With the financial ecosystem on the proverbial brink of collapsing, there is a growing concern among banking industry experts. Not about the imminent collapse itself, though, but how hackers can easily attack the global financial system.
A Threat to The Archaic Global Financial System
Although hackers attempting to steal funds is not particularly new in the world of modern finance, the number of attacks seems to be increasing at an alarming rate. There is growing concern among the banking elite of the world now that the SWIFT network has been abused not once, but twice by hackers in a few months time.
While both attacks were directed at smaller banks, a lot of money has been stolen during these intrusions. Lacklustre bank security, combined with an archaic legacy system, create a welcome target for hackers and other Internet criminals looking to take advantage of the financial system.
But that is not all, as banks are frustrated by the seemingly futile efforts of fighting hackers. Bigger institutions spend millions of dollars on security, whereas their smaller counterparts do not have such luxury. There are plenty of weak links in the chain of global finance, and hackers are taking advantage of banks where security standards are not up to par.
JPMorgan Head of Global Cyber Partnerships Greg Rattray stated:
At the end of the day, every institution is not equal. The banking industry needs to take a look at increasing the security of shared systems that settle payments, like SWIFT, and make sure they’re as strong as the large institutions are.
Albeit there are plenty of tips shared among financial players on how to best protect their infrastructure, medium-sized companies are facing issues when implementing changes. Most of them are forced to deal with attacks after the fact, which results in mounting losses for smaller banks. Or in the case of both SWIFT network incidents, they become an entry point for hackers to target a bigger bank.
Real-time information sharing is a possible solution to keep the global financial system safe from harm in the future. That will be easier said than done, though, as US federal agencies are not communicating enough with private companies to warn about impending attacks on the global financial system.
The Bitcoin Elephant in the Room
Unless these security concerns are addressed sooner rather than later, more consumers and enterprises will start looking at alternative forms of conducting finance. There is one other global financial system, called Bitcoin, which is accessible to everyone in the world, and not controlled by banks or governments.
Cryptocurrency enthusiasts will advocate Bitcoin is a direct competitor for the crown of the global financial system, and banks are not showing a keen interest in this concept as of yet. At the same time, the number of consumers and enterprises dealing with cryptocurrency keeps growing on a yearly basis, and the Bitcoin trend can no longer be ignored.
In the long run, Bitcoin and its underpinning technology could be an unlikely ally for banks as well. If both industries were to collaborate – and put personal agendas aside for the greater good – a better and more secure global financial system could be created. For now, that remains a utopian dream, though.
Should banks be afraid of hackers, or are there bigger concerns for them to address? What role can Bitcoin play in all of this? Let us know in the comments below!
Source: CNN Money
Images courtesy of Shutterstock, SWIFT