The cyber attacks on the largest banks in the United States like the Bank of America Corporation and the JPMorgan Chase will grab the headlines. The regulators of the banking sectors like the Federal Reserve Bank of Boston, however, worry more about the smaller banks. The Boston Federal Reserve Reports are critical in the banking industry.
The smaller banks have less robust cyber security. This makes them easy targets for foreign states, terrorists, and criminals that are seeking to infiltrate the financial system of the United States.
Interconnection between banks
The banks are interconnected with each other. They do business together and also interact with the Federal Reserve Bank. Attack on the smaller bank might, therefore, affect the larger banks because of the interdependence. When this becomes the norm, it is likely to threaten the confidence and the stability of the citizens in the banking system.
There are many small banks across the United States. Most of these banks do not have sufficient financial resources to hire the technological experts to help them safeguard their system.
It is critical to note that to come up with sophisticated software to prevent the cyber threats needs millions of US dollars.
The above-mentioned factor makes the banking sector in the United States to be substantially exposed. It is this weak link that the terrorists try to exploit so that they can lift identities, steal money, and wreak havoc on the banking and financial sector of the United States. This is the concern that the regulators like the Federal Reserve Bank fear.
To wreck havoc in the banking and financial system of the United States, the attacker only needs to access one small bank. By accessing one small bank, he will be able to access the other interconnected banks whether they are small or big. It is alleged that if the limited number of the smaller financial institutions stop processing some payments, then the impact would be felt.
The cybercriminals are already working around the clock to explore this flaw in the financial and banking sector. In 2015 for instance during a regular check in the banking system of a small bank in Boston, it was established that the hackers had invaded the systems of the bank.
Once the hackers gain access to the system, they do install malicious software which helps in the capturing of the financial information of the bank and the customers. The regulators, however, for security reasons did not reveal what the software was.