Essential Cybersecurity Requirements for Financial Institutions
Financial institutions work with sensitive data that cybercriminals can use to commit fraud, monetize, and other malicious activities. To prevent this, layered security technologies are essential. Financial organizations must also consider how their internal security programs comply with industry and state regulations.
Secure Data Transfer
One of the cybersecurity requirements for financial services companies is to use encrypted protocols during data transfer to ensure cybercriminals don’t intercept and read data. Encryption can also limit access to specific files to only those with permission, ensuring that sensitive information isn’t accidentally or maliciously exposed.
Encryption is a simple and cost-effective way to secure data transfers, and it can be easily implemented into existing IT systems. In addition to implementing industry-standard encryption, financial services companies should establish internal disclosure systems for cybersecurity incidents so that incidents can be reported almost immediately to corporate decision-makers and counsel.
For example, the 36-hour notification requirement for banking organizations should be incorporated into the company’s incident response plan. A harmonized basic level of security requirements is essential for financial institutions.
However, this must be complemented by a shift from a compliance-centric view to a threat-centric approach for more mature and large institutions. This will require the development of new and improved governance practices to support the rapid security posture improvements necessary for financial resilience. This will also require financial institutions’ willingness to cooperate with other stakeholders, even beyond the legally obligated level.
Secure Data Storage
Organizations store large amounts of sensitive information in their data systems, including on their network servers, the cloud, and endpoint devices. This information can be valuable to cybercriminals using it for identity theft, corporate espionage, and more.
Without a robust data security program, this information could fall into the wrong hands, resulting in financial penalties and reputational damage. The first step in secure data storage is to develop policies that specify the appropriate levels of protection for different types of data.
For example, public data may require much less protection than confidential or sensitive data. This will help organizations ensure their security measures align with their legal obligations. A security policy should also include an internal disclosure system allowing executives and counsel to share information with the right people immediately after a cybersecurity incident.
This will help financial services companies comply with regulatory reporting requirements requiring them to disclose breaches within 36 hours of discovery.
Secure Data Backup
Whether personal information, financial data, or intellectual property, backups are integral to a company’s ability to survive cyberattacks. Therefore, they must be protected and secured from potential threats to ensure they are valid during a disaster recovery.
This is a challenge because of how often they are updated, which makes them attractive to cybercriminals who want to access sensitive information without detection. The solution is to deploy encryption algorithms that convert data into an unreadable format only a decryption key can access.
This protects backups even when they are stolen, lost, or destroyed. It is also critical to protect backups in transit by implementing network security measures such as firewalls and virtual private networks. This will prevent attackers from intercepting or damaging them as they move between on-premises and cloud storage solutions.
Finally, it is essential to regularly test backups to ensure they are working correctly and can restore data during an attack. This is a requirement under the Gramm-Leach-Bliley Act (GLBA). It also assures that a company does all it can to secure client data.
Secure Data Access
As financial institutions transform digitally, they need a security infrastructure that protects data wherever it is stored, moving, and processed. This includes the cloud, enterprise data center, and endpoint devices. It also requires a secure way to manage data access and usage, especially for privileged users.
This includes implementing best practices like requiring strong passwords, enforcing multi-factor authentication, and monitoring access to sensitive information on the network for excessive, inappropriate, or unused privileges. It also includes implementing advanced capabilities like encryption and data masking that make data unusable to bad actors even if they successfully hack into an organization’s systems.
In addition, financial services companies must establish a comprehensive internal disclosure system for reporting cybersecurity incidents to corporate decision-makers and counsel almost immediately upon discovery. It also helps avoid costly fines and reputational damage from failed audits or data breaches.
Secure Data Use
Despite the increasing sophistication of cyber attacks, most data breaches are still caused by human error. Robust data security strategies guard against insider threats and ensure that sensitive information isn’t misused, even if inadvertently exposed to malicious actors.
Securing the organization’s most critical data can be complex in today’s diverse computing environments. The current regulatory landscape for ICT and cybersecurity in financial services is multilayered, encompassing global standards set by independent third-party frameworks and national and sector-specific regulations and standards.
This complexity burdens financial institutions to keep track of multiple cybersecurity standards and incident response protocols. They must also consider how their policies and procedures will respond to cyberattacks and regulators’ investigations and enforcement actions.