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.
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.
Frequently Asked Questions
Banks have always been at the forefront of enterprise cybersecurity. Due to the large amount of customer data they handle and their financial assets, banks are natural targets for both cybercriminals and malicious internal actors. They are not only a prime target for cyberattacks but are also among the most heavily regulated organizations when it comes to data protection, risking both high fines and a loss of reputation in case of a data breach.
Find out more about Data Loss Prevention for Financial Institutions.
Besides securing data against external threats, banks must also take into account obvious internal vulnerabilities linked to business operations. When looking to protect sensitive information, banking and financial services should also consider the following:
- Protecting data in motion
- Mitigating internal threats
- Having a response plan.
Learn more about data protection for banking and financial services
Sensitive data is information that is required to be protected from unauthorized access. The three main types of sensitive information are:
- personal information such as name or bank account number;
- business information such as intellectual property or trade secrets;
- classified information that refers to data that belongs to the federal government and relates to sensitive topics such as military plans.
A comprehensive Data Loss Prevention (DLP) solution is an essential tool in protecting sensitive company and customer information regardless of where data resides, as well as in monitoring and preventing confidential data from leaving the internal environment of a bank. Apart from providing solutions to prevent internal and external threats, DLP solutions help banks in complying with regulations such as PCI DSS, NIST 800-171, GDPR, etc. DLP tools can safeguard banks’ sensitive data by:
- Offering control over USB and peripheral ports;
- Protecting sensitive data in motion;
- Encrypting confidential data;
- Scanning sensitive data at rest
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Excellent post! Thank you for giving us an idea about this. Looking forward to the next one!
Very informative blog, Data archiving and security is necessary for financial institutions to achieve communication and regulatory compliance. Thank you for this information. I have also gathered some information related to e-Comms Channels and digital communications for FI on the Shield.
This is very informative. I’d be happy if the banks communicated with clients. It’s a plus to ensure that they do their job to make our money safe.
If your bank account gets hacked or stolen, it’s good to know that audit trails can help track behavior for anything suspicious. I don’t want my finances in mystery bags! Please share more blogs on mobile banking