In 2024, India’s public sector, particularly its public sector banks (PSBs), is experiencing a significant increase in cyberattacks. With the advancement of technology and the prevalence of digital banking, cybercriminals are taking advantage of vulnerabilities, resulting in a 40% rise in cyberattacks on Indian PSBs in the last year.

The average cost of data breaches for these institutions is now ₹10 crore ($1.2 million) per incident. Phishing attempts have increased by 30%, and ransomware attacks have escalated by 25%, leading to frequent operational disruptions and financial losses.

Therefore, India’s public sector institutions must implement strong cybersecurity frameworks to safeguard sensitive financial data, uphold customer trust, and ensure national security.

Understanding the Current Threat Landscape
The rapid digitization of banking services, especially in public sector banks, has dramatically improved customer convenience and made the financial system more vulnerable to cyberattacks. Cybercriminals now use sophisticated techniques such as phishing, ransomware, insider threats, and Distributed Denial of Service (DDoS) attacks. These methods can disrupt operations, compromise customer data, and erode public trust.

One major vulnerability in the current banking ecosystem is the reliance on legacy systems that are not designed with modern cybersecurity threats in mind. Many PSBs still use outdated infrastructure that lacks proper encryption, making them prime targets for cybercriminals. Additionally, the interconnected nature of banking systems amplifies the risk—an attack on one bank could potentially spread through networks and impact multiple institutions.

The financial and reputational impact of cyberattacks is significant. According to the 2024 statistics, cyber incidents now cost public sector banks an average of ₹10 crore per breach. Apart from financial losses, these incidents also damage customer trust, which is fundamental to the banking industry. Customers expect their personal data and funds to be secure. Repeated breaches can lead to a mass exodus of account holders to private banks or fintech platforms perceived to have stronger security measures.

Key Areas for Strengthening Cybersecurity

Given the increasing threat landscape, it is evident that India needs to implement a multi-faceted approach to enhance cybersecurity in its public sector and banking institutions. There are several crucial areas that require immediate attention: regulatory compliance, technology integration, cybersecurity mindset, and public-private collaborations.

1. Strengthening Regulatory Compliance
To enhance cybersecurity, it is crucial for public sector banks to comply with strict regulatory standards. The Reserve Bank of India (RBI) has already established guidelines for banks to protect their information systems, including using encryption and conducting regular security audits. Compliance should not be viewed as a one-time activity but rather an ongoing process.

Implementing a dedicated cybersecurity framework tailored to the public sector would be a positive step. This framework should incorporate international best practices while addressing the unique challenges Indian banks face. It is important for regular reviews and updates to be mandatory to keep up with evolving threats.

Furthermore, implementing a central cyber command for all PSBs to coordinate responses to cyberattacks could drastically reduce response times and mitigate the impact of attacks. A unified response strategy ensures that no institution is isolated when dealing with large-scale or coordinated cyberattacks.

2. Adopting Advanced Technologies

• Legacy systems are a major vulnerability in the cybersecurity framework of PSBs. Transitioning to advanced technology solutions like cloud computing, artificial intelligence (AI), and blockchain can significantly enhance the security posture of these institutions.
• Encryption and Tokenization: Remember to make encryption a central part of any data protection strategy. By encrypting sensitive customer data both at rest and in transit, banks can minimize the risk of data breaches. Additionally, they can use tokenization, which involves replacing sensitive data with unique identification symbols, to safeguard customer information, especially during financial transactions.
• AI and Machine Learning (ML): AI and ML can be used to detect unusual patterns of behaviour that may indicate potential threats. By continuously monitoring network traffic and analyzing large volumes of data, these technologies can identify potential risks before they develop into full-blown cyberattacks. AI can also be employed to improve fraud detection mechanisms, ensuring that suspicious activities are promptly flagged in real time.
• Blockchain for Transaction Security: Blockchain technology offers a decentralized method of storing transaction data that is nearly impossible to tamper with. By integrating blockchain into transaction processing, banks can provide an additional layer of security, especially in high-value transactions.
• Cloud Security: The shift to cloud infrastructure should be accompanied by robust security measures to ensure scalability, cost-efficiency, and compliance with the latest security standards, including encryption, multi-factor authentication, and regular vulnerability assessments.

3. Fostering a Cybersecurity-First Culture
Technology alone is insufficient to mitigate cyber risks. Public sector banks must invest in fostering a culture of cybersecurity across all levels of their workforce. A significant number of cyberattacks are successful due to human error—phishing attacks, for instance, often exploit employees who unwittingly provide access to secure systems.

• Training and Awareness Programs: All employees should be required to participate in ongoing education and awareness programs. These programs should cover regular phishing simulations, password management training, and incident response exercises. By promoting a cybersecurity mindset, employees can act as the first line of defense against attacks.
• Zero Trust Model: Adopting a “Zero Trust” security framework means assuming that every user or device could be a potential threat. This ensures that access to sensitive information is only given on a need-to-know basis. This approach reduces the attack surface and limits the potential damage if an attacker does gain access to the network.

4. Encouraging Public-Private Partnerships
The collaboration between the public and private sectors can significantly improve cybersecurity efforts. Technology companies in the private sector have extensive experience in developing cutting-edge cybersecurity solutions. By working closely with these companies, public sector banks can adopt top-notch solutions that are customized to their specific needs.

Furthermore, public-private partnerships can facilitate the sharing of threat intelligence. Since many cyberattacks target multiple organizations simultaneously, a collaborative platform where banks can share real-time information about threats would enable quicker and more coordinated responses to cyber incidents.

Public-private partnerships can also extend to capacity-building initiatives, where the private sector helps public-sector banks train employees, conduct security assessments, and develop tailored cybersecurity strategies.

The Role of Government in Cybersecurity
The Indian government plays a pivotal role in shaping the cybersecurity landscape. As custodians of critical public infrastructure, government agencies must provide clear policy direction, allocate resources, and enforce compliance.

Increased Funding for Cybersecurity Initiatives: “Ensuring adequate funding is crucial for enhancing cybersecurity defenses. The government should allocate dedicated funds to improve the cybersecurity capabilities of public sector banks. This funding can be used to upgrade legacy systems, implement advanced technology, and hire cybersecurity experts.

Cybersecurity Policies and Legislation: Implementing comprehensive cybersecurity legislation that holds public sector banks accountable for maintaining high-security standards would be a significant advancement. The government should also offer incentives to prompt banks to adopt cybersecurity best practices.

Conclusion
As the digital landscape evolves, the threats posed by cybercriminals are also evolving. Indian public sector banks are increasingly at risk, and a major cyber attack’s financial and reputational impact cannot be understated.

To safeguard the nation’s financial infrastructure, it is imperative that PSBs adopt a proactive approach to cybersecurity. This can be achieved by enhancing regulatory compliance, leveraging advanced technologies, fostering a security-first culture, and encouraging public-private collaboration.

By making cybersecurity a national priority and adopting a robust, multi-layered strategy, India’s public sector banks can defend against current threats and lay the foundation for a secure and resilient financial future.

(The author is VP – South Asia, Futurex; Views are personal)