Navigating Cloud Computing And Data Security Compliance In The Finance Sector.

Data is precious—even when it’s personal information and nothing involving finances. As such, it’s unsurprising that nearly 55% of surveyed organizations experienced third-party data breaches in the past twelve months. 

Robust data security is growing in importance across all industries.

Any business dealing with even slightly sensitive data requires rigorous safeguarding of digital information across all facets of its lifestyle, shielding it from unauthorized access, theft, and corruption.

Undoubtedly, cybersecurity and data protection are significant concerns for every business, with three-quarters of surveyed organizations prioritizing the former over the past year.

Data protection is an even more critical priority in the financial industry. Selling clothing or cars and keeping customer data is one thing. Dealing with people’s money, investments, and related digital information is entirely different and far riskier. Thus, the stakes are about a thousandfold higher in the financial industry.

The numbers back up the reasons for concern—in the span of 120 days during 2023, cybercriminals attacked the financial sector a million times.

Furthermore, as the financial sector embraces cloud computing, the cybersecurity risks regarding client data only escalate. Below, we’ll explore this notion further.

Cloud Computing Cybersecurity Risks.

While cloud computing is highly advanced and has safeguards within, it’s still vulnerable to the following cybersecurity threats:

• Traditional malware attacks will attack cloud platform providers but still hurt end users. For instance, a cybercriminal can use a trick like hyperjacking to steal sensitive end-user data (e.g., financial information).
• Mixing multiple cloud platforms with on-premise services can result in limited network operation visibility. This scenario often creates “dark spots” across the cloud infrastructure that monitoring tools don’t track well. All potential hackers can flag and leverage these blind spots with automated tools that scan for such inefficiencies in cloud apps.
• One of the primary topics of this article is cloud-computing compliance issues. While all industries face rigorous regulatory demands with data, financial data is on a different level (which we’ll delve into further in a proceeding section). Ambiguity or cross wires can’t happen for financial companies, lest they deal with severe punitive consequences.
• Insufficient backup and recovery can lead to data loss on the cloud.
• Weak and stolen cloud computing credentials often lead to data breaches. In fact, they’re the number one cause.
• Criminal insiders (current or former employees or partners) were responsible for 26% of insider threats, with related incidents increasing by 50% in only 24 months.

These threats exist across all industries using the cloud, including—and, in many ways, especially—the financial sector.

The Financial Sector’s Relationship With Data Compliance.

Financial data compliance is a form of structured governance centered on data protection. It ensures that companies in the sector comply with data-based regulations, standards, and laws.

All capital markets, financial services organizations, and similarly inclined companies necessitate a level of financial compliance. All complying companies adhere to rules made by industry groups, internal governance policies, and governments. These standards can be external or internal.

The processes and security tools involved with financial data compliance secure and govern data management, possession, storage, and organization. Implementing these systems and best practices will prevent theft, misuse, loss, and compromise.

Not all financial data is created equal; thus, not all financial data compliance regulations are equally rigorous. Varying rules specify the types of data being protected and establish the level of protection required to ensure optimized security.

When financial organizations and institutions follow data compliance best practices, they mitigate potential legal issues and monetary losses. They’ll also enhance their cybersecurity operations because the frameworks implemented are proven to succeed across the sector.

Cloud computing compliance within the financial sector often includes the following processes:

• Maintaining audit data to follow industry-specific regulations.
• Implementing and adhering to encryption protocols.
• Compliance process automation.

Why Is Data Security So Pivotal In Financial Operations?

First and foremost, the importance of data security in financial security stems from the cost of related data breaches. The financial sector ranks second out of all industries in average monetary losses directly due to data breaches.

In addition to the money directly lost from someone stealing data, regulatory fines also play a role. For example, Equifax was penalized over $1 billion for a 2017 breach.

Another factor is the reputational damage and lost business resulting from data breaches in the financial industry. Generally, across all industries, almost 80% of customers will leave after a data breach. Given what’s at play, the mass client departure could be even more substantial in the financial industry. 

How Can Financial Companies Enhance Their Cloud-Based Data Security?

The structured guidelines provided by financial industry cloud security frameworks are pivotal for successful industry-wide data protection. Such frameworks ensure financial organizations provide secured financial transaction environments while helping adhere to regulatory compliance.

Established frameworks to fortify financial institutions against cloud-related data breaches include:

• ISO 27001.
• ISO/IEC 27002:2022
• PCI DSS,
• NIST Cybersecurity,

Through these above standards, the financial sector develops a common language that streamlines industry-wide security best-practice collaborations and communications. Additionally, they demonstrate robust compliance measures to stakeholders and regulators, increasing confidence and trust in industry-wide security postures.

Here are some other crucial data security strategies to protect your cloud-based financial systems:

• Collaborate with partners across the sector to ensure you gain as much knowledge about best practices as possible.
• Always follow compliance standards to avoid regulatory penalties and reduce data risks.
• Data monitoring, encryption protocols, and frequent security audits are all proactive security measures that bolster data protection in cloud-based financial systems.

Wrapping Up Cloud Computing And Data Protection In The Financial Sector.

 The future of data security strategies, risks, and compliance in the financial sector will revolve around navigating game-changing tech like AI, which will bolster the efforts of criminals and security specialists alike.

Financial companies must remain informed on best practices and ongoing advancements. Moreover, leaders in the space must keep their ears to the ground about looming threats against their cloud data to proactively develop robust strategies against them.

Also, working with third-party security providers with expertise in cloud computing security in the financial space—like Practice Protect—will pay significant dividends.

Discover how we can protect your financial organization against oncoming threats. Book a consultation today!