November 12, 2020
Data Security Challenges in Financial Service Industry
The industry most targeted by cybercriminals is the financial services industry. Because of the sheer volume of sensitive financial data carried by this industry, it serves as a hotspot for cyberattacks. 47.5% of financial institutions were breached in the past year, while 58.5% have experienced an advanced attack or seen signs of suspicious behavior in their infrastructure1.
There are also quite a few regulations that govern this industry in specific, such as the PCI-DSS (Payment Card Industry Data Security Standard), GLBA (Gramm-Leach-Bliley Act, aka the Financial Services Modernization Act), and BCBS 239 (Basel Committee on Banking Supervision’s regulation number 239). Although the industry is heavily regulated, it has a significantly high data breach cost at $5.86 million2. So, data falling into unauthorized hands not only results in non-compliance for the organization but also puts it at financial risk due to the high cost of data breaches.
The use of third-party vendors is one of the major forces behind the cybersecurity risk that threatens financial institutions3. Most organizations work with hundreds or even thousands of third parties, creating new risks that must be actively handled. The financial sector has massive third-party networks that pose new weak spots in cyber defense. In the next two years, we can expect to see an exponential rise in attacks on customers, partners, and vendors4. Without continuous monitoring and reporting, along with the use of critical tools to do so, organizations are vulnerable to data breaches and other consequences.
Data transfers (cross-border data exchanges)
The most fundamental challenge is to keep your private data private. Given that the financial sector produces and utilizes a massive amount of sensitive data, and is highly regulated, cybersecurity becomes paramount. Adequate measures are needed to protect data at rest, in use, and in motion.
Problems arise with data security when employees, security officials, and others tasked with protecting sensitive information fail to provide adequate security protocols. They may become careless about leaving their credentials around at home or in public places. Other issues arise when networks and web applications provided by institutions don’t have enough safeguards to keep out hackers looking to steal data.
According to SQN Banking Systems, the five biggest threats to a bank’s cybersecurity include:
- Unencrypted data
- Non-secure third-party services
- Manipulated data
- Evolution of technology and the threat landscape
Technology evolves daily; what we’re using now might be obsolete in the coming year. At the same time, cybercriminals are also equipping themselves to face technological advancements head-on. Looking at the alarming number of cybercrimes in the past year, they are much advanced than the technology we are using. In such a scenario where criminals are always one step ahead of the organization, blocking threats becomes a difficult task.
Evolving customer needs and organizations
Just as technology evolves, so do organizations and the way they function. Customer needs are ever-increasing, and they want quick solutions. What customers might not realize is that appealing technology comes with its set of risks. Moreover, there probably isn’t a financial institution today that hasn’t explored digital and mobile platforms. As they continue to keep expanding and using these platforms to cater to their consumers, they’re incidentally open to cyber risk exposure. Retaining customer confidence while meeting their growing needs to newer technologies becomes a complicated process.
Alongside dealing with the challenges mentioned above, it is imperative that financial institutions also put in the effort to stay compliant with laws such as the GDPR and CCPA to avoid hefty fines and other concerns such as revenue loss, customer loss, reputation loss, and the like.
- Monitor user activity for all actions performed on sensitive data in your enterprise.
- Choose from different methods or select a combination of techniques such as encryption, tokenization, static, and dynamic data masking to secure your data, whether it’s at rest, in use, or in motion.
- Before this step, sensitive data discovery is a must, because if you don’t know where your data is, how will you protect it?
- Deploy consistent and flexible data security approaches that protect sensitive data in high-risk applications without compromising the application architecture.
- Your data security platform should be scalable and well-integrated, which is consistent across all data sources and span both production and non-production environments.
- Finally, ensure the technology you’re implementing is well integrated with existing data protection tools for efficient compliance reporting and breach notifications.
If financial institutions think they can dodge cyberattacks with the help of mediocre data security strategies, recent heists would’ve proved them wrong. And despite prevention and authentication efforts, many make the mistake of thinking anomalous and unauthorized activity will cease to occur, which is unfortunately not the case. While cyber-risk is inevitable, by implementing the right tools, and a well-defined approach to cybersecurity, financial institutions can be more prepared as threats evolve.
Our data and application security platform is a single integrated platform that protects sensitive data across its lifecycle, with modules for sensitive data discovery, static and dynamic data anonymization, data monitoring, and data minimization. Our solutions in data security are certified, tested, and deployed across a range of customers all over the globe. We have successfully implemented our solution in many large financial institutions – top private bank in the Dominican Republic, one of the largest Swiss Banks, a global financial services software manufacturer, the world’s largest credit rating agency, and a top commercial bank in the United Arab Emirates.
How a Swiss Bank is effectively handling data security?
A top Swiss Bank was looking to optimize costs by offshoring IT application development while ensuring compliance without compromising on sensitive data controls. This posed a need for sensitive data discovery and masking both production and non-production environments. In a highly regulated environment, they were able to deploy our product suite, a sophisticated solution that met their needs and was able to successfully achieve secure cross-border data sharing and sensitive data assessment for cloud migration and compliance.
You can download the case study here: Mage Customer Success Stories – Comprehensive Security Solution for a Top Swiss Bank
1) Bitdefender – Top security challenges for the Financial Services Industry in 2018
2) Ponemon Institute – Cost of a Data Breach Report, 2019
3) PwC report – Financial services technology 2020 and beyond: Embracing disruption
4) Protiviti – The Cybersecurity Imperative: Managing Cyber Risks in a World of Rapid Digital Change
5) NGDATA: The Ultimate Data Privacy Guide for Banks and Financial Institutions