How Putin could turn off the taps to our cash

Yahoo

15-03-2025

It's easy to take electronic payments for granted. In a world where the casual tap of a phone can buy almost anything, cash is no longer king.
But our reliance on digital transactions has ushered in a new and insidious threat.
Cyber attacks on Britain's banking system by hostile states risk mass disruption for consumers – and the drive to go cashless is making the country more vulnerable.
'If something is 'smart', it's hackable,' says Professor Alan Woodward, a computer security expert at the University of Surrey. 'And we're totally dependent on digital payment infrastructure. A large-scale cyber attack would have a profound effect on daily life. The country would grind to a halt.'
Teams of sophisticated hackers in Russia, China and North Korea are constantly probing for weaknesses in the country's banking system, according to Kevin Curran, professor of cyber security at Ulster University.
These groups are given free rein and vast resources to launch cyber attacks, he says, and can easily claim that the fallout has nothing to do with them.
'Our absolute reliance on electronic payments opens us up to a lot more nightmare scenarios. There is no in between – either the system is up and running as planned or you're back to pen and paper, literally.'
The warning follows a string of high-profile 'payday glitches' affecting high street banks, causing chaos for customers.
In January, Barclays customers were left unable to access app and online banking services following a major outage that lasted three days. Some were left stranded abroad while others did not receive wages and were unable to pay rent. The bank has suffered outages lasting 803 hours over the past two years.
Lloyds, Halifax, Nationwide, TSB, Bank of Scotland and First Direct also experienced IT problems at the end of January.
Banks have blamed these failures on internal malfunctions. Barclays said the latest outage was caused by a 'software problem in a critical module of our UK mainframe operating system'.
Yet Professor Woodward sees these problems as indicative of weaknesses of banks to cyber attack.
'These outages are typically caused by someone [working for the bank] doing a system update, something goes wrong and takes a while to put right,' he says.
'It's a failure of process. The cause is usually human error rather than malicious intent.'
But a state like Russia with huge resources behind it has the capacity to exploit these human weaknesses in the system, by 'socially engineering' people into allowing their identities to be stolen.
Jake Moore, a global cyber security adviser and former cyber crime officer in the police, believes that while banks put a 'huge amount of effort' into protecting their systems from external hacking threats, the biggest challenge is the 'insider threat'.
'Someone might be targeted on LinkedIn, bribed, and asked to put a USB stick in a machine. They get half the money upfront and half when they put it in.'
'It's very difficult to mitigate against this in any industry. The difference in banking is there's far more to lose.'
An added vulnerability is that banks have vast and complex IT networks running on increasingly outdated technology that is difficult to maintain and update.
Professor Woodward says: 'The UK's banking system is quite robust. Banks increasingly have two-man rules, and a lot of partitioning. You have very few people with God-like privileges within the system.
'But behind the scenes, a lot of older computer systems are doing the processing and some parts of the system can be creaky.'
Western banks have suffered from a surge in cyber attacks in the past three years. In 2024, 65pc of financial services firms were hit with ransomware attacks, according to cyber security company Sophos. This was up from 34pc in 2021 and marked the third successive annual rise.
Santander confirmed it had been the victim of a cyber attack in May 2024 after a hacking group calling itself ShinyHunters claimed to have gained access to 30 million customers' bank account details.
JP Morgan fell victim to one of the biggest cyber attacks in the banking sector a decade ago when data on the accounts of 76 million households and seven million businesses were compromised.
The recent rise has been blamed in part on Russian hackers acting in response to sanctions placed on the country and its banks following the full-scale invasion of Ukraine. Artificial intelligence has allowed hackers to increase the number and sophistication of their attacks.
A worst-case scenario cyber attack would be like the payday loan glitch 'times a thousand', Mr Moore says.
'It was a catastrophic day for the Barclays outage to occur. The last Friday of the month and nearing the end of the financial year.
'It lasted three days, but if you were to lengthen the time by days or weeks, you see what a successful attack might look like.'
Hostile states are unlikely to attack multiple banks at once 'like in the movies', according to Professor Curran.
Instead, he worries about 'smaller, politicised strategic moves' against the sector – particularly a highly disruptive 'denial of service' attack which would bring down cloud services and data centres.
'Salaries would not be paid and the high street would be hit hard,' he says. 'People would really suffer.'
Cash usage has dwindled in the past decade. Figures from UK Finance, a trade body representing the financial services sector, show that cash accounted for just 12pc of payments made in Britain in 2023. Around two in five people are living virtually cash-free, according to the survey.
The Treasury ordered no new 1p and 2p coins from the Royal Mint last year, a reflection of the declining use of physical money. De La Rue, the company that prints Britain's banknotes, has said demand for cash around the world is at a 20-year low.
An HM Revenue & Customs report from 2021 found that 25pc of small businesses and 27pc of mid-sized businesses did not accept cash payments.
But the elimination of cash risks inadvertently playing into the hands of Vladimir Putin and Xi Jinping.
Professor Woodward keeps a little cash at home in case of disruptions to the financial system.
'I'm a professional sceptic because of the industry I work in. If everything collapsed, I'd at least want to be able to buy a loaf of bread.
'There's got to be some contingency if the system fails – the obvious one is to have more cash. But there's no point keeping cash if we get to a stage where people stop accepting it.'
A UK Finance spokesman said: 'The UK's banking sector has very strong protections in place and maintains a continual focus on cyber threats. The industry invests significantly to protect customers and keep systems safe.
'The industry also works closely with regulators, government and cyber specialists to stay alert to new trends and threats.'
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