Heightened technology adaptation in the financial industry introduces more vulnerabilities and made this sector an attractive target to cybercriminals. In fact, according to recent research conducted by IBM, the average cost per data breach among 500 surveyed companies was $4.24 million. With the need to protect brand reputation and the pressure from regulatory agencies, financial firms are constantly improving their cybersecurity resiliency to gate-keep their customers’ personal identifiable information (PII). Learn more about what security controls financial sectors have in place to mitigate the inherent risks associated with today’s global shift toward mobile banking and online payment schemes.
Advanced Data Security Programs
With the ever-increasing demand for quick payment solutions, financial institutions have been more susceptible to security breaches. Recent heists would also prove that mediocre and outdated data security software is not enough to dodge these cyberattacks. That’s why financial service providers today have incorporated a protective framework made with advanced data security programs. Some examples of this would be data encryption, security assessment, multi-factor authentication, hardware security modules, and limited data access to keep data safe from prying eyes and help identify potentially risky situations before they occur.
While cyber risks are unavoidable, financial institutions prepare themselves by deploying flexible data security approaches to protect high-risk applications as cybersecurity threats continue to evolve. In fact, a report published by the World Retail Banking revealed that 57% of customers say they now prefer online banking and other mobile financial apps to stay on top of their finances.
Highly-Skilled Data Security Professionals
Keeping up with the rising demand for frictionless and cashless financial services can be a challenge for financial firms, especially now that people want apps that are secure and easy to access with just a click of a button. However, in today’s massive digital transformation, cyberhacking and malware have become more prevalent and last year, it was estimated that ransomware is so common that one cyberattack takes place every 11 seconds. This just fuels the industry’s need for advanced data security protocols and highly-skilled security professionals to help them keep pace with technological innovation.
Financial firms know that solely relying on software developers is not enough to ensure absolute security across all aspects of their operations. Thus, financial service providers are working closely with security professionals to make the data exchange process smoother and have their systems analyzed by a firm that specializes in financial services. According to Polsinelli PC, this will also serve as a reliable line of defense against cybercriminals who are attempting to exploit private data or other sensitive information to allow the installation of malware.
Local Regulatory Policies
As financial firms remain to be high-profile targets by cyberhackers, companies belonging to this industry have implemented stricter regulatory policies to control costs and mitigate potential risks. Government regulatory agencies keep a watchful eye on the events in this cyberspace and are ready to apply more onerous policies. The hefty consequences–financial fines and litigation–are imposed in the event of data breaches to ensure that sensitive customer data is protected appropriately. Failure to comply with the said regulations may also damage the reputation of the financial firm and lose customers over other competitors who provide greater security over sensitive information. Some of the specific financial sector laws across the country include the Financial Industry Regulatory Authority (FINRA), Gramm-Leach-Bliley Act (GLBA), Bank Secrecy Act (BSA), Making Online Banking Initiation Legal and Easy Act (MOBILE Act), and Sarbanes Oxley Act (SOX). All of these are done to ensure a seamless and cashless experience at a level of protection that is enough to secure customer information and better manage cyber risks caused by an accelerated digitalization in the financial industry.
International Financial Sector Standards
Data privacy concerns have become a hot topic in the financial sector as financial institutions manage a large volume of sensitive customer data. Breaches of the said data can lead to dire consequences and tarnished brand reputation. From insurance companies to commercial banks, brokerage firms, and everything in between, strict international regulations are imposed to set the standard for data security to protect customers from the rapidly evolving threat landscape in the financial industry. Some of the international standards that affect financial service providers are SWIFT Customer Security Program (SWIFT CSP) and Payment Card Industry Data Security Standard (PCI-DSS) to name a few. Likewise, there are also specific regulations imposed by the European Union (EU) along with the European Economic Area (EEA) namely, the PSD2 Regulatory Technical Standards (PSD2-RTS) and Payment Services Directive 2 (PSD2) to regulate service providers and make customer payments more secure.
User Education and Employee Training
Just as technologies in the financial industry evolve, so do customer needs and ways to meet them. A data security-centric solution to manage cybersecurity threats is to communicate and educate end-users about the services. Banks and other financial service providers communicate regularly with their customers on system upgrades to ensure that they are well-informed about any changes. The adaptation of this measure is also necessary to help them know if someone is trying to access their account without permission and to extend a culture of security among customers. Likewise, financial institutions are also deploying data security training among team members and staff to minimize the possibility of human error in the future. This data security training focuses on the best practices to protect sensitive data from theft, modification, disclosure, loss, or destruction in both offline and online spaces.
As the trend in the financial industry shifts to all-digital, the need for data security has been highlighted to enhance customer experience and address the heightened risks of cybersecurity threats in the space. Due to the sensitive nature of the data financial institutions collect, these organizations are equipped with advanced data security programs and strict regulatory requirements to minimize any vulnerabilities within a system. And as the pandemic quickened the financial digitalization trend, more and more people are starting to embrace the benefits of using digital payments and wallets.