Cybersecurity In The Financial Sector
The financial industry is built on sensitive information. Therefore, cybersecurity in the financial sector is critical. From basic customer details such as dates of birth, addresses, and phone numbers to more specific data such as bank information, financial institutions must have top-level safeguards to secure their customers’ assets. It does not matter that they might have thousands of clients. Above all, every account needs the same protection to maintain trust. Likewise, accounting firms have similar information, and must comply with various regulations including IRS Publication 4557.
Unfortunately, in the modern business landscape, scammers and hackers are growing in confidence and sophistication. Cybersecurity attacks are now occurring regularly in businesses, including the financial sector. Any breaches can have catastrophic consequences, especially when the criminal can directly access funds.
Why should cybersecurity be a top priority in the financial sector?
Safeguarding Financial Assets
The first and arguably the biggest reason to prioritize cybersecurity measures is to safeguard financial assets. Customers rely on banks to keep their money safe, whether investments, savings, or current account balances. It is more than just a number on a screen. In other words, the loss of even a small amount of money could mean the difference between someone being able to pay their rent or not.
Unusual payments due to scams can also affect credit ratings, impacting the customer’s ability to secure loans or buy property in the future. While banks may feel that their highest net-worth customers are their priority, cybersecurity should be locked in throughout every account level.
In many other industries, scammers work by getting hold of passwords and login information, which can then get them a step closer to being able to steal from individual accounts. If they somehow manage to breach bank security, they could gain access to massive amounts of money directly. Therefore, having credentials makes the entire process much quicker and, therefore, harder to stop. Bad actors target accounting firms for this reason, and according to the Journal of Accountancy, will “strike at any weak point.”
Regulatory Compliance And Avoiding Legal Ramifications
Financial companies must be aware of a considerable number of policies and standards. That is to say, it sometimes makes it tricky to understand what is compulsory and which are best practices. However, getting a grip on these regulations is crucial to ensure that you avoid breaking the rules, which comes with a heavy fine. GDPR non-compliance, for example, comes with a fine of up to €20 million – so even if you’re an American business, you must consider it if you’re working in other countries.
Policies to be aware of include:
- EU-GDPR (General Data Protection Regulation)
- UK-GDPR
- SOX (Sarbanes-Oxley Act)
- PCI DSS (Payment Card Industry Data Security Standards)
- BSA (Bank Secrecy Act)
- GLBA (Gramm-Leach-Bliley Act)
- PSD 2 (Payment Services Directive)
- FFIEC (Federal Financial Institutions Examination Council)
- CCPA (California Consumer Privacy Act)
- PIPA (Maryland Personal Information Protection Act)
- PIPEDA (Personal Information Protection and Electronic Documents Act – Canadian federal law governing collection, use, and disclosure of personal information)
Maintaining Investor And Consumer Trust
Ultimately, any breaches of cybersecurity will not just harm customer finances. It will lead to a lack of trust in the financial services they were using and will likely result in them moving their funds to a competitor instead. Plus, it will not just influence existing clients. If the word gets out, you will likely see a decline in new business. Thanks to the internet, this reputation will not just last for a few months – it will probably hang around for a while, harming the company’s bottom line.
Cybersecurity issues also have to be reported to the board, which can result in a lack of confidence in internal leadership. It can also mean that investors pull out or demand change to protect their funds, which can harm business growth and stability.
PWC outlines the cyber breach reporting required to CISA by law in the Cyber Incident Reporting for Critical Infrastructure Act of 2022. Banks, accounting firms, and businesses in 16 critical infrastructures are included.
Prioritize Your Cybersecurity Measures
Cybersecurity in the financial sector is critical. Cybersecurity should be of utmost importance to any organization where trust is vital. Ensure you regularly review the policies and measures you have in place to do your best for your business, clients, and customers.
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