Managing cyber security risks and attacks in the finance sector

By | | IT Security

Financial services organisations operate in highly connected environments where money, personal data and time-sensitive services are handled across multiple systems and partners. Banks, investment firms, insurers and fintech companies rely on integrated platforms and specialist suppliers to deliver efficient, secure services. Because of this interconnected setup, strong cyber security practices are essential to ensure systems remain protected and resilient.

The UK government’s Cyber Security Breaches Survey 2025/26 found that 44% of finance or insurance businesses had identified a breach or attack during the previous 12 months. Some 23% had experienced cybercrime.

Strong cyber security in finance is built on clear visibility and control across these connections, from payment approval workflows and cloud environments to third-party vendors and service providers. This article explores the key cyber risks facing financial organisations, common attack methods, regulatory requirements, the cost of breaches, and practical steps to build resilience.

What cyber security risks do financial services organisations face today?

Day-to-day operations in financial services involve a wide range of people and systems, each of which introduces potential cyber security risks. Staff process transfers, access sensitive records and communicate with clients under pressure, which increases the likelihood of human error, rushed approvals and successful phishing attempts. Many also have privileged access to financial systems, customer data and payment instructions, making them high-value targets for credential theft and social engineering.

Firms also rely on payment processors, cloud platforms, market-data feeds and outsourced IT teams, all of which expand the number of systems, integrations and user accounts that must be secured. Misconfigured cloud services, insecure APIs or compromised supplier credentials can all create entry points that sit outside the organisation’s direct control. Finance IT security therefore cannot stop at the organisation’s own network, as an attacker may find an easier route through a supplier or other third-party connection in the wider supply chain.

Common attack methods targeting the finance sector

Phishing is a major threat in financial services because it targets day-to-day payment and approval processes. In 2025/26, 38% of UK businesses reported phishing attacks, rising to 88% among those that experienced any breach. In finance, these messages often mimic internal payment requests, invoices, client onboarding, or regulator communications, tricking staff into sharing credentials, approving payments, or opening malicious files.

Ransomware and data extortion are also highly disruptive due to the sector’s need for constant system availability. Attackers may encrypt or steal data from trading platforms, payment systems, or customer portals, causing operational downtime and regulatory scrutiny, even after recovery.

Stolen credentials underpin many attacks and are especially dangerous in finance, where a single account can expose payment systems or client data. Weak password practices and excessive admin access increase risk, while third-party suppliers often provide additional entry points if access is not tightly controlled and promptly revoked.

The growing role of AI in financial sector attacks

AI has lowered the effort needed to produce highly convincing phishing emails, cloned voices and fake videos, which is particularly concerning for finance teams that rely on rapid approval processes and remote communication. The National Cyber Security Centre warns that criminals are using synthetic audio and video for impersonation and false identity documents, which can be used to mimic executives authorising urgent payments or to bypass identity checks during account setup. IBM’s 2026 Cost of a Data Breach Report recorded a 56% increase in AI-driven attacks, led by deepfake impersonation and AI-enabled malware.

The same technology can help defenders spot unusual behaviour across financial systems, such as abnormal transaction patterns, unusual login locations or deviations in payment approval workflows, but people still need to oversee it. A model can flag an odd sign-in; an analyst must decide whether it is a travelling employee, a compromised account or a false alarm, particularly where financial transactions or client assets could be affected.

Regulatory considerations for UK financial firms

Cyber risk management for finance is also about keeping essential services running when something goes wrong. Under the Financial Conduct Authority (FCA) operational resilience rules, covered firms must identify the services that matter most to customers and markets. For each one, they must set the maximum disruption it could safely withstand, known as its impact tolerance, and test whether they can stay within that limit. Firms must also report serious operational incidents to the FCA. FCA data published in February 2026 records 65 cyber incidents reported by firms during 2025, excluding incidents not reported directly to it.

A new standard FCA process for reporting operational incidents and serious third-party problems takes effect on 18 March 2027. Financial groups operating in the EU must also consider DORA, which has applied since 17 January 2025. It covers technology risk, incident reporting, resilience testing and oversight of outside providers, but does not replace UK rules.

