Data security for financial services is an issue that concerns almost everybody who participates in the modern economy. Anyone using online banking, shopping online, or receiving any kind of financial service from a company (or its subcontractors) that stores your data, your personal financial security is potentially at risk from data leaks.

Online fraud and cybercrime is increasingly an organized criminal activity. The crime gangs work systematically to hack financial service providers and steal clients’ financial data. The rewards of financial data theft are considerable, but the consequences for individual victims can be disastrous. Victims of financial data leaks can lose their life savings, or face the nightmare of detecting and unraveling a chain of fraudulent purchases committed using their stolen data.

A simple data leak can ruin the life of your clients’ customers. At the lower end of the scale of consequences, a financial data leak can publicly reveal their monthly income, debts and liabilities, spending patterns and shopping habits that they’d prefer to keep private. Many people mistakenly assume that their financial data on third party servers is limited to their credit card details and online financial transactions. In fact, the stored data can map their entire life.

Effective ,financial services data security is one of the fundamental requirements for trust in a global online economy. Without this basic trust, everyday transactions and business relationships will be paralyzed – or at least made more complicated. Financial services providers that cannot guarantee the security of client and user data face crippling penalties from regulators, possible lawsuits and loss of business. A likely consequence for any startup or SMB that suffers a financial data leak is bankruptcy.

Financial Service Providers and Sensitive Data

Financial service providers depend on data to do business – and always did. For most of the twentieth century, client financial data was recorded on paper forms and stored in filing cabinets. Data protection for financial services involved little more than vetting employees for honesty, locking sensitive data in secure locations, and restricting who had access to it. Opportunities for mass data theft and systematic fraud were limited. Where fraud occurred, it tended to be on an individual level and involved a direct abuse of trust.

Prior to the recent advances in computer and internet technology, data harvesting and data analysis was a laborious and expensive process with limited utility. Financial service providers and marketers were much less able to exploit financial data for marketing purposes and (fraudulent activity aside) raw financial data had less value as an asset.

Today, sensitive client financial data is a valuable asset in its own right that can be resold and traded – or stolen. Cloud, AI and machine learning, and the breakdown of traditional silos is transforming the potential of big data in the financial services industries. Data security for financial services providers needs to protect against industrial espionage, as much as it does against organized cybercrime gangs.

If you’re running any kind of financial service, client data is the lifeblood of your organization. You can’t function without it, but there is an incredibly fine line between an asset and a liability. If you have effective, comprehensive and preemptive financial services data security solutions, your stored financial data is a financial asset. Without effective data protection for financial services, stored data is a liability that can destroy your business when it eventually leaks.

What Kind of Data do Financial Services Companies Store?

The generic term financial services companies covers a wide range of institutions, businesses and service providers. They have ready access to different types of client data, and the picture is complicated by the fact that many financial service companies that we do business with are actually owned – or subsequently acquired – by other bigger organizations. Parent companies may be pooling legally acquired data from several subsidiary businesses.

Banks retain transaction data as a matter of course. Anybody with access to that data knows how much customers earn and what they spend at least a large proportion of their money on. The data holder can track physical movements to an extent by ATM activity and credit card use, and possibly via use of mobile banking apps. Spending patterns alone create an intimate picture of the customer’s life, and lifestyle.

Banks also have home and work addresses, job title and salary details, mobile and landline numbers and possibly passport and social security numbers. Anyone who has applied for a mortgage or a loan, they will store a mass of additional personal data, and possibly other members of households. For business owners and the self-employed, the amount of stored financial data grows exponentially. Data security solutions for financial services providers have to safeguard a mass of sensitive personal and financial data.

Why is it so Important to Protect Financial Data?

There are four key perspectives when we consider the importance of financial services data security.

  1. Protecting the financial security and personal privacy of individual clients and third parties whose sensitive data is stored by financial service providers. Financial data breaches are disastrous for anybody whose personal details are compromised. Cyber crooks either use stolen data directly, or sell it to organized crime gangs on the dark web. There is always a market for stolen financial data and it is quickly put to use, either to plunder online bank accounts, carry out fraudulent transactions, or for sophisticated long-term identity theft frauds.
  2. Protecting financial service providers and businesses (and their investors and shareholders) against the harsh fines and financial penalties, and the financial consequences of reputation loss, that follow data breaches. Regulators are punishing financial service providers and other businesses that suffer data breaches. The fact that you were a victim of a cybercrime is not considered a mitigating factor when regulators – and increasingly the courts – impose fines for data breaches. In addition to fines, you may face criminal charges for negligence, class action lawsuits by aggrieved parties whose data was leaked, and the consequences of negative publicity; reputation damage and lost business. If you survive a data breach and don’t go bankrupt, future insurance costs against data breaches may be prohibitive.
  3. Conserving financial data (raw and analyzed) as a valuable asset and protecting it against industrial espionage by competitors, or extortion and ransomware attempts. Your legitimately acquired financial data is a valuable corporate asset. It helps you to optimize your business, offer new and improved services and upsales, acquire new clients and enter new markets. Confidential financial data is worth many times its weight in gold. If your competitors steal your data, they are potentially stealing your future profits. At the very least, they’ve gained valuable assets that you worked hard to build up.
  4. Protecting national security by denying foreign governments and agencies financial data belonging to, or relating to your own citizens. Financial data on private citizens is a target for foreign governments and their intelligence services. A single data hack that hoovers up a few hundred GB of financial data can give foreign governments considerable advantages in a hybrid conflict, or even during mundane intelligence activity. It is a lot easier to suborn specific individuals if you have their financial data and know their potential weaknesses.

Data security for financial services providers needs to be comprehensive enough to protect against the entire spectrum of malicious actors and emerging cyber threats, and sufficiently flexible and scalable to deliver tailored ,data protection tools and solutions for individual businesses.

What are the Challenges of Protecting So Much Data?

There are a huge number of challenges when you need to protect dispersed financial data. Modern companies with multiple offices (and even global operations), remote workers and multiple contractors and freelancers, as well as a high turnover of employees, have a 24 hour data security headache. A traditional reactive DLP solution is already a potential liability – and a drain on your time and resources.

The first challenge – and it’s a big one – is to locate and map all the sensitive data across your entire IT ecosystem. This includes scanning all remote devices, channels and shadow cloud – and also identifying dormant data. If you don’t, a hacker or rogue employee eventually will.

Once you have an accurate data map, you need to quantify that data. That means that you need to know the likely financial cost of any data breach. A clear understanding of liabilities allows you to make informed, risk aware decisions about how to prioritize your data security.

The final challenge is to find a comprehensive, preemptive data security solution that delivers full security – with minimum disruption to your workflows. Actifile’s flexible one-click data encryption allows you to automate either instant encryption or delayed encryption by channel. Once all your data, and new data, is automatically encrypted in real time, your sensitive financial data is protected. Even if it is stolen, or accidentally sent to unauthorized recipients, it will be unreadable.

Actifile software continually scans and maps all your sensitive financial data, quantifies it, and then encrypts it according to your preferences. Actifile software is non-intrusive, it simply works quietly in the background and causes zero disruption to your workflow or employees.

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