What are DDoS Attacks and How Do They Affect Financial Institutions?
A Distributed Denial of Service (DDoS) attack is a malicious attempt to disrupt the normal traffic of a targeted server, service, or network by overwhelming it with a flood of internet traffic. Attackers use multiple compromised computer systems as sources of attack traffic, often leveraging botnets (networks of infected devices controlled remotely).
DDoS attacks on financial institutions are escalating and becoming more sophisticated, targeting websites, APIs, and payment systems to disrupt services, extort money, or distract from other cyber threats like data breaches, with attackers ranging from hacktivists to organized crime leveraging increased attack surfaces and geopolitical tensions.
The financial sector is a prime target due to its critical infrastructure status, leading to service outages, lost revenue, and damaged trust, requiring advanced defenses like WAFs, real-time monitoring, and API security to counter evolving Layer 7 and supply chain attacks.
Key impacts on financial institutions:
- Service disruption: Inability to transfer funds, access accounts, or process payments.
- Reputational damage: Loss of customer trust due to perceived unreliability.
- Financial losses: Direct costs of mitigation, lost business, and potential ransom payments.
In this article:
Financial institutions are frequent targets of DDoS attacks due to the sensitive nature of their operations and their critical role in the economy. Several key factors contribute to their high risk profile:
- Critical infrastructure: Banks, payment processors, and trading platforms are part of the backbone of the global financial system. Disrupting these services can halt transactions, delay settlements, and erode confidence in financial markets. Because uptime is essential, even short outages can have outsized consequences.
- High stakes: The financial sector deals with large sums of money and valuable data. A successful DDoS attack can serve as a distraction for other malicious activities, such as data breaches or fraud. Attackers know that the potential financial and reputational damage makes institutions more likely to pay ransoms or quickly comply with demands.
- Complex systems: Financial institutions operate large, interconnected IT environments with numerous public-facing endpoints: ATMs, mobile apps, APIs, and trading systems. This complexity increases the attack surface, making it easier for adversaries to find vulnerabilities or bottlenecks to exploit.
- Geopolitical motivations: Banks can also be targeted for political reasons. Nation-state actors or hacktivist groups may launch DDoS attacks to retaliate against sanctions, exert pressure during conflicts, or protest perceived injustices. These motivations add another layer of unpredictability to the threat landscape.
Service Disruption
Service disruption is often the immediate outcome when a financial institution falls victim to a DDoS attack. Online banking systems, payment gateways, trading platforms, and ATMs may become inaccessible, causing significant inconvenience for customers and partners. For institutions that operate internationally or provide 24/7 financial services, these interruptions can result in missed transactions, processing delays, and cascading effects on downstream systems that rely on real-time data.
Beyond minor inconveniences, prolonged service outages can erode customer confidence and prompt regulatory scrutiny. During peak times such as payroll dates, tax seasons, or major trading events, DDoS-induced downtime amplifies the negative impacts, potentially leading to legal action or compensation claims.
Reputational Damage
DDoS attacks on financial institutions often garner significant public and media attention, leading to reputational damage. News of outages or disruptions can spread quickly, and customers may interpret these incidents as signs of weak cybersecurity posture or internal mismanagement. The erosion of trust can have lasting effects, with clients moving accounts to perceived safer competitors or refraining from using online services altogether.
Loss of reputation is challenging to repair, even after technical issues are resolved. Regulatory agencies may scrutinize affected organizations more closely, investors might question the institution’s risk management capabilities, and partners could revisit business agreements.
Financial Losses
Direct financial losses from DDoS attacks can result from interrupted revenue streams, missed transactions, and the costs associated with restoring affected systems. Financial institutions often operate on razor-thin margins, so even short periods of unavailability can translate to substantial revenue shortfalls. For example, downtime for online banking or trading applications can cause failures in loan processing, missed investment opportunities, or lost trading commissions.
The indirect costs can be higher, including regulatory fines for failing to meet service level agreements, additional expenditures on public relations efforts, and investments required for system upgrades after an incident. Extended attacks might also force institutions to pay ransoms or invest heavily in emergency mitigation services.
Eva Abergel
Eva Abergel is a solution expert in Radware’s security group. Her domain of expertise is DDoS protection, where she leads positioning, messaging and product launches. Prior to joining Radware, Eva led a Product Marketing and Sales Enablement team at a global robotics company acquired by Bosch and worked as an Engineer at Intel. Eva holds a B.Sc. degree in Mechatronics Engineering from Ariel University and an Entrepreneurship Development certificate from the York Entrepreneurship Development Institute of Canada.
