Guide on cybersecurity risks in the banking industry

Cybersecurity must be a priority for financial institutions. According to Wipfli's 2026 State of the Banking Industry report, 81% of banking executives reported that their institutions experienced at least one incident of unauthorized access to networks or data, up from 65% in 2024.

As financial institutions continue to expand digital services, adopt cloud-based technologies and explore AI, they are increasing the number of systems, users and connections that must be secured. What was once a relatively contained technology environment has evolved into a sprawling digital ecosystem, which creates more opportunities for cybercriminals.

The digital transformation that financial institutions are undergoing creates a need to balance innovation with security. Understanding today’s most common cybersecurity risks is the first step toward building a resilient defense strategy.

Continue reading for an exploration of the biggest cybersecurity risks facing the banking industry and for some defense strategies.

Why are financial institutions a common target?

Financial institutions are attractive targets for cybercriminals because they have money and move a lot of money. A common attack method currently is for a bad actor to use a phishing scam to trick a bank employee into wiring them money.

Institutions also have personal information that attackers want. If an attacker can get into your systems, they can access your customers’ account numbers, Social Security numbers, addresses, transaction histories and other sensitive data that can be used for identity theft and fraud.

Ransomware groups, especially those associated with foreign adversaries, are seeking to damage critical infrastructure. Disrupting a major institution can create chaos and weaken trust in our financial system.

The most common cybersecurity risks facing banks today

The methods used to target financial institutions constantly evolve. New techniques will emerge, but established attack methods also remain mainstays for attackers.

Attack methods and vulnerabilities your institution needs to be aware of include:

Phishing and social engineering

Social engineering is a leading threat because it exploits human error rather than technical vulnerabilities. Criminals use fraudulent emails, text messages, phone calls and fake websites to trick employees or customers into revealing credentials, approving payments or downloading malicious software.

These attacks frequently serve as the initial entry point into an organization. Once credentials are stolen, attackers can move deeper into systems, access sensitive information and launch more extensive fraud schemes.

Lack of AI governance

By now, your institution is likely using AI in some form. But do you have a program to govern its use? The unsanctioned use of AI by employees (aka shadow AI) may inadvertently expose customer data, proprietary information or other sensitive content.

Without clear AI policies, approval processes and oversight, organizations risk creating new vulnerabilities in data security and regulatory exposure.

Ransomware

Ransomware poses a serious threat due to the critical nature of financial services and the high cost of operational disruption. It can affect core banking processors, employee systems, customer-facing applications and supporting infrastructure. A successful attack can interrupt banking services, limit customer access and create substantial recovery costs.

Business email compromise

In business email compromise (BEC) attacks, cybercriminals impersonate executives, vendors, customers or other trusted parties to convince employees to authorize payments, change banking instructions or transfer funds. These are attractive to attackers because of the potential for high-value financial transactions.

Malware and banking trojans

Specialized malware continues to target financial institutions and their customers. Banking trojans are specifically designed to steal credentials, intercept transactions, capture sensitive information or provide remote access to systems.

Once deployed, these tools can quietly gather information and support larger fraud campaigns. As malware becomes more sophisticated, institutions must continuously update detection and response capabilities to identify malicious activity early.

Third-party and supply chain risk

Many financial institutions depend on cloud providers, fintech partners, payment processors, software vendors and managed service providers. While these relationships are vital to operations, they also introduce risk.

A cyber incident or vulnerability at one of your vendors can give attackers access to your sensitive information or provide a pathway into your institution’s environment. Smaller institutions are especially vulnerable because they often rely heavily on outsourced technology and software-as-a-service (SaaS) providers. Strong oversight of vendor access, privileges and security controls is essential.

Recent incidents highlight how severe third-party risks can be. In the 2020 software supply chain incident, hackers injected malicious code into a SolarWinds system called Orion. When SolarWinds distributed an update to Orion, more than 18,000 customers installed the malicious code.

In 2026, TruStage, which provides insurance services to credit unions, was the victim of an attack. TruStage was forced to shut down its network, impacting credit union members’ ability to access services.

Cloud misconfigurations and infrastructure weaknesses

As cloud computing becomes more common in the banking industry, improperly configured storage environments and network settings can expose sensitive data.

Modern banking environments span multiple cloud services, applications, APIs and connected devices. This network sprawl creates more potential attack vectors than traditional on-premises infrastructures.

Insider threats

Not all threats come from outside your organization. Employees, contractors and privileged users can intentionally or unintentionally expose systems and customer information.

Because personnel often require access to sensitive financial records and business systems, institutions must implement strong access controls, monitoring, separation of duties and user activity reviews to reduce insider risk.

What cyber defenses should financial institutions prioritize

The attack surface that financial institutions must defend has expanded dramatically. Digital banking platforms, cloud services, mobile applications, APIs, third-party integrations and AI tools have transformed cybersecurity into a strategic business issue rather than strictly an IT concern.

Effective cybersecurity programs need to include the following:

Multi-factor authentication

MFA remains one of the most effective safeguards against credential theft and account takeover. Banks should require MFA for privileged administrators, employees and customers to reduce the likelihood that compromised passwords lead to unauthorized access.

