5 Ways in Which Banks Secure Their Data

Banks and banking functions as we know them have been around for centuries now. The history of money is tightly intertwined with the history of the banking industry. Even though the way we bank has changed considerably, the basic principles remain the same. Some of the banks we know today have been around longer than we as individuals. Perhaps this is why customers trust that their banks will keep their money safe and safeguard all the other information they have about them.

While banks have always had large amounts of personal and financial information about their customers, today, all of that data has become easily accessible to anyone who has permission to access it. The growth of financial technology has led to many innovations and changes over the past few decades, like wire transfers, credit/debit cards, online banking, and mobile payments. Banks have had to not only upgrade their systems to accommodate these changes but also transform their processes to ensure continued security when implementing new technology. Protecting sensitive information and implementing security measures to prevent attacks carried out by cybercriminals, including phishing and malware attempts, are also essential nowadays.

Banking regulations are constantly changing according to the requirements imposed by modern banking systems. Banks have a legal responsibility to keep customer data safe and protect it from cyberattacks or unauthorized access. In this article, we will see how modern banks and financial services companies ensure that they fulfill this responsibility.

Data Security Best Practices for Banks

In order to secure sensitive data, banks have to follow a 360 degrees approach to ensure that a data breach does not take place internally or externally. This implies securing both the customer-facing end of banking processes as well as the internal processes related to employees, vendors, systems, and processes. Following are some of the ways in which this is done.

1. Authentication

Authentication requires that every transaction in the bank takes place after confirming the identity of the person initiating the transaction. This applies to the customers logging in to online or mobile banking systems, to those visiting the bank in person, or to those using credit/debit cards at POS terminals and ATMs. It also applies to bank employees who have access to customers’ and banks’ data. While earlier authentication simply required an ID and a password or PIN, many banks have now implemented two-factor and multi-factor authentication to ensure that the person is actually who he/she claims to be. Banks are also using biometric authentication techniques to verify customers’ identity, including behavioral biometrics, when they interact with banking systems like IVR.

2. Audit Trails

A history of banking transactions was always available as a statement or passbook. Additionally, banking systems also maintain an audit trail for every event that takes place during a customer’s interaction with the systems. Whether it is a customer using phone banking or online banking, the time of the interaction is recorded along with the details of the interaction. This data is backed up daily and is never purged completely but archived at defined time intervals.

3. Secure Infrastructure

Secure infrastructure implies the database systems and servers where data is stored and the boundaries established to secure these. Production data is usually encrypted in any core banking system. If required for testing, it is mandatory that important data like bank account number, customer name, and address be masked. Access to production systems is restricted. Vendors who deal with infrastructure are generally different from those who deal with applications. Bank employees are usually given special equipment where access to social websites, personal emails, and USB ports is blocked. Employees can only access the banks’ network over a VPN when using public Wi-Fi.

4. Secure Processes

Banks have established many processes to ensure that security is implemented and tested. This includes KYC (Know Your Customer) updates for customers, NDA (Non-disclosure agreement) for employees and vendors, securing special zones within the premises and remote data centers.

With Data Loss Prevention (DLP) solutions, banks can mitigate insider threats and safeguard customers’ personal data like names and credit card numbers. These solutions can also help meet the compliance requirements of data protection regulations such as the GDPR, thus ensuring that a bank’s security meets consensus standards and keeps its customers’ information secure.

Processes related to global and local regulations are also implemented, and risk assessments are carried out to ensure that these processes are in line with the requirements.

5. Continuous Communication

Banks also communicate regularly with consumers on upgrades to systems, the introduction of new authentication procedures, etc., in addition to the periodic account statements that are generated and sent to customers. Customers can also set limits and alerts based on different conditions to ensure that they are informed if any unexpected activity takes place concerning their accounts. While there are multiple channels of communication available, the set-up is flexible to cater to customers’ convenience.

Thus banks work round the clock to ensure that they do everything that needs to be done to secure their data.