Tips from the Expert:
In my experience, here are tips that can help you better defend financial institutions from DDoS attacks:
Use decoy services to mislead and study attackers: Deploy honeypots and decoy APIs specifically designed to attract and monitor DDoS attempts. This allows you to gather attacker TTPs (tactics, techniques, and procedures), test your detection mechanisms, and delay or confuse adversaries without impacting production systems.
Apply dynamic throttling at the application layer: Instead of static rate limits, use adaptive throttling that adjusts based on user behavior, risk score, or time-of-day patterns. This helps distinguish between legitimate traffic spikes (e.g., payday surges) and malicious floods, especially on APIs and transaction endpoints.
Isolate high-risk functions using microsegmentation: Segment critical systems (e.g., payment processing, trading gateways) in tightly controlled zones with minimal external exposure. Use policy-based access controls to prevent lateral movement during multi-vector attacks and reduce the blast radius of targeted disruptions.
Push real-time DDoS telemetry to executive dashboards: Build dashboards that show key DDoS indicators (attack vectors, geolocation of source IPs, application-layer anomalies) so business leaders can assess operational impact quickly. This shortens decision cycles for customer comms, incident escalation, and regulatory notifications.
Implement upstream DNS and BGP security controls: Harden DNS infrastructure (e.g., DNSSEC, rate-limiting, redundant resolvers) and secure BGP routes (e.g., RPKI, route filtering) to prevent abuse during DDoS attacks that exploit weak routing configurations or target DNS as a choke point.
Network/Volumetric Attacks
Network or volumetric DDoS attacks are designed to flood a financial institution’s network infrastructure with massive volumes of traffic, saturating available bandwidth and overwhelming resources at the network layer. Common methods include UDP floods, ICMP floods, amplification attacks, and SYN floods that originate from thousands or even millions of distributed sources.
These attacks are typically measured in gigabits (Gbps) or terabits (Tbps) per second, easily surpassing the bandwidth capacity of many organizations. Financial institutions are especially vulnerable because their business depends on network availability for real-time financial transactions. Attackers often launch volumetric assaults during peak processing times to maximize disruption.
Application-Layer Attacks Targeting APIs and Web Services
Application-layer attacks, such as HTTP floods and attacks on RESTful APIs, directly target web servers and online services that customers and partners rely on. Unlike volumetric attacks, these are lower in volume but more sophisticated, overwhelming specific application functions or exploiting vulnerabilities in custom web applications and APIs. Attackers often mimic legitimate user behavior, making detection more challenging.
For financial institutions, application-layer attacks are particularly damaging because they can bring down core online banking portals, payment processing gateways, or customer-facing APIs. They may also be used to trigger resource-intensive operations that exhaust memory, CPU, or database connections, resulting in severe slowdowns or outages. Attackers often conduct reconnaissance to identify and target the weakest parts of the application stack.
Multi-Vector and Stealthy Campaigns
In recent years, DDoS attacks targeting the financial sector have evolved to employ multi-vector and stealthy tactics. Multi-vector campaigns combine different attack methods, such as network floods, application-layer attacks, and protocol exploits, simultaneously or in succession. This strategy bypasses basic mitigation tools, forcing defenders to respond to shifting tactics that test the limits of their detection and filtering capabilities.
Related content: Read our guide to DDoS types.
Stealthy DDoS attacks are designed to evade standard thresholds and signature-based defenses. Attackers may use slow-and-low techniques to degrade service gradually or combine bursts of high-volume traffic with targeted application-layer probes. These campaigns make it harder for incident response teams to pinpoint and contain ongoing attacks.
Organizations in the financial sector can better protect themselves from DDoS attacks by using the following practices.
1. Deploy Advanced DDoS Mitigation Solutions
Implementing specialized DDoS mitigation solutions is critical for financial institutions to defend against attack campaigns. Advanced tools, whether cloud-based scrubbing services, on-premises appliances, or hybrid setups, provide proactive detection, real-time traffic analysis, and high-capacity filtering against volumetric and sophisticated application attacks. Leading solutions also integrate machine learning capabilities to adapt to evolving threats.
Financial institutions should ensure that their DDoS mitigation services are continuously updated and tested for compatibility with their specific application stacks and threat environments. Integrating mitigation services with threat intelligence feeds and security operations centers (SOCs) can accelerate detection and response.
