Cyber Defenses for Credit Unions Are Between a Rock and a Hard Place

All eyes are on credit unions and regional banks – from conscientious consumers to the watchful eye of regulatory bodies – with seemingly no end in sight to persistent cyber threats and seemingly perpetual security audits. Already, the volume and intensity of data privacy and compliance mandates are putting credit unions between a rock and a hard place.

For those in IT and cybersecurity, this is a problem you’ve seen first-hand. Yet, the conversation I want to have today is not with those in the trenches, but with the business leaders, executives and boards at credit unions and other financial institutions. I want to put into perspective the reality of many cyber defense and compliance programs today and highlight how many of them are hindering your business.

The Existential Compliance Crisis

With each new year, regulations around compliance continue to become more stringent. This is a direct result of the increasing cyber threat environment and how financial institutions remain prime targets for threat actors. In the past two decades, nearly one-fifth of reported cyber incidents have affected the global financial sector, according to an International Monetary Fund report. Recently, these incidents have been directed at credit unions – recall the 60 credit unions that were impacted by the December 2023 ransomware attack.

This uptick in cyber activity towards credit unions can likely be attributed to a few main factors:

1. Limited resources: The unfortunate reality is that there is likely a backlog of system updates, patches and other preventative security-related activities that must be coupled with infrastructure maintenance and traditional everyday tasks. Unfortunately, it can’t all be done at once, leaving organizations vulnerable to costly data breaches.

2. Constrained budgets: Reduced budgets impact hiring and the ability to bring on more talent or upgrade/implement new technology and security solutions. This includes prioritizing the current spend to real-time, unified security technologies and processes, and away from legacy tools and processes that served its time and unable to keep up with the era of digital services.

3. Rise of Generative Artificial Intelligence (GenAI) Adoptions: Use of GenAI has lowered the barrier to entry for bad actors, aiding the creation of realistic phishing emails, malicious code development or poisoning the data used to train large language models (LLMs) targeted for use by your business processes. It is now easier than ever for the bad actors to automate and scale their attacks and strike more frequently and repeatedly. Cyber threats relating to GenAI adoption have been a greater concern because of bad actors’ sights on high-value targets, like financial services.

And yet, IT and cybersecurity teams at credit unions are still relying on legacy, outdated technologies and processes to get the job done. Reasons for this range from familiarity and cost-effectiveness, if not sheer optimism that they won’t be included in the next cyber breach headline. The operational risk is that these legacy approaches to securing IT systems and data are no longer effective, meaning a significant amount of the IT budget is essentially wasted on care and feeding antiquated systems and processes. And, from a cyber threat point of view, bad actors have recognized the stale security posture and breached data easily, incurring costly losses and business disruptions.

Data privacy and compliance needs are exacerbating these problems. For starters, maintaining compliance is costly and time consuming involving multiple internal and external stakeholders. A report by Vanta, published in late 2023, found that almost eight hours a week, one full workday, is spent on security compliance. The report also noted that one in four organizations have downsized IT staff and 60% have either already reduced IT budgets or are planning to. Data also shows that the financial services industry has some of the highest compliance costs, with the average cost of compliance totaling $30.9 million, according to a Ponemon Institute and Globalscape study.

Which begs the question: How are credit unions supposed to proactively fortify defenses or spearhead innovation if all their time and money is being spent on maintaining legacy compliance and data privacy processes?

Use Compliance Regulations to Strengthen Cyber Defenses

There’s a lot of hesitancy to adopt new technology, processes or business services because of the impact each of these might have on the legacy approaches to maintain compliance.

Take a real-life example of an approach to sharing confidential data. Lawyers often redact confidential information in physical documents prior to sharing that with key stakeholders. This security practice allows lawyers to safeguard the information while complying with regulatory requirements. What if IT and cyber teams can obfuscate data being shared with key stakeholders? This would be effectively safeguarding sensitive data and demonstrating compliance with privacy regulations.

Demonstrating compliance doesn’t necessarily mean you are effectively safeguarding the data. But safeguarding data does enable an organization’s ability to maintain compliance and mitigate potential threats. If your compliance program is eating up too much time and money, hindering business processes, and still leaving your institution vulnerable, then it may be time to make a change. Rather than continue to pay for complex processes, a security-minded approach would offer the best of both worlds – compliance and cost-effectiveness.

Dare to Be Different

While your outdated compliance approaches and business processes may be keeping you afloat for now, it’s like swimming against a strong current. As regional data privacy regulations evolve and threat actors advance their tactics, many traditional solutions grow static and open themselves to exploit. With smaller team sizes, scrutinized security budgets, and lack of resources for training and maintenance, you can’t keep up with a dozen piecemeal cybersecurity and compliance solutions. We’ve now reached a point where something must change; in the form of adopting the alternative methods and solutions on the market today.

What budget-minded organizations require are modern tools built with a real-time, security-first approach that can also align with the business processes. This enables IT teams to do more with less and allow organizations to prioritize critical security and compliance initiatives.

Long story short: Legacy security and privacy tools cannot achieve the results you’re looking for. They require you to add additional resources and processes while continuing to eat up budgets and stall productivity. Seek out modern solutions that unify cybersecurity and data privacy efforts, focus on preventative policies, and support real-time detection and remediation. These solutions enable you to make data-driven decisions before potential incidents or violations occur without racking up costs or resources.

It’s time to forego the status quo and stop hitting the snooze button on your cybersecurity.

Ravi Srinivasan is CEO of the Austin, Texas-based data security solutions provider Votiro.