Data breaches are an ever-increasing threat to every industry, with the number of U.S. data breach incidents hitting a new record of 1,579 breaches in 2017. Of the data breaches reported last year, 8.5 percent involved the financial sector, including entities such as banks, credit unions, credit card companies, mortgage and loan brokers, financial services, investment firms and trust companies, payday lenders and pension funds.
For years, the financial services sector globally has been a primary target for attacks by cyber-criminals largely because of the tremendous value of the information available. In fact, financial services firms are reportedly hit by cybersecurity incidents a staggering 300 times more frequently than businesses in other industries.
Cybersecurity incidents can cause lasting harm for any type of business, but the costs for financial institutions are often exponentially greater. While the average cost to U.S. businesses per record lost or stolen in a breach was $225 across all industries in 2017, the cost per record for businesses in the financial industry was $336. This cost difference is particularly significant considering the average data breach cost for U.S. businesses in 2017 rose 5%, to a staggering $7 million. These startling statistics underscore the importance of financial services professionals being aware of the breadth and causes of successful cyberattacks, as well as their need to keep their knowledge of risk mitigation strategies current.
Customer churn is also a significant contributor to the increased cost of data breaches, and resulting fraud, for the financial sector. A 2016 survey revealed that 12.3% of respondents left their credit unions and 28% left their banks as a result of unauthorized activity on their accounts. These figures highlight financial institutions’ need to consider not only how they can decrease their risk of a cyberattack, but also how they will mitigate fallout with their customer base if they do fall victim.
In our white paper, The Impact of Cybersecurity Incidents on Financial Institutions, we aim to help financial institutions address these needs by introducing the types of attacks behind data breaches in the financial industry and how they manifest. We also look at the impact that these events can have on a company, such as financial loss, damage to their reputation and reduced levels of trust in their brand. Finally, we analyze current procedures companies are using to mitigate the risk of and fallout from a data breach, including proactively providing identity protection services.
The return on investment for offering an identity protection service, which can preserve customer trust and help reduce the number of lost customers, in advance of the breach can be significant. Research has shown that organizations that have initiatives that aim to improve customers’ trust in how the organization safeguards their personal information will reduce churn and the cost of the breach. Moreover, customers appear to be looking to their financial institutions for identity protection services, as a recent consumer survey revealed that over 50 percent of consumers would look to their financial institution to purchase it.