German banks must do more to combat cyber threats and IT mishaps
Published: Tuesday, Jan 23rd 2024, 14:30
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The financial regulator Bafin is calling on Germany's financial institutions to take more precautions against a growing number of cyber attacks and IT failures. Banks and savings banks must "invest more than ever in their operational security and stability", said the President of the Federal Financial Supervisory Authority (Bafin), Mark Branson, in a speech in Frankfurt on Tuesday.
"The money is there at the moment." Thanks to the turnaround in interest rates, many banks have recently earned well. However, this boom will not last, predicted Branson. "We have to expect that insolvencies will continue to rise and that the situation on the real estate markets will not recover quickly."
This means that it will be more difficult for institutions in the future than in 2023. "It is therefore all the more important that they continue to strengthen their resilience," emphasized the Bafin President.
Concentration on a few service providers as a risk
The financial supervisory authority is concerned that banks and insurance companies are using a small circle of specialized IT service providers to outsource certain tasks. "If one of these multi-client service providers experiences disruptions, nervousness immediately breaks out in the system," explained Branson, who was once head of the Swiss Financial Market Supervisory Authority Finma.
This is a challenge for the companies themselves: "They should actually have a plan B to maintain their processes if their service provider fails," said Branson. "They need to ask themselves: if the worst comes to the worst, would it be possible to take over the outsourced processes again themselves at short notice? The honest answer for quite a few banks and insurers will be: No."
The risk of cyber attacks has increased
According to the regulator, technical dependencies can jeopardize financial stability. "Cyber attacks also pose a major threat," said Branson. "Incidents have been increasing for years. According to the Federal Office for Information Security, the threat in Germany is higher than ever."
In future, Bafin wants to regularly draw up a cyber situation report for the financial sector and organize crisis and emergency drills in order to identify vulnerabilities at an early stage. Branson warned: "Companies must have their IT risks under control."
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