Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

“If you give a man a fish, he’ll eat for a day. If you teach a man to spearphish, he’ll use your credit card to buy dinner!”

This little tech joke speaks volumes about the impact of cyber threats in today’s computer-dependent economy. Quite obviously, the financial industry is the worst affected by the rising menace of cyber crime.

The reality of computer crime, though far removed from Hollywood's depiction, is still a massive security issue. In fact, cyber threats have also perturbed the White House over the past few months, recently compelling the U.S. Office of the Comptroller of the Currency (OCC) to step in. The regulatory body has promised to help smaller banks defend themselves from cyber attacks in an effort to protect the health of the overall financial system.
 
The support will be given to smaller financial institutions, primarily those which do not have ample resources or proficiency to counter net-crime. The spate of cyber attacks began last year at JPMorgan Chase & Co. (JPM - Analyst Report), Citigroup Inc. (C - Analyst Report) and Bank of America Corp. (BAC - Analyst Report). Wells Fargo & Co. (WFC - Analyst Report), U.S. Bancorp (USB - Analyst Report) and The PNC Financial Services Group (PNC - Analyst Report) were also hit. What’s more alarming is that the well-defended sites of these banking majors have suffered connection problems under the yoke of the recent attacks.

Unknown perpetrators flooded bank websites with massive data streams, making them unavailable to customers and halting operations for hours. The method used is known as distributed denial-of-service (DDoS), which often directs a huge amount of traffic from hacked computers to the targeted websites. The volume of Internet traffic that has been directed at these sites was such that most caused a breakdown of powerful servers.

For example, last year, security firms supervising Internet traffic noticed a surge of "junk" data directed at BofA’s site, which became a torrent of about 65 gigabytes of information per second. That is roughly 15–30 times more than what is usually seen in cyber attacks. Therefore, smaller banks that have less sophisticated protective walls than their Wall Street counterparts are soft targets.

Moreover, smaller banks are more susceptible to attacks as these are dependent on a third party for online banking facilities. These third party servers are like new connections, offering access points to all connected networks, thus making smaller financial organizations more vulnerable.

Recent Counteraction

Countries and corporations are bracing up Internet security against the terror of cyber crime as well as developing strategies to upgrade government computer systems and expand cooperation with other countries. Efforts to improve coordination within the private sector are also noticeable.

The OCC has appointed a Senior Critical Infrastructure Officer to address cyber issues along with officials of both government and private sector companies.  

With increased spending by government and large enterprises, we believe companies such as EMC Corp. (EMC - Analyst Report), Symantec Corp. (SYMC - Analyst Report) and McAfee, a subsidiary of Intel Corp. (INTC - Analyst Report), will be encouraged to develop innovative products for a secured cyber space. EMC recently announced its intention of spending on acquisitions that will prioritize security apart from storage.

Earlier this month, AT&T, Inc. (T - Analyst Report) announced plans to launch an extended managed security solutions (MSS) suit, including mobile security solution, by this year end. The company’s high-end MSS security solution seeks to combine network and device security together with secured virtual private networking, application and a suite of mobile device management solution. This service will provide corporate users with all-inclusive security for their mobile ecosystems regardless of utilization of the AT&T mobile network.

Additionally, the shares of cyber security firm FireEye, Inc. (FEYE - Snapshot Report) surged almost 80% at its trading debut last Friday, indicating that even Wall Street is keeping its eyes on the cyber security trend. FireEye is a global network security company that provides dynamic malware protection against latest cyber threats.

While mere listing and coding of security loopholes may not be the answer to hacking, it should serve as a stepping stone toward solving the extremely complex issue. Moreover, training and know-how on security matters are crucial since users often unknowingly guide hackers through their actions.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%