers.

Read the full case: Robust data protection and disaster recovery in banking with migration to AWS

2. Software supply chain attacks

Cloud platforms enable you to integrate third-party services easily, compared to on-premises infrastructures, but these additional solutions also pose new risks. External vendors can introduce vulnerabilities into your software supply chain, especially if you assume their security standards match your own in every aspect. Furthermore, you might fall victim to an attack that isn’t directed at your organization but instead targets a cloud provider—and you, as their client, by extension.

Cloud security for financial services requires continuous monitoring and vigilance, especially when it comes to software supply chain risks. Never implicitly trust third-party tools based on vendor reputation alone. Instead, implement the principles of the Zero Trust model, including:

• Continuous monitoring and verification of identities and privileges, with timeout periods for logins and connections;
• Granting users the least necessary privileges to perform their tasks;
• Strict control of connections to ensure only authenticated services, applications, and APIs can interact with your cloud environments.

3. Insider threats

Not all security breaches originate from outside the organization. Your employees, contractors, and even business partners with access to sensitive information or systems can pose risks. In some cases, they may exploit their access with malicious intent, but most often, it happens accidentally. Staff members can fall victim to social engineering, share confidential files carelessly, or fail to sufficiently protect their account credentials. All of this can create a security gap wide enough for a skilled attacker to squeeze through.

Robust role-based control (RBAC) and strong identity and access management (IAM) processes are essential to minimize this risk. Define clear user roles, assign corresponding permissions, and limit access to what is strictly necessary for each role. Make sure to conduct regular audits to update permissions and automate user deprovisioning to avoid orphaned accounts. Such proactive management of internal privileges helps ensure that trusted users don’t create unintentional vulnerabilities due to human error.

4. Credential stuffing and account takeover

Leaked credentials can harm more than one system. Despite cybersecurity best practices, many people reuse the same login information across multiple services and accounts. It can create an easy entry point for attackers trying to achieve account takeover (ATO) within your institution, provided they have already stolen the credentials.

Besides, credential stuffing can succeed even if the original data leak occurred years ago. This technique encompasses cyber criminals using bots to test stolen username and password combinations at a large scale. While the success rate for this type of attack is low, even a single lucky attempt can be disastrous for banks, exposing customer accounts and sensitive financial data.

To defend against credential stuffing and ATO attacks, your banking cloud security should include continuous monitoring for anomalous login patterns, such as multiple failed attempts, and enforced multi-factor authentication (MFA). For example, when N-iX helped a large mobile network operator develop a personal banking mobile application, security was our foremost priority. Our team implemented the following features to strengthen account protection:

• Biometric authentication mechanisms;
• PIN code verification;
• Know Your Customer (KYC) functionality;
• Anti-Money Laundering (AML) functionality.

5. API exploits

APIs, especially in open banking, offer powerful data sharing capabilities, but they can also be misused by malicious actors if not properly secured. Vulnerable financial APIs can provide a direct gateway for breaches, giving attackers access to sensitive customer data and systems.

To safeguard your assets against these exploits, conduct regular API penetration testing. Enforce strict authentication protocols, input validation, and rate limiting to prevent an influx of malicious requests before they compromise your security or operations.

5 best practices in banking cloud security

In addition to specific defensive measures, cloud security for financial services should be supported by your business strategy. Let’s review five best practices you can incorporate to protect your bank.

1. Establish clear cloud governance

Whether you are just beginning to migrate to the cloud or scaling existing efforts, every decision should align with your bank’s overall IT strategy, regulatory obligations, and risk profile. Cloud adoption opens new ways to innovate and grow but also comes with distinct security demands. Defining a clear governance framework early on helps ensure that your cloud initiatives support business goals without exposing the organization to regulatory or operational risks.

2. Partner with a reliable cloud and security consultant

The US Department of Treasury states that insufficient human capital to deploy cloud services securely is one of the prevailing forces holding banks back from maximizing their cloud potential. Partnering with an experienced consultant can help you bridge this skill gap. Outsourcing allows you to strengthen cloud security for financial services without depleting internal resources or exposing your institution to avoidable risks.

3. Assess your cloud providers and third-party vendors

Upon moving to the cloud, you start sharing the responsibility for your digital banking security with a cloud provider. However, it is still up to you to ensure the vendor’s security policies align with your requirements. Similarly, conducting due diligence to uncover any risks in third-party services is a must. Discovering and managing vendor risk is an ongoing process that demands structured assessments and continuous oversight.

For example, N-iX has started collaborating with a global forex trader to improve the banking cloud security of their third-party vendors and verify each provider’s regulatory compliance. Our team has conducted over 40 security risk assessments to evaluate vendor security policies, access controls, and compliance with leading standards, including SOC 2, FedRAMP, CIS Controls, NIST, and PCI DSS. This effort helped identify areas for improvement in the client’s vendor ecosystem and provided actionable recommendations on how to mitigate the identified risks.

Read the full case: Boosting security and compliance of a global forex trader with comprehensive risk assessments

4. Diversify the use of cloud platforms

The finance sector handles data that often comes with specific storage and processing requirements. Some information is not suitable for public clouds and should be kept in private cloud environments or on-premises. Other data may have geographical restrictions. For instance, it may have to stay within the European Union. Factoring in such requirements is paramount to upholding compliance and protecting sensitive assets.

Besides, choosing multi-cloud or hybrid cloud environments over single-cloud systems strengthens your overall resilience. It reduces the risk of service disruptions, protects you against vendor lock-in, and gives you greater flexibility to adapt your architecture as business needs evolve.

5. Conduct regular security assessments

Proactively testing your cloud environment to uncover security vulnerabilities is far less costly than responding to a data breach. Regular cloud assessments help banks identify hidden weaknesses, misconfigurations, and compliance gaps before attackers can exploit them. This testing is a critical part of maintaining strong cloud security in banking, allowing you to stay on top of emerging threats.

Wrapping up

Cloud platforms offer incredible capabilities, but they also introduce new security demands. To ensure the reliable protection of their assets and customer data, banks must address these emerging requirements as they increase their cloud maturity.

Partnering with a trusted cloud security company brings you cost-effective expertise to fulfill your digital banking security goals. An experienced tech partner can help you reinforce trust with customers, prepare for audits, and build a foundation for long-lasting, adaptable security.

Why should you trust N-iX to strengthen your banking cloud security?

• With over 22 years of experience in the global tech market, N-iX is a competent partner for more than 25 active clients in the financial services industry.
• We have delivered over 250 finance projects to clients, helping them build resilient banking solutions, secure their cloud environments, and develop disaster recovery strategies.
• N-iX complies with leading cybersecurity standards, including ISO 27001, PCI DSS, ISO 9001:2008, and CyberGRX to ensure sound protection for your assets.
• Our team of 2,400 tech experts includes over 300 specialists with banking expertise and more than 20 dedicated security professionals.
• N-iX is a certified partner of all three leading hyperscalers, being recognized as an AWS Premier Tier Services Partner, Microsoft Solutions Partner, and Google Cloud Platform Partner.