Financial industry
Bafin urges banks to take precautions against cyber attacks
According to the financial regulator Bafin, Germany’s banks need to take more precautions against cyber attacks and IT breakdowns. photo
© Nicolas Armer/dpa
From a supervisory perspective, breakdowns at service providers and targeted cyber attacks are the biggest risks for the financial sector. Bafin urges banks and insurers to take precautions.
But this special boom will not last, predicted Branson. “We have to expect that bankruptcies will continue to rise and that the situation on the real estate markets will not recover quickly.” This means that things will be more difficult for the institutes in the future than in 2023. “It is all the more important that they continue to strengthen their resilience,” emphasized the Bafin President.
Concentration on a few service providers poses a risk
The financial regulator is concerned that banks and insurance companies use a small group of specialized IT service providers when outsourcing certain tasks such as account switching. “If disruptions occur at one of these so-called multi-client service providers, nervousness immediately breaks out in the system,” explained Branson. There is often a lack of alternative processes if something goes wrong.
The companies themselves are particularly challenged here: “They should actually have a plan B to maintain their processes if their service provider fails,” said Branson. “You have to ask yourself: If the worst comes to the worst, would it be possible to take over the outsourced processes yourself at short notice? The honest answer for quite a few banks and insurance companies will be: No.”
The risk of cyber attacks has increased
According to the supervisory authority, technical dependencies can endanger financial stability. “A major, increasing danger also comes from cyber attacks,” said Branson. The incidents have been increasing for years and, according to the Federal Office for Information Security, the threat in Germany is higher than ever. “We feel like these attacks are getting closer and closer to the heart of the financial system,” Branson said.
In the future, Bafin wants to regularly create a cyber situation report for the financial sector in Germany and organize crisis and emergency exercises in order to identify weak points at an early stage. Branson warned: “Companies must have their IT risks under control.”
Bafin announcement January 23, 2024 Speech Branson January 23, 2024 Bafin assessments of the most important risks for the German financial market