Financial institutions work with Personally Identifiable Information (PII) daily, and the penalties for violating data protection regulations can be severe. In addition to paying out monetary compensation, failing to protect consumer data can damage the institution’s reputation.
In most cases, failing to meet financial technology compliance can lead to fines of up to $100,000 per violation. In other cases, a single fine can be more than $1 million.
Here are three strategies financial institutions can use to enhance compliance, avoid fines and improve trust between the institution and its customers:
1. Keep up with compliance regulations
With business conducted around the globe, institutions may have customers in a variety of locations, which means they need to manage compliance issues both locally and abroad. For example, regulations may prohibit data transfers outside of the country. In this event, data must be stored and processed within the country of origin.
Companies that do business across borders will need to research and learn relevant financial regulations for their new markets. In the U.S., it’s possible that regulations could even be different from state to state. Make sure that someone in your organization is committed to learning relevant regulations and ensuring compliance.
2. Formalize your compliance strategy
For financial institutions, cybersecurity is more than just reactively neutralizing threats. It’s a matter of proactively protecting a customer’s data. Many compliance regulations require specific processing, storage and security best practices to protect this sensitive information. These can include GDPR, the Payment Card Industry Data Security Standard (PCI–DSS) and the Sarbanes-Oxley Act (SOX).
To ensure that requirements are met, financial institutions should have a formal compliance framework in place. The two most common frameworks for the financial services industry are the National Institute of Standards and Technology (NIST) Cybersecurity Framework and the Federal Financial Institutions Examination Council (FFIEC) Information Technology Examination Handbook.
These compliance frameworks are designed to ensure firms meet data privacy laws. While they’re written for a U.S. audience, they can provide a good starting point in creating a compliance strategy for regulations in other countries as well.
3. Train employees how to protect data
Financial institutions are a prime target for cyberattacks, especially in the era of remote work. In fact, 81 per cent of global organizations saw an increase in cybersecurity threats during the COVID-19 pandemic, and financial and insurance institutions were the top attacked industries in 2020.
While automation can improve a firm’s cybersecurity stance, it’s vital that employees also know how to protect their data. Require periodic training for all employees, and use follow-up testing to make sure everyone understands security best practices. Also, ensure that remote employees have the tools they need and remind them to use a secure connection to cloud services whenever they log in.
Protect consumer data with technology
Financial institutions need a solid technology foundation to help close compliance gaps and keep data secure. With the right experts and the right tools, your institution can improve security and reduce the risks of compliance fines.
Allstream has the technology tools you need to boost your overall compliance strategy. From dedicated Internet connections to VPNs to firewall services, our connectivity and managed IT services can improve security and help you rest easy. To learn more, contact us.