The biggest security risks facing financial institutions in 2026

Financial institutions are spending more on security than they were five years ago. 

They have more security tools, invest more in training, have more policies in place and report on security more regularly. 

That sounds positive, but it does not automatically make them more secure. 

One of the biggest challenges for security leaders is deciding where to focus. New vulnerabilities, threat reports and regulatory requirements appear all the time. With so much competing for attention, it can be difficult to separate genuine priorities from the latest headline. 

Across the sector, significant investments have been made in security controls. The real test, however, is whether those controls would stand up during a serious incident. 

Answering that question is becoming harder. Technology is changing quickly, supplier relationships are becoming more complex and regulators are placing greater emphasis on operational resilience. 

With that in mind, these are the security risks we believe financial institutions should be paying closest attention to in 2026. 

People remain the easiest way in 

Financial institutions are far better at defending systems than they were ten years ago. Attackers know this. 

That is why so many attacks now begin with a person rather than a vulnerability. 

Social engineering remains one of the most effective techniques available as it does not require sophisticated malware or advanced exploitation techniques. It requires patience, research and an understanding of how organisations operate. 

AI is making that easier. Creating convincing emails, researching targets and tailoring messages used to take time. Much of that effort can now be automated, allowing attackers to operate at a scale that was previously difficult to achieve. Deepfake technology is adding another layer of risk, making it easier to imitate executives, colleagues and trusted contacts. 

Whether through phishing, voice-based impersonation, SMS fraud or business email compromise, the objective remains the same: convincing a legitimate person to take an action they should not. 

Senior executives, finance teams and privileged users remain attractive targets, but attackers are equally interested in receptionists, IT staff, facilities teams, branch staff and contractors because they often control physical access, operational information and established business processes. 

Technical controls have improved considerably over the last decade. What is often missing is the same level of investment in helping people recognise when something does not feel right. 

Physical security is being underestimated 

Physical security rarely receives the same level of attention as cyber security, but it continues to provide opportunities for attackers and is often the first step in a wider compromise. 

Techniques such as tailgating, impersonating contractors and engineers, or posing as delivery personnel remain surprisingly effective. In many cases, gaining access to a secure area requires little more than confidence, good timing and a willingness to take advantage of people’s natural tendency to be helpful. 

Physical access changes the nature of the risk. Once inside a building, an attacker can observe how people work, identify critical systems, access unattended devices, photograph sensitive information or connect directly to internal networks. In some cases, that access is enough to support a much larger attack weeks or even months later. 

For financial institutions, physical security and cyber security cannot be treated as separate disciplines. A weakness in one often creates an opportunity in the other and attackers are increasingly willing to exploit both. 

Insider threats are more common than most people think 

When people hear the term “insider threat“, they often think of a malicious employee stealing data. 

More often, the issue is carelessness, poor judgement or compromised credentials. 

An employee forwarding documents to a personal email account, a contractor retaining access long after a project has ended or an attacker using a compromised account can all create significant risk. The challenge is that these activities often appear legitimate at first glance. 

Most insider incidents do not start with malicious intent. They start with convenience, workarounds or simple mistakes. That is what makes them difficult to identify. The behaviour often looks normal until someone examines it more closely. 

For financial institutions, the challenge is not just detecting malicious insiders. It is identifying unusual activity early enough to prevent a routine action from becoming a security incident. 

Organisations are struggling to see their real exposure 

Security teams have spent years building controls, yet many still struggle to answer a relatively simple question: 

How would an attacker approach us? 

Security programmes are often shaped by compliance requirements, audits and industry frameworks. While all of these have value, they do not necessarily reflect how an attacker would target the organisation. 

Defenders naturally spend a lot of time looking at the business from the inside. Attackers see something very different. 

What information is publicly available? What are employees sharing online? Which suppliers have access to critical systems? What assumptions about security have never been tested? 

Organised crime groups, state actors and opportunistic attackers all operate differently. What represents a serious risk for one institution may be largely irrelevant for another. 

Without that external perspective, firms can spend considerable time and money improving controls while remaining exposed in the areas that matter most. 

Third-party risk is now an operational resilience issue 

Financial institutions depend on a growing ecosystem of suppliers, cloud providers and technology partners. 

Most firms have a reasonable understanding of their critical suppliers. Far fewer understand the dependencies that sit behind them. 

Recent incidents have shown that disruption can originate from organisations that firms have no direct relationship with. While supplier registers and risk assessments are common, fewer institutions have explored what would happen if a critical supplier became unavailable with little warning. 

The key question is simple: if a critical supplier failed tomorrow, what would happen next? 

Understanding those dependencies and testing the organisation’s ability to operate without them, is becoming just as important as assessing the supplier itself. 

AI adoption is outpacing governance 

AI is already embedded in many financial institutions, often more deeply than leadership teams realise. 

In some cases, organisations cannot say with confidence which AI tools are being used, what information is being shared or whether appropriate controls are in place. 

At the same time, employees are experimenting with AI tools to improve productivity, often without considering how information is processed, stored or shared. 

The challenge is not simply the technology itself. It is the speed at which it is being adopted. 

Before organisations can govern AI effectively, they first need a clear understanding of how it is already being used and where sensitive information may be exposed. 

Plans are easy. Responding under pressure is hard. 

Most financial institutions already have an incident response plan. 

The real test is whether it works when senior management need answers, systems are unavailable and decisions must be made quickly. 

Unless they are tested regularly, weaknesses in the response process often remain hidden until a real incident occurs. 

This is one of the reasons operational resilience has become such a major focus for regulators. Financial institutions are increasingly expected to demonstrate not only that plans exist, but that they work. 

Looking ahead 

One of the biggest challenges facing financial institutions is deciding where to focus. 

Security budgets continue to grow, new technologies are deployed and regulatory expectations continue to expand, yet leadership teams still struggle to answer a simple question: 

Are we investing in the areas that would make the biggest difference if an incident occurred tomorrow? 

Resilience is not about predicting every threat. It is about understanding where you are most exposed and being confident that the people, processes and controls you rely on will work when you need them most. 

As organisations look for greater assurance around their security posture and resilience, Toro has recently partnered with UK Finance to support members in identifying areas of exposure and strengthening their preparedness for real-world incidents.