Cyber Threats Targeting Banking and Financial Sector in 2025

The banking and financial sector stands at a significant stage, where digital transformation has brought in unparalleled convenience and efficiency. From mobile banking apps to AI-driven financial services, institutions are leveraging technology to enhance customer experiences and streamline operations.

Consumer expectations have fundamentally reshaped banking operations. Three-quarters of Americans prefer digital banking, while 62% say they can’t live without their mobile banking app and 78% use banking apps weekly. The situation is not unlike in other countries as well, including India, where UPI (Unified Payments Interface) has become an unavoidable part of daily life. However, this rapid digitalization has also expanded the attack surface, making financial institutions prime targets for cyber criminals.

In this blog, let’s explore the emerging threats targeting the sector, notable incidents that have impacted financial institutions recently, and best practices that banks and financial institutions can implement to strengthen their defenses.

Notable Cyber Attack Incidents that Targeted the Financial Sector in 2025

1. DBS and Bank of China vendor data compromise: In April 2025, a ransomware attack on Toppan Next Tech compromised the personal data of over 11,000 customers from DBS and Bank of China. While customer deposits remained safe, the incident highlighted the risks associated with relying on third-party vendors, emphasizing the need for stronger supply chain security.

2. Cyber attack on Erie Insurance: In June 2025, a cyber attack caused widespread service disruptions at Erie Insurance, with customers unable to access their accounts. The incident underlined the operational risks financial institutions face during cyber attacks, highlighting the importance of strong incident response measures and system resilience.

3. Ransomware attack on Optima Tax Relief: Optima Tax Relief fell victim to a Chaos ransomware attack in June 2025, exposing 69 GB of sensitive customer data. The breach exposed personal information, raising concerns about the rising threat of ransomware targeting firms handling sensitive financial data and the need for advanced security protocols.

4. Cyber fraud targeting the Himachal Pradesh State Cooperative Bank: In June 2025, ₹11.55 crore was stolen from the bank after attackers hacked an account holder’s phone and used mule accounts to siphon funds. This case demonstrated the increasing sophistication of cyber fraud in the banking sector and the urgent need for improved security measures to protect critical financial systems.

5. AI deepfake scam targets Deutsche Bank executive: In July 2025, a senior executive at Deutsche Bank India transferred ₹1.08 crore after being tricked by a deepfake video call impersonating the CEO. The incident stressed the growing risks of AI-powered scams, calling for stronger verification measures to protect financial institutions from social engineering attacks.

Major Cyber Threats Targeting the Banking and Financial Sector in 2025

1. Ransomware attacks: Ransomware attacks have surged in recent years, with financial institutions increasingly targeted due to the sensitive and valuable data they hold. Cyber criminals are leveraging sophisticated tactics to infiltrate systems, encrypt data, and demand hefty ransoms. These attacks disrupt critical operations, causing significant downtime and operational losses while putting customer data at risk. In 2025, the rise of ransomware attacks in the banking sector highlights the urgent need for stronger defenses.

2. Deepfake and AI-driven scams: AI-powered attacks, such as deepfakes, are becoming increasingly prevalent in the financial sector, allowing cyber criminals to impersonate high-ranking executives or customers with striking accuracy. The use of deepfake technology for fraud and social engineering scams represents a new and dangerous method of manipulation that is difficult to detect. Incidents of AI-driven scams, like deepfake video calls, show the growing sophistication of cyber attacks targeting financial institutions.

3. Malware attacks (including Trojans): Malware attacks, including banking trojans and other malicious software, continue to evolve, targeting financial institutions' systems and mobile applications. Attackers often use these threats to steal login credentials, intercept transactions, and take control of banking apps on mobile devices. With the rise of sophisticated malware strains like Godfather and FinStealer, financial institutions must enhance their mobile security and continuously monitor for malicious activity.

4. Server and network exploits: Cyber criminals are increasingly exploiting vulnerabilities in financial institutions' servers and networks to gain unauthorized access to sensitive systems and data. These attacks, which often involve exploiting unpatched security flaws, can lead to large-scale fraud or data breaches, as evidenced by the recent rise in server hacking incidents. As financial institutions continue to adopt more complex digital infrastructures, these vulnerabilities are becoming more pronounced, posing a growing risk to both data security and operational integrity.

5. Third-party vendor attacks: As financial institutions increasingly rely on third-party vendors for services like cloud storage, payment processing, and customer support, these vendors have become attractive targets for cyber criminals. A breach in a third-party vendor's system can lead to massive data exposure and financial losses for the financial institutions they serve. The rise of vendor-based attacks highlights the need for stringent third-party risk management and continuous monitoring of vendor security practices.

6. DDoS (Distributed Denial of Service) attacks: DDoS attacks are on the rise in the financial sector, with cyber criminals increasingly targeting financial institutions' websites and online services. These attacks overload systems by sending a flood of malicious traffic, causing temporary outages and service disruptions. The rise in DDoS incidents shows the potential for financial institutions to face severe operational disruptions, especially during peak business hours.