Implement phishing-resistant MFA methods such as FIDO2 passkeys and hardware security keys. They reduce an attacker’s ability to intercept or replay authentication tokens, making them significantly more effective against sophisticated credential-phishing campaigns. Financial institutions should prioritize deploying phishing-resistant MFA for high-risk access points, including privileged administrator accounts and sensitive customer-facing portals.

Secure internet banking and password reset controls

Online banking platforms are common targets for attackers. Institutions should implement strong identity verification procedures around password resets and account recovery processes to prevent fraudsters from taking over customer accounts.

Go beyond regulatory compliance

Regulations such as GLBA establish important security requirements, but they represent the minimum standard rather than a complete security strategy. Financial institutions should build controls that exceed compliance requirements and address evolving threats that regulations may not yet recognize.

Employee security awareness training

Human error is the biggest cybersecurity vulnerability. Many successful attacks begin with phishing emails, fraudulent phone calls or other forms of social engineering. Ongoing employee training helps staff recognize suspicious activity and reduces the likelihood that human error will result in a security incident.

Continuous threat monitoring and SIEM tools

Cyberattacks often evolve rapidly, leaving organizations with little time to react. Continuous security monitoring and security information and event management (SIEM) tools can help institutions identify suspicious activity faster and respond before threats escalate.

Endpoint detection and response

Endpoints such as employee laptops, desktops and mobile devices are common entry points for cybercriminals. EDR solutions provide advanced threat detection, investigation and containment capabilities that help stop attacks before they spread across the organization.

Strong vendor risk management

Banks rely heavily on technology providers, cloud services, fintech partners and other third parties. Effective vendor oversight is essential to help ensure external partners maintain appropriate security controls and do not introduce unnecessary risk into your institution’s environment.

A vendor management program should include:

• Tiers to categorize vendors by risk, such as low, medium, high risk or critical and non-critical.
• Questionnaires to gather information about a third party’s governance, organizational structure, security controls and technology.
• Contractual cybersecurity requirements for vendors.
• Methods to monitor and assess a vendor’s security posture throughout the engagement.

Routine vulnerability management and patching

Unpatched systems and out-of-date software are some of the easiest ways for attackers to gain access. Regular vulnerability assessments, timely software updates and disciplined patch management reduce the likelihood that known weaknesses can be exploited.

Incident response and disaster recovery planning

There is no way to guarantee a cyber incident will not happen. You need to have a plan in place to avoid being caught flat-footed if you are attacked. Established incident response and disaster recovery plans help your institutions contain threats, restore operations, maintain regulatory compliance and minimize customer impact.

Be sure to conduct regular tabletop exercises to help staff practice their response, identify gaps and be better prepared to act quickly during an actual event.

AI governance

As AI becomes more deeply embedded in your organization, you need a formal framework for managing both risks and opportunities. Strong AI governance helps ensure AI tools are used responsibly while protecting sensitive customer and organizational data.

Key elements of an AI governance program include:

• Formal AI policies: Establish clear guidelines for how employees may use AI tools and what data can be shared with them.
• Tool approval processes: Create an approval committee or governance process to evaluate new AI solutions before deployment.
• AI vendor due diligence: Incorporate AI-specific evaluations into vendor risk management processes to assess security, privacy and ethical use considerations.
• Operational oversight: Implement controls that validate AI-generated outputs and monitor for inaccuracies, bias or hallucinations.
• Restrictions on sensitive information: Prohibit the entry of customer data, account information and other sensitive content into unauthorized AI tools.

Top cybersecurity frameworks for banking

There are multiple frameworks businesses can use to design a quality cybersecurity program. Here are two that align well with the needs of financial institutions:

NIST Cybersecurity Framework 2.0

NIST CSF 2.0 provides a widely adopted framework for managing cybersecurity risk. It helps organizations align security activities with business objectives through core functions focused on governance, identification, protection, detection, response and recovery. Financial institutions frequently use NIST to assess maturity, identify risk and prioritize remediation efforts.

Cyber Risk Institute Profile

The CRI Profile was developed specifically for financial institutions and provides a more granular approach to cybersecurity risk management. Built around the unique operational and regulatory needs of the financial sector, it helps banks assess maturity levels and strengthen controls using a framework tailored to the industry.

Financial institutions do not necessarily need to view these frameworks as an either-or decision. Many institutions use NIST CSF 2.0 as their strategic cybersecurity foundation while incorporating controls and assessment criteria from the CRI Profile to address banking-specific risks. This approach can help organizations establish a comprehensive cybersecurity program that balances broad risk management with industry-focused security requirements

How can Wipfli help?

Wipfli helps financial institutions strengthen their cybersecurity posture through services ranging from vCISO support and cybersecurity program development to technical security assessments, penetration testing, vulnerability management and risk analysis. Whether your institution needs guidance building an information security strategy, implementing a cybersecurity framework or identifying technical vulnerabilities, Wipfli can help create a more resilient and mature security program. Start a conversation

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