Did you know that financial services firms are 300 times more prone to IT security attacks than other sectors? What’s more, the average cost of dealing with a cybercrime incident is higher in the financial services industry, with the average totalling at 14 million pounds per company.
When it comes to data security, it may feel as though your finance firm has a big, red target stuck to its back. This is because financial businesses process valuable personal and financial information, which is very lucrative for criminals. That, coupled with the fact financial firms take an average of 98 days to detect a data breach.
Indeed, it’s clear that financial firms such as yours need to do what they can to improve overall data security. When it comes to protecting your clients and customers, you simply can’t afford to let rigorous security slide.
But, before we take a closer look at the challenge facing your firm, let’s first define what we mean by ‘data security’.
What is data security?
Here’s our definition of data security:
Data security refers to privacy measures that prevent threats to computers, databases and websites. Threats include unauthorised access, or corruption of data caused by software/equipment or third-party services.
It’s an essential aspect of the IT security policy for businesses of any size, across all industries. It’s also known as information security (IS) or computer security.
Data security in the financial services
How high is data security on your financial firm’s list of importance?
It may surprise you to learn that many financial organisations still don’t take data security threats as seriously as they should, according to research from the Financial Conduct Authority (FCA). Reasons for this include:
- Some businesses simply do not understand the full gravity of the risks they face or where those risks come from. For example, 95 percent of data security breaches are a result of human error. With fines for breaching regulations running up to 20 million euros, it’s important firms such as yours take note.
- Others do not have the resources or expertise to handle the level of data they process, evaluate the risks and come up with solutions to resolve them.
- Businesses aren’t adapting to changes in regulations and the evolving IT landscape, so are increasingly at risk of a data breach. Yes, they might have been safe a few years ago, but they haven’t been proactive enough to consider themselves secure today.
Traditional IT security focuses on preventing unauthorised access to data, but the changing nature of technology and data security means that this alone is not enough. These changes mean that your financial firm must address not only the prevention of data breaches, but the detection, response and policy procedures required to maintain complete data security.
Your finance firm faces a variety of internal and external threats to your sensitive data.
These threats include:
- Malware viruses transferred via email attachments, files on storage devices, and interactions with an infected website.
- Hackers using malware to access and control systems remotely, steal or remove sensitive information and spread even more malware.
- Cybercrime and IP theft from hackers accessing hardware.
- On and offline scams and phishing attempts designed to trick people and systems into revealing sensitive information – from bank details to passwords.
- Advanced and sophisticated attacks on computer hardware and software using AI and machine learning.
- Third-party services that have access to data can become a weak link in the chain and can lead to stolen or lost data.
- Internal data security issues caused by careless or under-trained staff members.
Now that we’ve covered the threats to the finance sector, let’s dive into why data security is so vital for the sector.
Data security regulations and why they matter
While it’s important for every business to protect their data, your finance firm is amongst the top targets for security attacks due to the sensitive information you hold. This alone displays why investment in data security is so critical.
But, on top of this, your firm also needs to comply with a continually evolving list of regulations, laws and guidelines. If you don’t, you risk further issues in the form of fines, legal problems or reputational damage that could severely impact the future of your business.
Indeed, it’s clear that the financial sector as a whole is under intense scrutiny, but rest assured. These regulations are in place to stop data breaches, protect individual privacy and to preserve wider economic stability. They’re not just there to cause you needless pain.
Ultimately, they ensure that any information your business stores is adequately protected. This includes a range of different PII data, such as:
- Phone numbers
- Email addresses
- Bank and credit card details
- Health information
- Sensitive financial files and documents
The General Data Protection Regulation (GDPR) can impose some hefty fines on companies that lose or mishandle data. They have set out a series of principles that businesses have to adhere to, to ensure sensitive data is safe and secure. These include:
- Storage limitation – not storing data for longer than necessary
- Purpose limitation – only using data in specifically necessary ways
- Lawfulness, fairness and transparency – communicating any issues appropriately
- Minimisation – demonstrate data kept is relevant and limited to what is necessary
- Accuracy – ensuring all data is correct and up to date
- Integrity and confidentiality – using adequate encryption methods
- Accountability – for all data the business has
These regulations can guide your data security practices and ensure you’re limiting your data risks. But they’re just a start.
Let’s look at the practical data security steps your organisation can take.
How can your firm protect sensitive data?
We understand that it can be difficult to know where to start with data security.
But, don’t despair – here’s a list of ways to help predict, prepare and respond to issues and keep your financial data secure:
- Create and follow a stringent data security policy – this policy should encompass your business’s entire data processing activities, responsibilities and job roles. No stone should be left unturned.
- Understand the risks – encourage relevant employees to undertake data security awareness training will help them to identify threats and issues.
- Invest in encryption solutions – from strong passwords and multi-factor authentication across the business to keeping sensitive data away from prying eyes, this will help stop hackers cracking into your systems.
- Remote wiping – it’s an unfortunate but all too common occurrence for staff to leave laptops or phones in taxis or on public transport.
- Invest in cloud security – take advantage of the acclaimed security cloud providers, such as Microsoft Azure, offer. On top of this, ensure you regularly update software to mitigate against new data security vulnerabilities.
- Periodic assessment of procedures and access – review all your processes regularly and apply the policy of least privilege to give people only the access they need.
- Regularly backup your data – this will help your business stay active, even in the event of a breach. Try to follow the 3-2-1 rule if you can (three copies of data, two different data types, one stored offsite). Investing in cloud backup is the best option for offsite, easily accessible data access.
- Enlist the help of an IT partner – if you struggle to maintain data security in your firm, reach out to expert, dedicated cybersecurity specialists who will release you of the IT burden.
- Big data analytics – perform complex correlations across different data sources to detect changing patterns. This combination of big data analytics with security creates an even more robust defence against threats.
By adopting these practices and principles, you can defend yourself and react to cyber-security threats effectively.
Keep a watchful eye on your data security
The data security landscape in the financial industry is rocky to say the least.
In fact, cyber-attack reports within the finance sector grew by 1000 percent in 2018. And, even more worryingly, these attacks hit more than half of British firms in 2019.
With the pressure of remaining secure and available, as well as the watchful eyes of regulatory bodies, it’s no wonder many financial firms struggle with implementing data security.
However, if your business takes the right steps, you can keep your data secure and stay compliant. By training your staff, following internal and external policies, and continuously monitoring systems you will stand in better stead.
That said, with overstretched IT departments, and wider economic forces to worry about, it can be difficult for businesses to get their IT security right. Working with a team of experts is a great way of resolving the headaches that come with data security, all while leaving your team the time to focus on innovation and growth.
Reach out for a chat with our team today if you’d like to learn more about securing your business. Or, to learn more on how to secure your business, download the guide below.