Usually, we at BankMarketingCenter.com don’t hand out kudos to individual bankers, but an exception must be made in the case of Independent and Community Banks of America (ICBA) President and CEO Camden Fine for his articulate defense of small community banks.
Fine put up his dukes so to speak after an article in The Boston Globe published a story contending that small community banks faced the greatest risk from hackers. Given last week’s report from an international consortium of reporters concerning leaked bank records from offshore accounts revealing activity by world leaders and celebrities, the vulnerability of banks is again front and center. On Tuesday, the Prime Minister of Iceland resigned after revelations that he had an offshore account sparked protest.
A qualifier: Most activity at offshore banks is legal. But that’s not the issue at hand. It’s the question of security, an issue that affects banks from Wall Street to Main Street.
The Globe article, headlined “Small banks face the greatest risk from hackers” reported that the Federal Reserve Bank of Boston and other regulatory agencies “worry that smaller banks, with less robust cybersecurity, provide easier targets for criminals, terrorists and foreign states seeking to infiltrate the U.S. financial system.” (See the complete article HERE.)
The article suggests that community banks are a weak link in an interconnected American financial system. An attack on a small bank could possibly spread to larger banks threatening the stability and confidence in American banks.
Consider this excerpt of the Globe piece: “Numbering in the thousands across the country, small banks don’t have the resources to hire armies of technology experts and spend millions for the most sophisticated software to thwart cyber threats.
“That makes them a weak link for those looking to steal money, lift identities and wreak havoc on the financial system, regulators fear.
“All an attacker has to do is get into one institution and that gives them a door into others, “Kenneth Montgomery, COO of the Boston Fed, told the Globe. “If a sufficient number of small institutions stop processing payments, could that have a systemic risk? It could have some impact.”
Fine, in a letter to the editor of the Globe, said the alarm bells about community banks were – to borrow a bit from Shakespeare, sound and fury signifying nothing. Fine called the article’s contention “absurd.”
“The scenario of one bank being the weak link could only occur if the protections already in place throughout the system, including the Federal Reserve, megabanks, and other intermediaries, failed.”
Fine continued, “For America’s community banks, the protection of their customers’ personal and financial information is serious business and the cornerstone of their day-to-day practices. To safeguard their customers’ information, community banks work on many levels to achieve cybersecurity preparedness.”
Fine contends that the “vast majority” of community banks share cyber threat information and mitigation techniques with other banks and educate customers about keeping personal financial information secure.
In fairness, hackers tested the weak link theory last year, invading the computer system of an unidentified community bank. The target, the Globe reported, was not the small bank, but the Fed and payment systems. The Fed was quickly notified and thwarted the attack. The Boston Federal Reserve is testing an initiative aimed at getting small and medium-sized banks to share threat information to help them respond to threats.
And, community banks, like the Holyoke, Mass., -based PeoplesBank have responded to potential threats by expanding its cybersecurity team from one person handling cybersecurity and other jobs, to three employees – two full-time and one part-time – strictly working on safeguarding the bank’s security system, the Globe reported.
While the cybersecurity threat is real – and hackers could strike at any bank of any size – the threat also offers an opportunity.
Community banks can take the extra step in its marketing, especially to older, less tech-savvy customers, to outline its cybersecurity strategy. It’s also a chance to educate consumers on steps they can take to protect their financial information. The Boston example –from the Federal Reserve to the community bank customer – illustrates that cybersecurity requires a multi-layered team approach.
After all, as Frank J. Cilluffo, director of George Washington University’s Center for Cyber and Homeland Security put it, “No one is immune. All banks have got a big bull’s-eye on them.”
He’s right. And that makes Camden Fine’s argument against the “weakest link” scenario all the more compelling. Kudos, Mr. Fine.
Read Camden Fine’s letter to The Boston Globe here.
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