The financial services sector is responsible for safeguarding large amounts of valuable data making it a consistent target for cybercriminals. Without the proper cybersecurity controls in place, the banking records and personal identifiable information (PII) that financial institutions house on their servers is vulnerable to a breach. This raises cybersecurity compliance concerns for banks and other financial organizations, as they are subject to significant fines and reputational loss in the event of a breach.
For this reason, maintaining cybersecurity compliance in the financial services industry is crucial. As more banks begin to digitize their offerings, having an effective cybersecurity compliance program will allow them to ensure critical assets are protected while adhering to regulations put in place by different government entities. This translates to secure banking practices and helps organizations avoid fines and penalties for non-compliance.
What is financial compliance?
Financial compliance refers to the regulation and enforcement of the laws and regulations within financial services, banking, and the capital markets. Regulations apply to the entire industry, from investments to commercial banking, and provide a standard for securing critical data and information.
Cybersecurity regulations in the financial industry
In the financial sector, there are several key regulatory standards that must be followed in order to conduct business. When building a cybersecurity compliance program, it is important to understand how each of these regulations impact day-to-day operations as that will dictate how you shape your compliance systems.
Some of these regulations include:
Sarbanes-Oxley is a US law that was passed in order to create a system of internal checks and balances regarding the accuracy of financial records. While SOX was initially only concerned with tracking the legitimacy of financial records, in recent years, a cybersecurity component was added to the law. Financial organizations are now required to have “cybersecurity systems standards and practices” in place. In order to remain compliant, organizations must be able to show that they have security systems that adequately monitor and protect financial information.
Payment Card Industry (PCI) Data Security Standards (DSS)
PCI DSS is a global set of standards that govern how organizations handle credit card information. Compliance with PCI DSS requires that organizations are able to maintain a secure data network and continuously monitor data across networks with the goal of limiting credit card data theft and destruction. While PCI DSS does require organizations to implement complex security solutions, integrating security controls into existing systems can raise problems of its own.
Bank Secrecy Act (BSA)
The Bank Secrecy Act is a law aimed at preventing financial organizations from being used to hide or launder money by verifying the legitimacy of currency transactions. With cybercriminals using data manipulation tactics to alter currency records, many auditors will also look into an organization's cybersecurity system when conducting an evaluation. Additionally, auditors will review an organization's incident response plan to ensure that, in the event of a breach, proper steps are taken to contain all threats.
Challenges of maintaining regulatory compliance
Protecting large amounts of sensitive customer data presents a challenge for most financial organizations. Some of the main challenges companies face with cybersecurity compliance include:
Increased endpoint device usage
As more organizations utilize tablets and smartphones to conduct business, the number of endpoint devices on a network grows. With increased endpoint device usage, protecting against threats becomes more difficult as they give cybercriminals more entry points into a network. In addition, tracking data across endpoint devices is extremely difficult without the right solutions in place.
Implementing cloud solutions presents a compliance challenge for organizations in the financial sector. One reason for this is a widespread lack of understanding around the shared responsibility model. Many organizations assume that once their data is in the cloud, it is their vendor’s responsibility to ensure compliance. That is not the case, however, as it is always the organization's responsibility to maintain compliance. This challenge is compounded by the growth of multi-cloud network environments. With multiple cloud networks, it becomes difficult to properly track where data is being stored and accessed. This is why it is essential for organizations to work closely with their cloud providers to ensure they have controls in place that accurately track data across cloud networks.
In digital business environments, financial institutions are increasingly relying on third-party vendors. While working with vendors helps to streamline business operations, they can also expose organizations to substantial compliance risk. If vendors do not have adequate cybersecurity programs in place, customer data will be vulnerable to a breach, leading to non-compliance with regulations. As parent organizations assume all responsibility for third-party breaches, it is essential that financial organizations work to properly monitor third-party risk.
Three best practices for maintaining compliance in the financial sector
As cyberthreats become more sophisticated, it is crucial that financial institutions take steps to maintain compliance. Here are three best practices financial organizations can follow to ensure ongoing compliance with regulatory standards:
1. Establish a third-party vendor risk management program
Managing third-party risk is a key component of compliance. With an established third-party risk management program, financial organizations can better identify and mitigate vendor compliance risk. For a third-party risk management program to be effective, it is important for organizations to catalog cybersecurity risks and assign risk levels to individual vendors. From there, they can build out vendor questionnaires that accurately assess third-party cybersecurity and compliance practices.
2. Implement network access controls (NAC)
Establishing network access controls improves visibility into device usage on networks, allowing organizations to better track data as it moves across endpoints. This helps bolster endpoint security, which translates to improved data compliance. NAC solutions also allow organizations to govern employee access to a network, limiting potential gaps in security. Given current remote work requirements, these solutions are especially important as they improve network functionality without sacrificing security.
3. Educate employees
Building a cyber aware workforce can go a long way in maintaining compliance. Employees who understand different aspects of device and network security are more likely to take steps to limit potential attacks. For this reason, it is recommended that financial organizations build an employee cybersecurity education program. With an established education program, institutions can teach employees how to leverage cybersecurity best practices and prevent potential breaches.
How SecurityScorecard can help financial organizations maintain compliance
For financial institutions to successfully maintain compliance, they need solutions that allow them to continuously assess their internal and third-party security posture. With SecurityScorecard’s financial services solutions, organizations are able to take a proactive approach to compliance monitoring. Our comprehensive security solutions help organizations gain increased visibility into their IT infrastructures so they can easily identify and remediate security and compliance risk.
SecurityScorecard also provides third-party risk management solutions that can be used to monitor vendor compliance. By assigning a letter grade to each vendor, businesses can quickly identify potential compliance risks and work with vendors to make sure they are resolved.
For financial organizations undergoing digital transformation, it is important that they implement solutions that improve efficiency without restricting security and compliance capabilities. SecurityScorecard’s financial solutions help organizations optimize their security programs so that they can digitize operations while maintaining compliance.