AI-driven cyber threats emerge as key risk for BFSI sector: MeitY report

The Ministry of Electronics and Information Technology (MeitY) on Monday released the second edition of the Digital Threat Report 2025-26 for India’s banking, financial services, insurance (BFSI) and payments sector, warning that artificial intelligence is rapidly altering the cyber threat landscape and shortening the gap between innovation and exploitation.

The report has been prepared jointly by MeitY, the Indian Computer Emergency Response Team (CERT-In), the Computer Security Incident Response Team in Finance (CSIRT-Fin) and cybersecurity firm SISA. It is aimed at financial institutions, regulators and cybersecurity leaders navigating risks across banking, insurance and digital payments.

According to the report, six of the seven forward-looking predictions made in the 2024-25 edition have already materialised, underscoring the speed at which cyber threats are evolving. MeitY said attacks that were once considered emerging risks, such as social engineering, credential theft, supply-chain compromise and cloud exploitation, have now become mainstream attack vectors.

“As cyber threats become increasingly sophisticated, trusted partnerships between public institutions and industry are essential to strengthening digital trust,” said MeitY Secretary S. Krishnan at the launch. He said the collaboration between CERT-In, CSIRT-Fin and SISA reflects how expertise developed in India can contribute to national cyber resilience as well as global cybersecurity knowledge.

The report identifies AI asymmetry as one of the defining risks for the financial sector. Tasks that previously required specialist teams, substantial resources and weeks of effort can now be executed at machine speed by relatively low-resource attackers, placing offensive cyber capabilities on a faster trajectory than many defensive and regulatory mechanisms.

CERT-In Director General Sanjay Bahl said cyber resilience must be treated as a shared responsibility as India’s financial ecosystem becomes increasingly interconnected and real-time. He said institutions need to move from periodic security interventions to continuous risk assessment, coordinated response and stronger information sharing.

A key feature of the report is the “Anatomy of Cyber Failure” 4-layer gap archetype framework, which examines how modern breaches escalate through a chain of compounding weaknesses rather than a single lapse. The report also sets out an 18-month roadmap for financial institutions, focusing on strengthening foundational controls, building continuous monitoring capabilities and developing more resilient security architectures.

The report draws on digital forensics and incident-response research, CERT-In and CSIRT-Fin observations, and analysis of adversarial AI trends across the financial ecosystem.