Safety from the Cyber Storm: Sheltered Harbor, a New Cooperative Initiative, Helps Bank Customers Access Their Funds Should Their Bank Suffer a Cyber Attack
Charles Keenan · ABA banking journal · 2017
While he's not ready to retire anytime soon, Trey Maust has given thought to the concept over the past few years, a vision of where he would rely in large part on his wealth that resides in brokerage and bank accounts. Yet Maust, the co-president and CEO of $170 million-asset Lewis & Clark Bank, couldn't help but wonder: What if one day his account balances evaporated in a sweeping cyber attack? starting to think at some point I'm going to rely on those balances to live on, whether it's in a brokerage firm or a bank, he says. want to know I can point to something and say, is my balance.' So when Maust was approached last year to work on an initiative in the financial industry to safeguard customer information and account balances, he quickly signed up for the job. Maust, whose bank is based in Oregon City outside of Portland, saw a chance to represent community institutions at the table with some of the world's largest financial companies to come up with a system that would save enough information to get customer balances back in the event of a cyberattack. That system is now becoming a reality. Dubbed it allows financial institutions to securely store and quickly retrieve account information after an incident. It acts as a firewall of sorts, supplementing the defenses financial institutions already have by separating the information away from their own networks. consumer data is stored and kept private by each institution, and is encrypted and protected from changes. Sheltered Harbor is also distributed, with no central repository of information. This is about making sure the public can retain confidence in the system if a bad thing happens, says Steven Silberstein, chief executive of Sheltered Harbor, and a former chief technology officer for SunGard. We can't guarantee all our protections will succeed and we have to have a fallback just in case. Sheltered Harbor was created by the Financial Services Information Sharing and Analysis Center and its members, which includes banks, credit unions, brokerages, processors and financial trade associations, such as ABA. members represent roughly 60 percent of all U.S. retail banking and brokerage accounts. goal is to have most members of the group using the system by the end of the year, then roll it out to the rest of the financial industry. initiative was spearheaded by one of its board members, James Rosenthal, a former COO at Morgan Stanley. Rosenthal and other industry executives saw a need to provide a backup to customer data in age where cyberattacks have grown in severity and shown no sign of abating. When it comes to cybersecurity, banks have done a good job of safeguarding customer information, but the increasing sophistication and frequency of the attacks is enough to keep chief executives in the financial industry up at night. [ILLUSTRATION OMITTED] While breaches of American retailers, healthcare firms and government agencies are a common occurrence, a few incidents over the years highlighted how all companies are vulnerable to breaches. One was the 2013 attack of Target Corp., where hackers used malware to gain access to credit card numbers and personal information of more than 100 million customers, eventually leading its chief executive to resign. Another infamous attack was of Sony Pictures in 2014, where hackers released embarrassing files and emails of executives. The Sony attack clearly was a huge warning, says Albert Kendrick, who serves on the Sheltered Harbor board and is CIO at FirstBank, a $17 billion-asset institution based in Lakewood, Colo., a suburb of Denver. There were other attacks that were clear indicators that the risk was growing quickly. Perhaps even more alarming for bankers have been attacks in the financial industry. Cybercriminals stole $81 million from Bangladesh Bank in February 2016 by hacking credentials to send payment messages over SWIFT, a financial messaging network used in international transfers. …