The finance sector has long been a prime target for cybercriminals, accounting for nearly a fifth of all reported cyber incidents in the past 20 years, with total losses approaching $12 billion. Given the severity of the threats, it’s important to have comprehensive cybersecurity measures that comply with industry regulations in place. Here are the critical cybersecurity practices banks and financial services organizations should follow to protect their clients’ information and assets.
Follow proper cybersecurity frameworks
Many businesses may be unsure how to implement a comprehensive cybersecurity framework, but they don’t have to start from scratch. Well-established frameworks, such as the National Institute of Standards and Technology (NIST), offer a structured approach to identifying and managing common cybersecurity risks. These security frameworks help banking and finance companies:
- Develop guidelines for how sensitive information should be handled, shared, disclosed, and disposed of within the organization
- Establish protocols for vulnerability assessments and risk mitigation strategies
- Devise a plan for detecting and responding to threats when they occur
- Develop data recovery procedures in case of a security breach
Establishing this framework could also keep businesses compliant with laws such as the Payment Card Industry Data Security Standard (PCI DSS) and the General Data Protection Regulation (GDPR), ensuring they follow best practices for data protection.
Follow Know Your Customer (KYC) standards
KYC standards require financial institutions to verify a customer’s identity and financial profile constantly, thus helping protect organizations from money laundering, fraud, and terrorist financing. This process primarily involves collecting personal information, proof of address, and conducting background checks. If the information provided does not meet KYC requirements, a bank may refuse to open an account or even terminate an existing business relationship.
As an additional benefit, following KYC standards helps banks understand their customers and their financial activities better, leading to enhanced service that more accurately caters to their clients’ needs.
Implement threat detection
With online threats ever increasing, banks and other financial institutions (particularly digital-only enterprises) should prioritize having threat detection systems in place. For example, solutions such as security information and event management (SIEM) can quickly identify suspicious activities or potential breaches, enabling immediate responses to minimize damage. Beyond threat detection, SIEM plays a crucial role in maintaining compliance with regulations such as GDPR, PCI DSS, and other industry standards, protecting businesses and their clients.
Have thorough backup procedures in place
For financial institutions handling sensitive personal data, thorough backup procedures are not only a regulatory requirement but also critical for long-term security. Regular backups protect vital records from loss or corruption and allow for swift recovery in the event of a system failure or breach. A well-structured data recovery plan is equally important, as it can prevent a minor disruption from escalating into a major operational crisis.
In addition, data retention regulations mandate that financial institutions store backups securely for specified periods. For instance, the Sarbanes-Oxley Act (SOX) demands that financial data be retained for seven years for audit purposes, a challenge often addressed by utilizing backup systems rather than the primary database.
Assess your third-party relationships
Banks and financial institutions often rely on vendors and third-party services for cloud storage, customer support, and banking software. While these partnerships offer significant advantages, they can also introduce serious security risks if not properly managed. For instance, cybercriminals may exploit vulnerabilities in a third party’s system to access sensitive data a bank has shared or use their authorized credentials to breach its network. Moreover, compliance regulations such as the Gramm-Leach-Bliley Act (GLBA) require financial institutions to disclose how customer information is shared and protected.
To mitigate any third party-related risks, you need to thoroughly vet potential partners before entering into any agreements. Review their security policies to check that they meet both industry standards and your organization’s specific requirements. Equally important is maintaining ongoing oversight to ensure the vendor adapts to evolving risks and regulatory changes.
For banking and finance, protecting sensitive data and ensuring compliance with industry regulations require a multifaceted approach to cybersecurity. By following best practices — such as implementing comprehensive security frameworks, adhering to KYC standards, and regularly assessing both internal and third-party security measures — financial institutions can better safeguard their clients’ information and assets. The next step is to put these critical practices into action, reinforcing the security and resilience of these institutions against evolving cyberthreats.
Fortunately, predictiveIT offers a comprehensive package of managed cybersecurity services, covering everything from risk management to data backups and disaster recovery. Whether you’re a bank, a finance tech company, or any other business looking to improve your data protection, you can book an appointment with our team to boost your security posture today.
