Cybercrime Wreaks Havoc in Malaysia’s Banking Sector: Experts Warn of Credit Rating Downgrades

The banking industry in Malaysia is facing a growing threat from cybercrimes, with experts warning that a successful attack could have systemic consequences for the entire financial system.

According to S&P Global Ratings, collaboration among industry participants and cross-border information sharing are essential in building cyber resilience. The rating agency emphasizes that regulators play a key role in setting standards for banks and guiding them towards collaboration.

Covid-19 Pandemic Exacerbates Cyber Risks

S&P Global’s Sydney-based banking analyst Nico DeLange notes that the Covid-19 pandemic has pushed up the risks of cyberattacks as banking operations have shifted increasingly online. With more people relying on digital channels, the potential for cyber attacks has increased.

Asia-Pacific Region Particularly Vulnerable to Cyber Attacks

The Asia-Pacific region, where Malaysia is located, is particularly vulnerable to cyber attacks. S&P Global warns that a successful attack could pose significant monetary and reputational losses to banks in the region. An attack on one large player in markets such as Hong Kong, Singapore, or Australia could disrupt normal business operations and unsettle the entire banking system.

Malaysia Takes Steps to Strengthen Safeguards

In Malaysia, the central bank, Bank Negara Malaysia, has taken steps to strengthen safeguards against financial scams. Recently, it directed financial institutions to be more responsive to scam reports lodged by customers and to facilitate efforts to recover and protect stolen funds.

Banks Increase Digital Security Measures

A slew of banks, including Malayan Banking Bhd (Maybank), AmBank Bhd, and RHB Bank Bhd, have issued statements highlighting their increased digital security measures. However, the recent cyber attack on iPay88, one of Malaysia’s largest online payment providers, has raised concerns about data breaches and vulnerabilities in bank systems.

Police Warn Public About Cybercrimes

The police have also been speaking out more to warn the public about cybercrimes. Inspector-General of Police Tan Sri Acryl Sani Abdullah Sani announced that 12,092 online fraud cases involving losses amounting to RM414.8 million were reported in Malaysia from January to July this year.

Cyber Resilience a High Priority for Financial Institutions

Bank Negara Malaysia governor Tan Sri Nor Shamsiah Mohd Yunus has highlighted cyber resilience as a high priority for financial institutions. The central bank is coordinating efforts with the industry, Royal Malaysia Police, and Malaysian Communications and Multimedia Commission to improve fraud incident response and recovery efforts.

Call to Action

In light of these warnings and concerns, it is essential that banks and financial institutions take proactive steps to strengthen their cyber resilience. Collaboration among industry participants and cross-border information sharing are crucial in building a robust defense against cyber attacks. With the Covid-19 pandemic accelerating the shift to digital channels, the potential for cyber attacks has increased, making it more important than ever for financial institutions to prioritize cyber resilience.