If you happened to miss the recently published, “Cyber Hygiene Fundamentals Guide” by the Conference of State Bank Supervisors (CSBS), it’s worth a read. It’s a reminder to bankers of the ever-evolving threat of cyber attacks, and it offers preventive measures that banks can take to better protect themselves and their customers.
An important point that the Cyber Hygiene Fundamentals Guide makes abundantly clear is that these threats are not reserved for the larger institutions. In fact, in many cases, smaller institutions are more attractive targets because attackers perceive them as having fewer dedicated cybersecurity resources; which is often the case.
The Expanding Digital Threat
As banks expand digital services, such as online banking, mobile apps, remote deposit capture, cloud infrastructure, and fintech partnerships, each introduces a potentially new vulnerability. And, as we all know, cybercriminals are increasingly organized, well-funded, and technologically sophisticated.
Ransomware, phishing campaigns, credential theft, supply-chain compromises, and denial-of-service (DoS) attacks (a malicious cyberattack that renders a network, website, or machine unavailable to legitimate users by overwhelming it with excessive traffic or data) remain among the most common threats. Importantly, attackers are leveraging automation and, of course AI, to further enhance their efforts and even a single compromised credential can serve as the entry point for a broader network breach. Community banks are particularly vulnerable to:
- Business email compromise (BEC)
- Social engineering targeting employees
- Exploitation of unpatched software
- Weak authentication controls
- Third-party vendor vulnerabilities
Ransomware: Still the Primary Threat
Ransomware remains one of the most disruptive and costly threats facing banks. Today’s ransomware attacks often involve “double extortion,” where attackers not only encrypt systems, but also exfiltrate (which is the unauthorized transfer or theft of sensitive data using techniques such as phishing emails or malware injection) sensitive data and threaten public release. This tactic significantly increases reputational risk and regulatory exposure.
The guide recommends strong backup procedures, regular testing of restoration capabilities, network segmentation, and endpoint detection tools. Two such tools not mentioned in the guide but worth noting, are CrowdStrike Falcon and Microsoft Defender for Endpoint.
Phishing and Social Engineering
Another central theme is the human factor; employees remain both the first line of defense and the most common point of failure. Employees are increasingly vulnerable as phishing attacks continue to grow more convincing with attackers frequently impersonating executives, vendors, regulators, or even customers. As the guide points out, Multi-factor authentication (MFA) dramatically reduces the risk associated with employee credentials being stolen.
Also critical is regular security awareness training. Ongoing employee education, paired with simulated phishing exercises, can go a long way in reducing risk. The guide also reminds us that cybersecurity is not simply an IT function; it’s the responsibility of the entire enterprise.
Third-Party and Supply Chain Risk
Community banks increasingly rely on third-party providers for core processing, cloud hosting, payments, and fintech solutions. These partnerships introduce significant risk if not properly managed.
Threat actors often target smaller service providers as a gateway into financial institutions. As a result, banks must regularly evaluate vendor security controls, incident response capabilities, and data protection practices. After all, like all security measures, vendor oversight is not a one-time checklist; it is a continuous process. Steps to take include:
- Thorough due diligence before onboarding vendors
- Contractual security requirements
- Ongoing monitoring
- Clear incident notification protocols
Addressing simple failures
Many successful attacks exploit known vulnerabilities for which patches already exist. Simple failures, such as leaving default passwords unchanged or delaying software updates, continue to account for a significant percentage of breaches. In other words, sophisticated threats often succeed because of preventable weaknesses. Steps to take include:
- Timely application of security updates
- Regular vulnerability scanning
- Configuration management
- Removal of unsupported or outdated systems
Response and Continuity
The guide strongly encourages banks to develop, test, and regularly update incident response plans. A documented plan ensures that roles and responsibilities are clear before a crisis occurs. Tabletop exercises are highlighted as an effective way to prepare leadership teams. These exercises simulate real-world attack scenarios and allow institutions to identify gaps in communication, decision-making, and technical response.
Equally important is coordination with law enforcement, regulators, and cyber information-sharing organizations. Early reporting can reduce broader systemic risk. The guide also stresses that business continuity planning must account for prolonged outages. Institutions should plan for scenarios where core systems, payment channels, or communication tools are unavailable.
Key Oversights
Cybersecurity governance is another major focus and must be integrated into overall strategic planning. Leadership is encouraged to view cybersecurity investments not as discretionary expenses, but as essential to operational resilience and customer trust. Steps to take include:
- Establishing a formal cybersecurity framework
- Defining risk appetite
- Reviewing regular risk assessments
- Ensuring adequate staffing and budget
- Monitoring key risk indicators
Practical Recommendations
To sum up, the document outlines a handful of actions community banks should take:
- Implement multi-factor authentication everywhere feasible, particularly for privileged accounts and remote access.
- Strengthen endpoint detection and monitoring tools to quickly identify suspicious behavior.
- Conduct regular employee training and phishing simulations.
- Enhance vendor oversight, with clear security expectations and documented due diligence.
- Test backups and incident response plans regularly.
- Prioritize patch management and system updates.
- Share information through resources such as the Financial Services Information Sharing and Analysis Center (FS-ISAC) intelligence exchange.
Cyber threats will continue to evolve and bad actors, with the benefit of emerging technologies, will continue to innovate. But so can the community banking industry. With disciplined cyber hygiene, proactive governance, informed vendor management, and a strong security culture, community banks can reduce risk in practical, executable ways while continuing to serve their customers with confidence. Keeping those customers aware of cyberthreats and fraud are an important component of the customer relationship, and we can assist in this area with our fraud and cybercrime awareness messaging.
Bank Marketing Center
We’re Bank Marketing Center, the leading subscription-based, automated marketing platform designed especially for community banks. We are presently helping the marketers at over 300 financial institutions craft and distribute topical, compelling marketing communication that builds trust in their brand, deepen customer relationships, and grow revenue.
We do this by automating the essential marketing functions banks rely upon; content creation, social media scheduling and monitoring, digital asset management, compliance routing, and more.
We also believe in sharing what we know and learn. Whether it’s insights on the latest AI tools, tips for attracting and retaining top talent, a webinar on operational efficiency, or what experts are saying about the future of banking, we’re committed to helping community banks thrive.
Want to learn more about what we do for bank marketers to help them succeed? You can start by visiting bankmarketingcenter.com. Then, feel free to contact me directly by phone at 678-528-6688 or via email at nreynolds@bankmarketingcenter.com. As always, I welcome your thoughts.