7. Advanced phishing tactics: Phishing attacks have evolved significantly, with cyber criminals now using a variety of sophisticated techniques to target financial institutions. These attacks go beyond traditional phishing and include advanced tactics such as quishing (QR code phishing), document-based phishing (malicious documents), callback phishing (where attackers trick victims into calling a fake number), precision-validated phishing (hyper-targeted attacks using personalized data), and chainlink phishing (seemingly legitimate links from reputable services like Google Drive). These advanced tactics often exploit trust and social engineering, making them difficult to detect and mitigate.

8 Best Practices for Banks and Financial Institutions

1. Zero trust model for third-party access

Banks often work with third-party vendors to handle tasks like cloud storage, payment processing, or customer support. While these vendors are essential, they can also present a significant security risk if not properly managed. Zero Trust is a security model that ensures third-party vendors are only granted access to the specific data or systems necessary for their tasks, nothing more. This means that even if a vendor’s system is compromised, the attacker won’t have access to sensitive or critical bank data. By adopting Zero Trust, financial institutions minimize the risk of data breaches or attacks originating from outside their organization.

2. Ensure separation of duties to mitigate risks

Relying on a single person to manage critical tasks, especially those involving sensitive data, is a significant risk for financial institutions. This practice increases the potential for fraud, errors, and misuse of access, which can have severe consequences. Separation of Duties is a security principle that splits responsibilities so that no one person has full control over key processes. For instance, one employee may approve a transaction, while another executes it, ensuring that no single individual can manipulate the system. This helps prevent fraud and mistakes, as it requires oversight from multiple people.

3. Multi-Factor Authentication (MFA) for internal systems

MFA is a common security recommendation for financial institutions, especially for customer-facing systems. However, many banks fail to apply MFA internally, where employees access sensitive data. This is a major oversight. If internal systems rely solely on passwords, a breach could easily occur if an employee’s password is stolen. The fact that we still see data breaches related to weak passwords suggests that MFA is often not fully implemented across all internal systems. If MFA were followed rigorously within organizations, there would be far fewer reports of breaches caused by compromised credentials. It's one of the most overlooked yet crucial security measures. To take it a step further, banks should adopt advanced methods like passkeys, which provide phishing-resistant authentication.

4. Continuous employee training and phishing simulations

Many financial institutions provide initial cyber security training, but ongoing education is crucial as cyber threats constantly evolve. Regular phishing simulations help employees recognize phishing attempts and social engineering tactics in real-world scenarios. These simulations mimic common cyber attack methods, training staff to spot fraudulent emails, fake websites, and suspicious links. The more employees practice identifying phishing threats, the less likely they are to fall victim to these scams. Training should also extend beyond phishing, covering topics like secure password practices, data protection, and emerging cyber security risks. Without regular updates, employees may fail to notice new attack techniques or vulnerabilities.

5. Strict access controls and least privilege principle

The least privilege principle ensures that employees only have access to the data and systems necessary for their specific job functions. By limiting access, financial institutions reduce the risk of internal threats and human error. Regularly reviewing and adjusting access permissions is vital, especially when employees change roles or leave the organization. This practice ensures that individuals no longer have access to systems they don’t need, preventing unauthorized actions. Enforcing strict access controls helps protect sensitive financial data, reducing the likelihood of data breaches. Role-based access control (RBAC) is an effective tool for managing permissions and enforcing the least privilege principle. By using RBAC, banks can assign access levels based on the role of the employee, ensuring they can only access what is essential for their work.

6. Segregation of networks and critical systems

Network segmentation is a crucial security practice for financial institutions to protect sensitive data. By dividing the network into different segments, banks can isolate critical systems from less sensitive ones. This limits the spread of a cyber attack, as an attacker who breaches one part of the network cannot easily access other parts. Segmentation ensures that sensitive financial data, such as customer accounts and transaction systems, remain secure even if other parts of the network are compromised. It also allows for more precise monitoring of traffic within each network segment, making it easier to detect and respond to suspicious activity.

7. Always have an incident response plan ready

No matter how strong a bank’s security measures are, the possibility of a cyber incident still exists. Having an incident response plan (IRP) in place is essential, as it provides a clear, structured approach to follow in the event of a security breach. The plan should outline the steps to identify, contain, and mitigate the impact of the incident, ensuring that the organization can respond quickly and effectively. It should also designate key team members responsible for various tasks, such as communication, investigation, and recovery. The plan needs to include procedures for notifying affected parties, regulatory bodies, and customers, as transparency is key during a breach. Even with the best preventive measures, an incident may still occur, and the quicker the bank can respond, the less damage will be done.

8. Secure backup and disaster recovery plan

Banks must regularly back up their data to ensure that critical information can be restored after a cyber attack or system failure. Having up-to-date and secure backups helps minimize downtime and ensures business continuity in the event of an incident. A solid disaster recovery plan includes clear procedures for restoring data quickly and efficiently, with designated roles for each team member. Testing the backup and recovery process is essential to ensure that systems can be restored accurately and promptly when needed. The disaster recovery plan should prioritize critical systems and outline how to keep essential services running during a disruption.

Balancing Innovation and Security in Finance

As the financial sector embraces new advancements, it is crucial to stay focused on understanding the associated risks and the vulnerabilities they may introduce. Financial institutions must be agile in adapting to these evolving challenges, ensuring strong cyber security measures are always in place. Staying ahead requires a balance of innovation and vigilance to prevent exploitation and maintain trust.