The lines between physical and digital security are disappearing, and nowhere is this more critical than in the banking sector. This convergence is a double-edged sword — it strengthens the security infrastructure when done correctly, but poses a compounded risk to operations.
The Growing Threat of the Cyber-Physical Nexus
Banks are prime targets for converged threats due to their reliance on technology and third-party providers. A cyberattack can disable physical security, while a server room break-in can lead to data theft or digital sabotage. Multiple real-world examples highlight the importance of taking a unified approach to protect physical and cyber environments.
In 2017, hackers accessed a casino’s network using an unsecured IoT aquarium thermometer. The device regulated feedings and temperature, but also became the perfect Trojan horse to steal 10GB of data. If criminals can exploit the most unassuming routes, they can also target the avenues customers use. In the U.S., 53% of smartphone users rely on mobile banking, widening the surface banks must now defend.
How Cyberattacks Compromise Physical Security Systems
Cyberattacks can access physical security tools or cause on-site disruptions that make it easier for intruders to break in.
- DDoS as a distraction: During a distributed denial of service attack, hackers flood a bank’s systems to mislead IT teams. In 2023, Google faced a record-breaking breach with 398 million requests per second, overwhelming servers by rapidly opening and closing connections. In banking, such intrusions could divert attention and create openings for physical or cyber intrusions.
- IoT weaknesses: In 2021, security camera company Verkada failed to secure its feeds, allowing hackers to access 15,000 live cameras in customer facilities. If this happened to banks, criminals could monitor guard movements or find blind spots, making intrusions easier. It could also expose footage like customer transactions or vault access, which is usable for extortion or social engineering.
- Building system hacks: Attackers can target lighting, HVAC or elevator systems. If compromised, they could lock doors, shut down operations or trap people inside, creating serious safety and security risks.
How In-Situ Breaches Expose Data and Disrupt Operations
Physical break-ins can lead directly to cyber damage. Once inside, threat actors can access servers, steal data or install malware without triggering digital security systems.
- Server room intrusion: Someone can bypass firewalls, steal files or damage systems by gaining access to a server room using a stolen badge or tailgating. In 2024, Nainital Bank in India experienced such a breach when attackers used a bank manager’s login credentials to siphon 16.71 crore, or nearly $2 million. Investigators believe the perpetrators likely accessed the physical server room to manipulate the manager’s credentials and execute the transfers.
- Insider risks: Insider threats remain a significant concern. While 75% are unintentional, they cost companies up to 20% of annual revenue. In the Bangladesh Bank SWIFT heist, attackers exploited insider access to steal $81 million from the Federal Reserve Bank of New York.
Impacts on Banking Operations
The financial implications of these converged threats are substantial. In 2022 alone, organizations lost over $1 trillion due to physical security incidents. Meanwhile, the average cost of a data breach ballooned to $4.88 million in 2024. The damage can multiply exponentially when these threats intersect.
Integrating Security for a Unified Defense
To counter rising hybrid threats, banks must adopt a converged security model that simultaneously treats physical and digital systems.
1. Smarter Surveillance and Access Controls
AI-powered video analytics and biometric tools can link physical access with digital activity. For example, if someone uses their badge to enter a server room, the system should immediately monitor their behavior. Combining multifactor authentication with physical ID checks reduces unauthorized access.
2. Unified Security Operations Centers
Banks should integrate cyber and physical security teams to improve coordination, speed response times and ensure both teams share threat intelligence using a single platform.
3. Real-Time AI Monitoring
Managing threats manually is no longer enough. New AI-powered tools can scan social media, cyber data and geopolitical news for risks and send alerts within seconds, helping teams act quickly based on reliable insights.
4. Cross-Training Staff
Teams must train together to handle hybrid threats. Simulations of someone using a stolen badge to install malware prepare both sides to respond jointly.
5. Secure IoT Devices
Banks should lock down internet-connected devices by using robust passwords and encryption and keeping them separate from core systems. Poorly secured IoT gadgets are a common entry point for attacks.
Bridging the Security Divide
Every part of the banking infrastructure is now connected and vulnerable to hybrid threats. Attackers will exploit all potential weak spots as financial services become increasingly digital. Banks that adopt integrated security strategies will respond faster and recover more effectively.
Devin Partida is an industrial tech writer and the Editor-in-Chief of ReHack.com, a digital magazine for all things technology, big data, cryptocurrency, and more. To read more from Devin, please check out the site.
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