Attributed to Ross Woodham, General Counsel and Chief Privacy Officer, Aptum
A recent VMWare report found that cyber-crime in the financial sector grew by 238% between February and April 2020. 80% of surveyed financial institutions reported an increase in cyberattacks over the past 12 months, and 82% said cybercriminals have become more sophisticated over the past 12 months. This threat requires a strict regulatory and compliance landscape that must be abided by to protect consumers’ data.
Without understanding the importance of security and the complexity of compliance, financial institutions will find it challenging to implement a clear regulatory strategy to mitigate risks and avoid other expensive and legal side effects of noncompliance. This is particularly important as many financial leaders aim to promote a strong compliance company culture to enhance customer experience and loyalty, protect employees, satisfy shareholders, and have the trust of financial authorities.
In part, cyber threats are increasing due to a shift in how workplaces operate — with the volume of attack surfaces growing exponentially due to the increased number of remote workers over the last 12 months. This has taken place against the background of a data explosion, governmental institutions implementing new data privacy regulatory laws, such as the GDPR, Brexit privacy regulations, and ransomware policies. Combined, these changes all bring complex challenges for any financial institution looking to adhere to data privacy and compliance across the IT spectrum.
Financial institutions are adopting cloud technologies to help navigate these challenges. Along with the well-understood advantages of scalability, agility, and a pivot towards OPEX operational models, 51% of senior IT decision-makers cite security and compliance issues as a key driver behind migration to the cloud.
Compliance: The Heart of Financial Institutions
At their core, banks and other financial institutions are expected to collect, manage, and store customers’ financial information and money. In addition to this, financial firms must comply with national and international laws to keep their financial data safe and secure; protecting the data of the customers from any kind of fraud and maintaining compliance with the government policies while also ensuring financial services and products are made more convenient to use. There has been a swift and sharp shift towards digital platforms all over the world, and all industries are changing their models accordingly, which makes strict monitoring and adherence to compliance, with rules and regulations, necessary.
Given the current climate, nearly all industries are falling victim to ransom attacks at the hands of savvy cyber actors. Advances in security technology, adopting new rules and regulations, and a change in the mindset and outlook towards digital finance have helped company owners a great deal in staying a step ahead of these criminal minds. At the end of the day, it is all about ensuring IT leaders have the necessary internal control systems and networks in place so that regulatory compliance can be properly monitored.
The importance of compliance with cloud operations
Compliance offers many critical benefits to financial firms. For example, its execution results in fewer legal problems, improvements in operations and safety, and results in higher employee retention. But while compliance has become crucial for businesses, the regulatory challenges, and complexities to navigate it have also escalated. If not done correctly, compliance can prove to be costly and stunt business growth.
Firms need to recognise that a move towards cloud-based operations does not obviate them from their responsibilities. Indeed, to ensure companies don’t face the consequences of not being compliant — a long list including financial penalties, industry disqualification, reputation damage, and, in severe cases, the shutdown of an organisation – business leaders must work with cloud experts to create a comprehensive strategy that will improve operational efficiency and scalability of compliance at the company.
Security and data protection concerns: The primary barriers to cloud transformation
According to data from the Aptum Cloud Impact Study, the top three barriers cited by respondents regarding a move to the cloud include security, governance, and compliance. Indeed, 38% cite security and data protection as the primary barrier to cloud transformation. However, these issues are commonly associated with the mismanagement of cloud infrastructures rather than cloud infrastructures per se.
A recent McAfee report found a 630% increase in attacks aimed at cloud services since January 2020. As a result of this sort of activity and despite the increased security in hybrid cloud environments that companies are seeing, there is also a range of serious challenges that need to be overcome.
- Valuable enterprise data resides outside the corporate security system, raising severe concerns.
- Without help from a cloud expert, the sheer complexity of cloud operations makes it difficult to establish and maintain effective compliance protocols.
- Hacking and various attacks on cloud infrastructure can affect multiple clients even if only one site is attacked. An example of this happened recently, with the Kaseya ransomware attack; while less than 0.1% of the company’s customers were embroiled in the breach because its clientele includes Managed Service Providers, estimates are that anywhere between 800 to 1500 small to medium-sized companies may have experienced a ransomware compromise through their MSP.
These risks can be mitigated in numerous ways by using security applications, encrypted file systems, data loss software, and buying security hardware to track unusual behaviour across servers. Cloud data security is vital for data protection when storing in the cloud. By embedding security at the beginning of a digital transformation process, FSIs and banks can achieve better security levels than they could in their server rooms.
Cloud Security and compliance act as a bank’s golden ticket to cyber success. Financial leaders must embrace compliance and not just do it but do it well to outsmart crafty cyber actors. Furthermore, to ensure a smooth and secure cloud migration and management, organisations should ideally work with technology experts, like Aptum, to help them understand how to avoid the consequences of noncompliance and manage data efficiently and securely.