"Why Banks Need to Boost Their Cybersecurity Investments"

Cyberattacks on the banking industry are widespread, but system-wide investments in cybersecurity are insufficient, thus increasing the risk of financial instability, privacy violations, and bank runs. In a study titled "Cybersecurity and Financial Stability," University of Auckland macroeconomics professor Prasanna Gai, economics lecturer Chanelle Duley, and Deutsche Bundesbank economist Kartik Anand emphasize the need for banks to collaborate and improve their cyber defenses. They also provide new perspectives on the cybersecurity tools used by regulators and the banking sector. According to Gai, many banks and other organizations in the financial sector use the same platforms and digital services for their online banking and back-end operations. A 2019 survey found that a handful of companies, including Amazon, Microsoft, Alibaba, Google, and IBM, provide such services. Although shared services save costs, they can create cybersecurity dependencies, according to the researchers. One bank's access can become the "back door" that attackers could use to compromise others. The financial system's cybersecurity may depend on the bank with the lowest level of protection. As part of their study, Gai, Duley, and Kartik created the first formal model of its kind to outline the effects of cyberattacks on financial stability and the regulatory implications. They demonstrate how cyberattacks can turn into bank runs when many customers withdraw funds out of fear that their money is in danger. This article continues to discuss the researchers' study on cybersecurity and financial stability. 

The University of Auckland reports "Why Banks Need to Boost Their Cybersecurity Investments"