Financial Services Compliance, Data Security and Everything in Between

January 27, 2021by Amit Bareket

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The digital transformation occurring within the financial sector today has made it clear that data is profitable and powerful. The more robust and valuable the data, the more power it offers. And with power comes increased risks.

If financial companies and services want to increase their rollout of customer-centric features and products they need user data and the trust of their customers. The idea that a normal credit union may now be processing terabytes of client data daily — not to mention international banks and fintech firms — has now firmly attracted the attention of hackers. In recent years, some of the most significant cyberattacks have been on the financial industry, including the famous Equifax breach in 2017.

As more and more cybercriminals are designing new, sophisticated methodologies to implement in their attacks, the number of compliance regulations being created for the financial sector increases in parallel. This is forcing companies to act fast or feel the heat.

The importance of financial compliance regulations

The importance of regulatory compliance cannot be overstated. Financial organizations are working with highly sensitive data that is continuously targeted by hackers. To enforce the right levels of compliance, financial services organizations need to adopt and implement the proper protection of sensitive data.

Financial services firms looking to take full control over their data see new data regulations as a game-changer. It forces their hand in the adoption of new technology solutions and more agile business processes in pursuit of ever more complicated and strict rules.

The most famous regulation to contend with is the 2018 EU General Data Protection Regulation (GDPR). This law enforced better protection for personally identifiable information while forcing organizations to remove customers' data upon request. GDPR requires organizations to become more responsive and accountable, bringing challenges for organizations that were, until now, not up to date with compliance.

Similarly, the Financial Industry Regulatory Authority (FINRA) organization provides guidelines and sets requirements for U.S. broker-dealers. Key FINRA requirements include having written data protection policies for preventing the compromise of consumer data and for detecting and mitigating cyber threats — an idea which, by definition, requires a multi-capable solution.

The role of network security in compliance

Security works hand in hand with compliance to prevent business risks within the organization. Security teams are developing and designing different network models and architecture to protect data from internal and external threats, partly using the guidance set by the compliance team. Compliance itself isn’t the central concern for security professionals, but it does overlap, and in their defense against attacks, the business requirement for compliance can be addressed.

For compliance teams, their goal is to also manage business risks. In their case, that is accomplished through organizational policies and regulations. Unlike security teams, the compliance teams will go beyond the technology risks and are more focused on the financial and legal risks that come with data security. The key role of a compliance team is to ensure that the organization complies with the regulations in their industry, and that means recruiting the security team to implement practical solutions. Accordingly, both compliance and security teams have a shared goal to protect the organization. They just have different ways of getting there — and must work together to mitigate risk.

Financial services networks come with security risks

Financial organizations need to ensure that all their employees are connecting with secure network access when using different financial applications that contain customer data. One of the most popular attacks on a network is unauthorized access by hackers. As seen in the Capital One breach, a cybercriminal gained unauthorized access by exploiting a firewall misconfiguration, which permitted commands to reach the impacted server.

Another network risk that financial services organizations can experience is access control privilege escalation. This risk occurs when a hacker gains access to a network and moves horizontally inside the network infrastructure and servers. This kind of attack allows hackers to gain access to more resources and data with the original privileged access credentials they have stolen. Limiting credentials by role, device and other qualifiers is the first step to compliance. This will allow IT and security teams to restrict and limit which employees have access to the network and applications that they need to do their daily work. By enforcing the privileged access model within an organization, it will decrease the opportunity for cybercriminals to gain unauthorized access to the network and sensitive resources.

Addressing compliance and security risks together

The financial industry can put equal focus on data security and achieving regulatory compliance. A rising tide of cyberattacks has pushed financial services organizations to adopt concrete data and cybersecurity strategies to ensure their networks, applications and customer data are less vulnerable.

By enforcing the proper network security strategy and adopting foundational tools such as access management, encryption and multi-factor authentication, organizations’ compliance teams can sleep soundly at night, knowing they’ve built the right safeguards. They don’t need to worry about being fined or putting their customers’ data at risk.

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Amit Bareket

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