Financial firms’ measures against cyberattacks now more effective, BSP says 

THE FINANCIAL SECTOR’S measures against cyberattacks are becoming more effective as the number of compromised consumers has been decreasing, the Bangko Sentral ng Pilipinas (BSP) said.

However, the value of losses from cyber fraud continued to increase in 2022 and remains a concern as the central bank pushes for further digitalization in the financial industry, the Philippine central bank said in an e-mail to BusinessWorld.

“While the amount of cyber fraud losses continues to increase from 2020 to 2022, the number of compromised customers is notably decreasing year on year. The relative decrease in customers affected shows the effectiveness of protection mechanisms,” the BSP said. 

The regulator said it has sought to improve the industry’s cyber resilience against digital attacks in line with the BSP’s Cybersecurity Roadmap.

The BSP is also “actively enhancing” its monitoring capabilities to help foster a responsive regulatory landscape.

In March last year, the BSP issued Circular No. 1140 that amends risk management regulations to mitigate the losses from online fraud and illicit activities.

It also issued regulations on cybersecurity risk management (BSP Circular No. 982 dated Nov. 9, 2017) and cyber incident reporting (BSP Circular No. 1019 dated Oct. 31, 2018).

However, digital fraud and attacks remain “an area of concern” for the central bank as cybercrimes in the financial services industry are evolving.

“Based on the reports on crimes and losses submitted by BSP Supervised Financial Institutions (BSFIs), the majority of the cyber fraud losses emanate from account takeover or identity theft, as well as phishing and its variations. This shows that cyber threat actors are targeting human vulnerabilities to perpetrate cyber fraud,” the BSP said.

Account takeover is a form of identity theft that involves unauthorized access to a consumer’s online account, which then allows criminals to steal for financial gain.

A TransUnion report said about 71% of Filipinos surveyed in the fourth quarter last year said they were targeted by digital fraud attempts across a wide range of communications channels, and 11% among all surveyed fell victim during the same period.

Phishing and smishing (both at 46%) were the most commonly reported fraud schemes experienced by Filipino consumers, followed by third-party seller scams (33%) and identity theft (25%).

“While the increased migration of financial consumers to digital financial platforms provided an impetus for threat actors to conduct their fraudulent activities online, the BSP and BSFIs continue to work together to ensure the safety and security of digital financial services,” the central bank said.

“The central bank ensures that risks are appropriately managed and consumer protection is upheld by its supervised institutions,” it said.

The BSP also reminded BSFIs to come up with effective cyber defense and resiliency strategies, use multi-layered security controls, and implement measures equal to their risk-taking activities. 

BSFIs should also ensure the protection of its customers, the BSP added.

International Monetary Fund (IMF) Deputy Division Chief in the Monetary and Capital Markets Department Tommaso Mancini-Griffoli said in an interview with BusinessWorld that the financial sector is becoming increasingly digitalized.

“The implications of this are macro critical. The private sector is moving rapidly in the space and is requiring clear regulation, clear supervision, clear rules of the game, so that they know where to invest,” Mr. Mancini-Griffoli said. 

“The public sector needs to ramp up its infrastructure for it to serve the purpose of providing stability and interoperability in the digital world,” he added.

Latest data from the BSP showed the share of digital payments in the total volume of retail transactions in the country rose to 30.3% in 2021 from 20.1% a year earlier amid growing adoption of online transactions.

Meanwhile, the value of payments done online represented 44.1% of total retail transactions last year, higher than the 26.8% share in 2020.

The BSP wants digital payments to make up 50% of all transactions both in volume and value by this year. — By Keisha B. Ta-asan