Cyber Security

Cybersecurity and cyber threats are increasingly developing in the digital world, posing numerous risks and significant impacts on financial service providers. The most crucial data, often targeted by cyber attackers, is financial data security, which is highly sensitive for the entire organisation. Not only does it store financial and accounting data internally within the company, but it also maintains financial data with external parties, including business partners, suppliers, and clients. 

To address this issue, a robust security system is necessary to ensure the overall system remains secure and operates smoothly, meeting its requirements. Learning about financial data security now is crucial to protect your organisation from financial data theft.

What is finance data security?

Financial data security is an additional layer of protection designed to minimise the risk of cyber threats in a system, especially when interacting with third-party services. Financial data encompasses business transactions, strategies, tools, valuable insights, and other relevant information. Therefore, financial data security is necessary to protect your system from various threats.

Why is financial data security important?

Every organisation, from significant financial services firms to public institutions such as government and health agencies, must have a robust security system to operate in the long term, ensuring data security in the financial services sector. All organisations possess essential data, both internal and external, that must be kept confidential. A cyber attack, even if it results in a small leak of financial information, can lead to significant losses for an organisation. Therefore, financial data security plays a vital role in protecting sensitive data, ensuring it does not pose a high risk of ransomware in the future.

Types of financial data

Financial data comes in various forms, and each type has its own data security needs for financial services. Below are the different categories of economic data in the financial sector that require protection.

Transactional data

In an organisation, especially a business, transactions are carried out frequently. These include transactions with clients and suppliers. Transaction data, such as bank accounts and the nominal amounts that leave a company, is certainly confidential and must be protected from unauthorised access to comply with industry regulations. Moreover, the data in financial service databases is often vulnerable to breaches if it is not encrypted or secured adequately by security policies aligned with PCI standards.

Client data

For an organisation to be trusted by clients, having good data security is not just important, but a prerequisite. With proper financial data security, clients will feel secure in conducting transactions and build trust with the organisation. This is because conducting transactions or dealing with organisations means providing sensitive client data that is private.

Accounting Data

Accounting data includes records such as accounts payable, accounts receivable, and ledgers. This information helps businesses track their financial health, making it a primary target for data discovery, fraud, or tampering. Therefore, securing this data is essential for any organisation.

Financial Statements

To monitor financial flows within a team, documents such as balance sheets and income statements, as well as valuable data that must be protected, are crucial to support business financial performance. These documents are typically known only to the accounting team and investors who have a specific role in this field. Consequently, financial data security is vital for safeguarding this sensitive information and ensuring compliance with global regulations.

Payroll Data

Payroll data includes details of employees’ payments, such as salaries, bonuses, and deductions. This information must be kept secure to prevent identity theft or fraud, which could result in financial losses for both employees and the financial service providers. Any financial institution must prioritise data security to safeguard against potential breaches and ensure compliance with regulations, such as the GDPR.

Tax Data

Tax data encompasses financial records related to tax filings, including income tax returns, tax payments, and supporting documents. Proper protection of this data is essential to prevent penalties, legal issues, and the misuse of sensitive tax information.

Common Financial Data Security Measures

Several measures help keep financial data secure. From encryption to password policies, implementing these practices is essential for safeguarding your business’s financial information.

Strong Encryption

One effective strategy for preventing cyber threats is the implementation of a robust security strategy that includes data encryption and compliance with global regulations. Encryption is a method that renders data unreadable, thereby enhancing data security and privacy. With difficult-to-obtain access keys and robust data protection measures, only authorised individuals can access financial data as part of a comprehensive security strategy. Encryption not only enhances the security of economic systems but also protects data from malicious actors.

Secure Password Policies

Robust security requires multiple layers of protection. In addition to encryption and strong passwords (with complex, lengthy character combinations as recommended by PCI standards), implementing discretionary access control provides critical safeguards against unauthorized access to sensitive financial data.

Discretionary access control systems allow administrators to precisely define who can access specific data and systems, working in tandem with strong password policies to:

• Prevent brute-force attacks by making credentials harder to predict
• Limit exposure of sensitive information through granular permissions
• Create audit trails of system access
• Complement encryption for comprehensive data protection

While complex passwords form your first defense line, combining them with discretionary access control measures significantly enhances your overall security posture against evolving cyber threats. This multi-layered approach ensures that even if one security measure is compromised, others remain active to protect critical business data.

Security Audits

Regular security audits help identify vulnerabilities in the system. By checking for weaknesses and updating security protocols, or using penetration testing tools, businesses can prevent potential breaches and ensure that their financial data remains safe.

Regulatory Compliance

Adhering to financial regulations is vital for protecting financial data. This ensures that your business adheres to industry standards for data protection and helps mitigate the legal risks associated with non-compliance with security practices.

Five Ways to Keep Your Company’s Financial Data Secure

Here are five practical steps businesses can take to enhance their data security in the financial services sector. Secure their financial data and reduce the risk of a breach by implementing a data security platform that meets the requirements of the GDPR.

1. Monitor Your Credit Report and Bank Activity Regularly

Regularly checking your credit report and bank activities helps spot any unauthorised transactions early, ensuring robust data security for financial services. This proactive step can help prevent long-term damage and identify security threats before they escalate.

2. Examine Your Company’s Operating Expenses

Keep a close eye on your company’s operating expenses to ensure there are no fraudulent activities or discrepancies. Regular audits and expense reviews can help you identify and address any issues promptly.

3. Prioritise Data Security

Make data security a top priority in your business operations. Train employees on security protocols, invest in robust security software, and regularly update systems to ensure your financial data is protected, particularly in compliance with PCI DSS standards.

4. Separate Business Accounts from Personal Accounts

Keep your business accounts separate from your accounts to enhance data security and privacy. This practice not only aids in organisation but also makes it easier to monitor suspicious activities and improves financial data security.

5. Safeguard Your Relationships with Suppliers

 Ensure that your suppliers follow proper security protocols for handling financial data. Working with trusted suppliers who implement strong security measures reduces the risk of financial data breaches from external sources.

Financial Data Security Best Practices

To maintain financial data security, following best practices is crucial. These strategies ensure that your data stays protected from evolving cyber threats, particularly for financial institutions.

Two-Factor Authentication

Two-factor authentication (2FA) adds an extra layer of security to your financial systems. By requiring two forms of verification, it becomes more challenging for hackers to gain access.

Use Cloud-Based Services

Utilising cloud-based services for financial data storage enables secure and easy access. Cloud providers often have robust security measures in place, which can be beneficial for fintech companies seeking to protect valuable data and ensure data protection.

Securities and Exchange Commission (SEC) rules

The Securities and Exchange Commission (SEC) rules require publicly traded companies to disclose financial data accurately and protect it from cyber threats. Companies must follow strict reporting and security guidelines to avoid penalties.

Frequently Asked Questions

Conclusion

In conclusion, financial data security is essential for both businesses and individuals. Implementing robust security measures, adhering to best practices, and complying with relevant regulations can effectively protect sensitive financial information. By prioritising data security, you safeguard your business, customers, and reputation from potential risks.