2. Designing DDoS-Resilient Network Architectures
A resilient network design is essential in reducing the risk and impact of DDoS attacks. Financial organizations should implement redundant infrastructure, load balancing, failover systems, and geographically distributed data centers to ensure availability. Segmenting critical services and designing networks to limit attack spread can mitigate damage and allow unaffected systems to continue operating during an attack.
Institutions should also consider leveraging content delivery networks (CDNs) and anycast routing to distribute traffic and absorb sudden surges. Regularly updating network hardware, using ingress and egress filtering, and enforcing strict access control policies further reinforce DDoS resilience.
3. Continuous Traffic Baselining and Anomaly Detection
Establishing a baseline profile of normal traffic patterns is fundamental for early detection of DDoS attacks. Financial institutions can leverage network and application monitoring tools to gather traffic statistics, identify typical usage trends, and flag aberrations in real time. Automated anomaly detection systems can pinpoint unusual spikes, protocol irregularities, or suspicious packet structures; vital indicators of a developing DDoS campaign.
Continuous baselining allows security teams to distinguish between legitimate surges (such as end-of-month payment runs) and malicious activity. Institutions should regularly update detection thresholds to account for business growth or seasonal fluctuations. By quickly identifying deviations from expected behavior, organizations reduce the window of vulnerability.
4. Regular DDoS Simulation and Stress Testing
Routine simulation and stress testing are indispensable for preparing financial institutions to respond to DDoS incidents. By conducting controlled attack simulations, organizations can assess the effectiveness of existing defenses, uncover configuration weaknesses, and measure incident response times. Simulations should replicate a range of scenarios, including volumetric, application-layer, and multi-vector attacks, to ensure comprehensive preparedness.
Regular testing enables security and IT teams to practice coordinated response procedures and refine playbooks. It also helps institutions meet regulatory requirements for business continuity and disaster recovery. After-action reviews following each test should feed into ongoing improvement cycles.
5. Coordination with Upstream ISPs and Mitigation Providers
Effective DDoS defense extends beyond the organization’s perimeter and requires close partnership with upstream Internet Service Providers (ISPs) and specialized mitigation vendors. Financial institutions should formalize relationships and pre-arrange escalation procedures to divert malicious traffic at the network edge before it reaches core systems. ISPs often have greater bandwidth and filtering capacity, helping block large-scale volumetric attacks.
Collaborative incident response involves the exchange of threat intelligence, sharing attack signatures, and establishing secure communication channels for rapid escalation. Financial organizations should periodically review SLAs with vendors and ensure that incident reporting and runbooks are current.
6. Integrating DDoS Defense into Broader Cyber Resilience Programs
DDoS mitigation should be part of a holistic cyber resilience strategy rather than a standalone discipline. This involves integrating DDoS response plans with incident response, disaster recovery, and business continuity frameworks. Financial institutions should establish cross-functional teams to align policies, processes, and technologies, ensuring a unified approach to threat detection, containment, and recovery.
Cyber resilience programs require regular tabletop exercises, cross-training, and ensuring that all staff understand escalation protocols. Combining DDoS mitigation data with insights from other security domains (such as fraud prevention, endpoint security, and threat intelligence) improves organizational awareness and readiness.
Financial institutions require continuous, high-capacity DDoS protection to safeguard online banking platforms, trading systems, payment gateways, APIs, and customer-facing web services. Even brief disruptions can trigger regulatory scrutiny, financial losses, and reputational damage.
Radware DefensePro delivers real-time, behavior-based mitigation against volumetric, protocol, and application-layer attacks. By continuously baselining traffic patterns, DefensePro detects stealthy anomalies and multi-vector campaigns targeting APIs, login portals, and transaction systems before service performance is impacted.
For large-scale attacks that threaten upstream bandwidth, Radware Cloud DDoS Protection Service provides global scrubbing capacity to absorb malicious traffic before it reaches financial networks. Hybrid deployment models ensure seamless mitigation across on-premises data centers and public cloud environments.
Radware Cloud Application Protection Service strengthens resilience at the application layer with integrated WAF, API protection, bot management, and application-layer DDoS defense. This helps protect digital banking APIs, mobile back-end services, and trading platforms from credential abuse, business logic attacks, and targeted HTTP floods.
Threat Intelligence Subscriptions provide continuously updated intelligence on active botnets and threat actors targeting the financial sector, enabling proactive blocking and faster incident response.
Together, these layered defenses support DDoS-resilient architecture design, continuous anomaly detection, and integration into broader cyber resilience programs required in the financial sector.