Inadequate Cyber Security a Threat to Banking Sector

In this file photo, a Pakistani resident withdrawing currency from an ATM in Islamabad. Pakistan has begun chasing wealthy tax-dodgers who enjoy lives of extravagance and luxury, but revenue officials face huge challenges in trying to force the very richest — and most influential — to pay up on March 6, 2015. (AFP)
Updated 14 November 2018
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Inadequate Cyber Security a Threat to Banking Sector

  • International hackers not only steal money but also sell data related to credit and debit card holders globally
  • Such cyber attacks are among top five global risks, says World Economic Forum (WEF)

ISLAMABAD: The Federal Investigation Agency (FIA) cybercrime wing has recently confirmed that data around client information was stolen from almost all Pakistani banking sector entities. The hackers, who are reportedly outside Pakistan, managed to breach security arrangements and steal money from account holders. What is concerning is that nobody, including the FIA, knows when this security breach took place and if another such bank pilferage can be prevented in the near term. The hackers are not just after the bank deposits or balances on credit cards. They are also selling data containing information about Pakistani depositors, credit and debit card holders globally. This implies that the most immediate measure by 10 Pakistani banks - blocking global transactions via debit cards - may not be enough. Other online services have also been temporarily stopped. This is a mere reactive move, which must have been preempted by the hackers.
While of course the IT-related security systems at commercial banks need to be questioned, the financial sector regulator, in this case the State Bank of Pakistan, also needs to be held responsible for not ensuring the safety of bank accounts. It is unfortunate that guidelines related to security measures at the banks are not adequately updated and their compliance is not monitored as a priority. The real-time monitoring of card operations also does not seem to be working in a manner which could prevent future cyber-attacks.
The central bank’s complacency is incomprehensible. The availability and use of card skimming devices remains on the rise across the country and there have been recent warnings by several international institutions. The Global Risk Report, published by the World Economic Forum (WEF), has described such cyber attacks in the top five global risks. The report states:

“Most attacks on critical and strategic systems have not succeeded – but the combination of isolated successes with a growing list of attempted attacks suggests that risks are increasing. And the world’s increasing interconnectedness and pace heightens our vulnerability to attacks that cause not only isolated and temporary disruptions, but radical and irreversible systemic shocks.”

Unfortunately these recent events could have negative implications for the central bank’s ambitions to promote financial inclusion in the country. There have been ongoing advocacy efforts to convince people to move away from cash-based business models and towards more digitized ways of conducting transactions. The new government was also keen to promote the flow of remittances by Pakistanis abroad through formal online transfers to Pakistani banks.
The inadequacy of the financial sector’s cybersecurity will also discourage technology-based startups in the country. Those in the FinTech sector – enterprises aiming to use technology and innovate the delivery of financial services – have long raised concerns regarding lack of protection against cyber threats, unfavourable regulatory environment for FinTech startups, threats to intellectual property and an unpredictable tax regime. They have also spoken about the lack of an effective grievance redressal mechanisms for victims of cyber-attacks in Pakistan – one of several reasons why firms like PayPal are not coming to the country. While the private sector is ready to contribute its share in improving systems, the investment required in the overall oversight of the financial sector remains a public sector responsibility.
The same challenges are also faced by online payment platforms in Pakistan. While there has been a growth of business to consumer e-commerce on the back of improved internet access, increased branchless banking, provision of 3G/4G services, and a youth bulge, consumers remain comfortable with the cash-on-delivery mode and are reluctant to use online payment options. Given the weak implementation of laws around cyber security, businesses themselves are reluctant to invest in costs related to putting in place online security-related measures for their consumers.
Going forward Siraj Ahmed Sheikh, Professor of Security Systems at Coventry University in the UK, provides a three-pronged approach involving: a) the standard operating procedures at financial institutions including measures that curtail the impact of the attack and prevent propagation across known and unknown networks. The banking sector needs to understand specific measures to disable and de-escalate such situations; b) banks need to ensure that clients are reassured to avoid panic and run-on-banks. A tremor in one market can easily cause negative ripple effects in other markets including the domestic stock market; and c) capacity to conduct forensic audits which help in evidence generation may be enhanced. In the case of missing local capacity, development partners and international institutions responsible for financial surveillance may be requested.


Oil edges up on supply cuts, but recession fears cap market

Updated 38 min 29 sec ago
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Oil edges up on supply cuts, but recession fears cap market

  • Prices have also been driven up by US sanctions on oil exporters Iran and Venezuela
  • Manufacturing data from Asia, Europe and North America is pointing to a sharp economic slowdown

SINGAPORE: Oil prices edged up on Tuesday, lifted by supply cuts led by producer club OPEC and US sanctions against Iran and Venezuela, but signs of a sharp economic slowdown and potentially even a recession kept markets from rising further.
Brent crude oil futures were at $67.33 per barrel at 0416 GMT, up 12 cents, or 0.2 percent, from their last close.
US West Texas Intermediate (WTI) futures were at $59.26 per barrel, up 44 cents, or 0.8 percent, from their last settlement.
Oil prices have been supported for much of 2019 by efforts by the Organization of the Petroleum Exporting Countries (OPEC) and non-affiliated allies like Russia, who have pledged to withhold around 1.2 million barrels per day (bpd) of supply this year to prop up markets.
Prices have also been driven up by US sanctions on oil exporters and OPEC-members Iran and Venezuela.
Yet analysts said oil prices would likely be higher by now if it wasn’t for a spreading economic slowdown that some say could turn into a recession soon and dent fuel consumption.
“Recession risks have risen to the highest since 2008,” said Ole Hansen, head of commodity strategy at Saxo Bank.
Manufacturing data from Asia, Europe and North America is pointing to a sharp economic slowdown.
“Global factory output growth slowed to a 1 percent rate last quarter, and indicators point to a near stall this quarter,” said JPMorgan Chase Bank.
“Outside China, Asian industry was already contracting as we turned into the New Year,” the US bank added.