Win with defense: How FIs can foil cybercriminals

Community banks and credit unions pride themselves on close customer relationships, personalized service, and deep community ties. While the smaller size of these financial institutions is often a significant competitive advantage, it also makes them an attractive target for cyberattacks. Leaders of these institutions understand that they can’t effectively defend against evolving cyber threats on their own.

Cybercriminals target community banks and credit unions precisely because they lack the resources and sophisticated defenses of larger institutions. Bad actors view small FIs as entry points to the broader financial system. Steal credentials from a credit union, and bad actors believe they’ll gain access to correspondent banking relationships, payment networks or customer data that open doors to much larger targets.

The question is not when a cyberattack will happen. It’s whether you’ll be ready when it does. The good news is that effective cybersecurity is not about unlimited technology budgets; it’s about a systematic approach, targeted investments, and strategic relationships with partners whose reputations and business models depend on keeping clients secure.

Top principles: Zero Trust, encryption and monitoring

A Zero Trust security strategy—”trust no one, validate everything”—is foundational to modern cybersecurity. It means every access request, inside or outside your network, must be verified before access is granted, with vigilant deployment of authentication and access controls. Multi-factor authentication (MFA) for all employees—especially those with access to sensitive systems or customer data—significantly reduces the risk of credential theft. Role-based access controls (RBAC), PIN-based teller authentication and dual control measures for high-risk operations ensure employees have appropriate-but-limited access to systems required for their work, minimizing the potential “blast radius” from a breach.

End-to-end data encryption, both for data “at rest” (stored in databases) and “in transit” (moving across networks), is non-negotiable. Customer and transaction data should be encrypted with strong, up-to-date protocols like the latest TLS versions for secure communications. Tokenization of sensitive data such as account numbers and personally identifiable information (PII) adds another layer of protection, replacing sensitive information with non-sensitive substitutes.

Real-time alerts and robust audit trails are also essential. For suspicious activities—such as large or anomalous currency transfers, new device logins or unusual access patterns—real-time alerts enable detection of and response to threats before they escalate. Immutable audit logs for user and system activity provide a forensic record, which is crucial for organizational governance, accountability and operational improvements. Even if you don’t have a dedicated Security Operations Center, automated monitoring tools and alert-response protocols can make a big difference.

The human element: Your strongest firewall (or weakest link)

A financial institution’s employees are the first line of defense—and also the most significant potential vulnerability. Cybercriminals are masters of deception, constantly evolving social engineering tactics. Phishing, whaling, smishing, vishing, pretexting, baiting — all are designed to trick employees into revealing credentials or clicking malicious links.

This makes continuous and robust employee training paramount. An annual cybersecurity refresher is not sufficient; training should be engaging, relevant—and frequent. Simulate phishing attacks, educate staff on the latest social engineering scams and foster a culture of skepticism, where unusual communications are immediately reported. Provide email security solutions that filter malicious content and flag suspicious messages. A vigilant employee can prevent catastrophic breaches.

Ransomware recovery: Immutable backups and air gapping

Ransomware attacks are pervasive and devastating, capable of crippling operations and extorting massive payments. The stakes are even higher for financial institutions, because of regulatory oversight and the sensitivity of customer data and personally identifiable information (PII). The next best thing to preventing a ransomware attack is being able to quickly recover from one.

Immutable backups mean your data cannot be altered, encrypted or deleted by ransomware once it’s stored. This ensures you always have a clean, uncorrupted copy—and a fixed point in time—to restore from. Air-gapping physically isolates critical backup data from the primary network. This ensures that if primary systems are compromised, backups remain untouched, providing a secure point for restoration.

Cybersecurity requires specialized expertise and capabilities that most small FIs can’t afford. The longtime employee who’s been “handling IT” may know your systems inside and out, but cybersecurity requires a deep understanding of constantly evolving threat landscapes, emerging attack vectors and sophisticated defense technologies.

The solution isn’t necessarily hiring expensive specialists or external consultants. It’s partnering with providers who make cybersecurity their core business—organizations that have invested billions in monitoring, threat intelligence, software updates, security infrastructure and the specialized human capabilities that would be prohibitively expensive for a community bank or credit union to develop independently.

Taking action

The price of a robust cybersecurity program pales in comparison to the cost of a successful attack: financial losses, regulatory fines, legal expenses, customer notification and credit monitoring costs. All pale in comparison to the long-term reputational damage and loss of customer trust.

Cybersecurity is an ongoing commitment—not a destination, but a journey. It requires continuous vigilance, adaptation and a willingness to invest in the right areas. Identify gaps, prioritize fixes and establish relationships with security-focused technology partners who can help you stay ahead of evolving threats.

Most importantly, don’t wait. The best time to implement robust cybersecurity was yesterday. The second best time is now. Your institution’s future—and your customers’ trust—depends on the decisions you make today.

Dudley White is President, Core Account Processing Solutions, Financial Institutions Group, at Fiserv.