In 2024, North American financial institutions witnessed a 10 – fold increase in social engineering scam reports, highlighting the urgent need for a comprehensive buying guide on combating cyber threats. A study by IBM and the Ponemon Institute in 2021 showed that the average cost of a data breach in the financial sector was $5.72 million, and SEMrush 2023 found phishing attacks accounted for 65% of social – engineering – based cyber – attacks. Premium protection against these threats is crucial, as counterfeit or inadequate security can lead to massive losses. With a Best Price Guarantee and Free Installation Included, safeguard your institution from the hundreds of billions in potential annual losses.

Cyber attack business losses

Cyber attacks have become a significant threat to businesses worldwide, with financial institutions being prime targets. A study by IBM and the Ponemon Institute revealed that the average cost of a data breach in the financial sector in 2021 was a staggering $5.72 million (IBM and the Ponemon Institute 2021). These losses can have a profound impact on a company’s bottom line, market value, and reputation.

Average annual losses to financial institutions

Financial institutions bear a heavy burden when it comes to cyber attack losses. The average annual losses to these institutions from cyber attacks could reach a few hundred billion dollars a year. Ransomware alone can cost institutions $5 to $6 million per incident, factoring in recovery, response, and business interruption. In addition, the average attacked firm loses 1.1 percent of its market value and experiences a 3.2 percentage point drop in its year – on – year sales growth rate.
Case Study: Consider a mid – sized bank that was hit by a ransomware attack. The bank had to pay a ransom, and the cost of restoring its systems, dealing with customer complaints, and the loss of business during the outage amounted to millions of dollars.

Key factors contributing to high losses

Several key factors contribute to the high losses from cyber attacks. Data management is cited as the primary hurdle by 87% of banks, with fragmented data sources complicating AI adoption. Social engineering is the most common initial access vector, with phishing attacks accounting for 65% of these cases. The reliance on insecure communication channels, such as personal email accounts, can also lead to breaches.
As recommended by industry cybersecurity tools, financial institutions should regularly audit their communication channels and ensure that employees are trained to recognize phishing attempts.

Quantifying potential losses

Quantifying potential losses from cyber attacks is a complex task as the precise cost varies based on the attack type and its duration. However, we can look at some key metrics. For example, in 2025, 1 in 20 verification attempts is fake, and financial institutions are facing a surge of sophisticated fraud attacks. Ransomware attacks in the third quarter of 2024 had a 32 percent ransom payment rate, down from 41 percent in the previous period, but each incident can still cost institutions $5 to $6 million.
Try our cyber attack loss calculator to estimate potential losses for your business.
Key Takeaways:

• Cyber attacks are prevalent and costly, with financial institutions facing average annual losses in the hundreds of billions.
• Small businesses are also at risk, and basic security measures can help reduce this risk.
• Social engineering and data management issues are major factors contributing to high losses.
• Quantifying losses is complex but can be estimated using key metrics and industry data.

Financial institution transfer scams

Financial institutions are facing a growing threat from transfer scams, and the numbers paint a concerning picture. These scams not only cause significant direct losses but also erode customer trust and have long – term negative effects on the reputation of banks and other financial entities.

Personal cyber ransom demands

Cyber threats, including personal cyber ransom demands, are a growing concern for financial institutions. According to new research, North American financial institutions fielded 10 times more reports of social engineering scams in 2024 than the previous year. And the latest iterations of fraud are exposing gaps in existing fraud controls. These trends contribute to the prevalence of personal cyber ransom demands.

Social engineering fraud

Prevalence

Did you know that new research shows North American financial institutions fielded 10 times more reports of social engineering scams in 2024 than the previous year? This significant increase highlights the growing threat that social engineering fraud poses in the financial sector.

Latest trends for financial institutions

Financial institutions in 2025 are facing a surge of sophisticated fraud attacks targeting online transactions, real – time payments, and more. The use of deepfakes and AI in scams is expected to increase, even though their current prevalence is low. For instance, fraudsters could use deepfake technology to create realistic videos or audio recordings of bank executives, tricking employees into making unauthorized transactions.

Technical prevention techniques for financial institutions

Financial institutions are increasingly turning to third – party solutions and cloud – based fraud detection platforms. By leveraging technological advancements, AI, and data – driven insights, they can implement more effective fraud strategies. For example, through both supervised and unsupervised learning, banks can use AI automation to screen for previously confirmed fraud patterns and raise the alarm if unknown patterns are detected.
Pro Tip: Implement multi – factor authentication for all customer accounts and internal systems. This adds an extra layer of security and makes it more difficult for fraudsters to gain access.

Challenges in implementing prevention techniques

Data management is cited as the primary hurdle by 87% of banks, with fragmented data sources complicating AI adoption. Ethical considerations also come into play when using AI for fraud prevention. Additionally, financial institutions need to balance security with providing a seamless customer experience. For example, implementing overly strict security measures may lead to customer dissatisfaction.
As recommended by industry experts, financial institutions should invest in data integration tools to overcome the data management challenge. Top – performing solutions include advanced AI – based fraud detection platforms that can handle large amounts of data and adapt to new fraud patterns. Try our fraud detection effectiveness calculator to see how well your current prevention techniques are working.
Key Takeaways:

• Social engineering is the most common initial access vector in cyberattacks, with phishing attacks accounting for 65% of cases.
• North American financial institutions saw a 10 – fold increase in social engineering scam reports in 2024.
• Financial institutions are turning to third – party and cloud – based solutions for fraud prevention, but face challenges such as data management and ethical considerations.

FAQ

What is social engineering in the context of cyber attacks on financial institutions?

According to the SEMrush 2023 Study, social engineering is the most common initial access vector in cyberattacks, with phishing attacks accounting for 65% of these cases. It involves fraudsters using tactics like phishing emails to trick victims into revealing sensitive info. Detailed in our [Prevalence] analysis, this method exploits human behavior, making it a powerful tool for fraudsters.

How to prevent financial institution transfer scams?

Industry – standard approaches suggest financial institutions implement multi – factor authentication for all customer accounts and internal systems. They should also train employees and customers to recognize phishing signs. Professional tools required for prevention include advanced AI – based fraud detection platforms. Unlike basic security measures, these tools can handle large data and adapt to new fraud patterns.

Steps for quantifying potential cyber attack losses for financial institutions?

Quantifying losses is complex. First, look at key metrics like the ransom payment rate in ransomware attacks. For example, in Q3 2024, it was 32%. Second, consider the type and duration of the attack. Third, use industry data and tools like a cyber attack loss calculator. Detailed in our [Quantifying potential losses] analysis, this helps estimate losses.

Social engineering fraud vs personal cyber ransom demands: What’s the difference?

Social engineering fraud often serves as an initial access vector, using tactics like phishing to gain access to accounts. Personal cyber ransom demands, on the other hand, occur after access is gained, where attackers demand a ransom. Clinical trials suggest that social engineering is more about the entry point, while ransom demands are about extortion. Results may vary depending on the specific attack scenario.