Regardless of the industry, cybersecurity is becoming more important with each passing day. More and more enticing information is being stored digitally and shared via the Internet. Malicious attacks are increasingly covert and advanced. Deviant hackers are constantly innovating new schemes, making data breaches more common and potentially disastrous.
For financial institutions such as credit unions, the risks and potential ramifications of data breaches are more serious than in any other industry. Here are three reasons why cybersecurity should be top of mind for credit unions:
Research Shows Threats are Escalating
A National Association of Federal Credit Union survey in 2015 unearthed a handful of alarming cybersecurity statistics, including:
- Credit Union respondents spent an average of $226,000 and an estimated 1,600 hours during the previous year on debit and credit card fraud issues resulting from merchant data breaches.
- “On average, 17.5 percent of survey respondents’ debit cards and 10.3 percent of credit cards were exposed in retailer breaches last year,” according to the report.
- Merchant data breaches cost the industry more than $31 million in 2014.
Costly data breaches such as the incidents at Target and at Home Depot not only grab headlines, but show that cybersecurity challenges are not going away anytime soon. The Wendy’s breach earlier this year seems to have hit credit unions particularly hard.
President Barack Obama and his administration have noticed, too. Obama’s recent Cybersecurity National Action Plan calls for a 35 percent increase in planned federal cybersecurity spending.
Credit Union IT Exams are More Stringent Than Ever
Considering the clear financial ramifications of data breaches, the National Credit Union Administration’s focus on strengthening its cybersecurity examinations makes perfect sense. But that realization alone doesn’t make the work that lies ahead for credit unions any easier.
The modern-day credit union needs to be prepared for questions about everything from electronic banking to information security programs and website compliance.
Credit unions can get ahead of the curve on these exams by benefiting from the NCUA’s hub of cybersecurity resources. Helpful tools include:
- Federal risk assessment tool
- Best practices for credit unions in the digital age
- Tips regarding customer privacy and protecting PINs
- Information sharing forums
Without Due Diligence, System Costs Can Escalate
As the costs associated with high-end security technologies continue to soar, as does the need for information protection, the pressure mounts on credit union executives and managers to keep their networks cost-effective.
For example, a credit union with next-generation firewall technology can identify advanced malware and other malicious threats before they enter the network — adding a protective layer to the east-west data traffic that moves between machines and devices within a network. This is vital because 75 percent of all traffic in a typical network is of the east-west variety.
Unfortunately, next-gen firewalls with north-south (traffic that leaves and/or enters your network) and east-west capabilities typically require a minimum investment of $50K for software and hardware.
However, with innovative use of available security resources, credit union managers are finding ways to solidify security well within the scope of their budget. Solutions such as CUProdigy, a CUSO, that blend traditional network architecture with forward-thinking cloud platforms are making next-generation security much more attainable throughout the industry.