Professional bodies offer further practical guidance. ICAEW explains how to manage cyber risk around corporate finance deals, while ACCA covers ransomware, compromised email accounts, supplier weaknesses and stolen login details.

The real cost of a cyber attack in the finance sector

A breach invoice is spread across several budgets. IBM’s 2026 global study puts the average cost of a data breach at US$4.99 million, up 12% year on year. This is a cross-industry, international average. Individual UK financial firms may spend far less or far more, particularly where high-value transactions, real-time trading systems or large customer account bases are involved.

In the finance sector, the impact is often amplified by the need to maintain trust and meet strict regulatory expectations while services are disrupted. Even short outages in payment processing, online banking, trading platforms or claims systems can create immediate operational pressure and reputational damage.

The bill can include investigation, system recovery, outside experts, overtime and lost income. Regulators may also review the incident and ask for detailed timelines, decision records and proof that controls were effective. Delayed payments, frozen accounts or inaccessible client portals can quickly damage customer trust, and firms may also face compensation claims or contract penalties. Cyber insurance may cover some costs depending on the policy, but it does not replace tested controls, regulatory readiness or a workable recovery plan.

Building cyber resilience: practical steps for financial organisations

Cyber security in the finance industry becomes easier to manage when each safeguard is linked to a realistic way an attack might happen:

  • Require multi-factor authentication for email, cloud services, remote access and administrator accounts. For higher-risk accounts, consider security keys or passkeys, which are harder to defeat through phishing, and limit administrator access. This is especially critical in financial services, where compromised email or admin accounts can be used to authorise fraudulent payments, access client financial data, or manipulate trading and transaction systems.
  • Give each person and service only the access needed for its work. Review access when someone joins, changes role or leaves, and investigate unused accounts or unusual sign-ins. In finance organisations, this reduces the risk of staff or contractors accidentally or maliciously accessing sensitive customer banking records, payment systems, or investment portfolios beyond their job role.
  • Train staff with examples drawn from real finance workflows, including changed bank details, urgent transfer requests, fake regulator messages and voice-cloned executives. Confirm sensitive requests through a second channel. This is vital in the finance sector, where a single successful impersonation can result in large-scale fraudulent transfers or unauthorised changes to client account details.
  • Assess suppliers before giving them access and throughout the contract. Record what data they hold, how they connect, when they must report an incident and how essential services will continue if they fail. For financial firms, third-party providers often handle payment processing, cloud hosting, or customer onboarding, meaning a supplier breach can directly impact customer funds and regulatory compliance.
  • Keep backups separate from day-to-day systems and test them regularly. A timed recovery exercise shows what the firm can restore and how long it will actually take. In financial services, this ensures critical systems like online banking, trading platforms, and payment processing can be restored quickly to minimise financial loss and customer disruption.
  • Rehearse the incident plan with IT, compliance, communications, legal teams and senior decision-makers. Include ransomware, compromised identities and supplier outages. Record decisions and lessons after each exercise. For finance organisations, this preparation is essential to meet regulatory expectations, maintain market confidence, and ensure rapid reporting to regulators and customers during a cyber incident.

The 2025/26 government survey found that 53% of finance or insurance businesses had a formal incident response plan, the highest proportion among the sectors reported. Even so, almost half did not say they had one. Strong finance sector cyber security needs clear responsibility, actions that have been practised and results that senior leaders can review.

How Syntax helps financial services firms strengthen cyber security

Syntax Security for Financial Services brings together monitoring across networks, email, devices, system activity and Microsoft 365 for FCA-regulated organisations. Syntax can review the firm’s security, agree practical next steps and develop an incident response plan, with documentation for regulators, investors or insurers.

Syntax also provides managed cyber security services with 24/7 monitoring and analyst input. This gives internal teams added coverage while keeping reporting lines clear. If you are dealing with finance sector cyber attacks, supplier exposure or regulatory requirements, don’t wait for an incident to expose the gaps. Contact Syntax today to speak with a specialist and put a clear, practical plan in place.