Cyber Security for Financial Services: More Than a Regulatory Need
Read time 6 mins
Cyber security for financial services organisations is paramount. Financial institutions are huge targets for cybercrime – after all, these are the places where the money is. Sadly, attacking banks, insurance companies, credit unions, and all types of financial services organisations offers multiple avenues for cyber-criminals to make a profit.
Indeed, from fraud, extortion, and straight-up theft to money laundering, bribery, and even hacktivism, it’s little wonder that the industry is so highly regulated, particularly when it comes to data management and protection (regulations such as PCI DSS and the Data Protection Act 2018 set the minimum standard for data security within the financial industry).
As most will know, here in the UK, the Financial Conduct Authority (FCA) is the regulator of financial services firms and financial markets. Its role includes protecting consumers, keeping the industry stable, and promoting healthy competition between financial service providers.
Whilst the FCA does have a wide remit, one of its many functions is to promote cyber resilience, ensuring that financial firms are capable of managing cyber risks and defending themselves (and their customers’ data) against cyber-attacks.
Beyond cyber security regulation
A hot topic in the news lately, the Edinburgh Reforms of financial services have promised to deliver the next chapter of the government’s vision for UK financial services. The reforms aim to repeal burdensome pieces of retained EU law, offer a ‘smarter’ regulatory framework, and ‘seize the benefits of Brexit’. However, it’s true that the UK continues to benefit from, and will remain committed to, high quality regulatory standards – and this includes effective cyber security practices.
After all, the FCA expects the financial system to be ‘operationally resilient’, meaning financial firms have the ability to prevent, adapt and respond to – as well as recover and learn from – any type of operational disruption. It believes that ‘an operationally resilient financial system is one that can absorb shocks rather than compound them’.
Without this ability, operational disruptions (such as a successful cyber breach, for example) and the consequent unavailability of important business services can potentially cause wide-reaching harm to consumers and/or risk to market integrity. It goes without saying that, without this mandated cyber and operational resilience from the FCA, the viability of UK financial businesses would be threatened, causing instability in the entire financial system.
Still, cyber security services are more than just regulatory compliance. Whilst unquestionably important for financial services (and the UK economy as a whole) there is another side to the cyber security coin.
Looking ahead as we face economic disruption and an inevitable global recession in 2023, financial organisations with robust cyber resilience measures in place look most well placed to weather the storm – particularly in light of the increasingly digitised global economy.
Below we investigate four big business benefits of cyber security in 2023:
Meet rising expectations
From leisure and work to exercise and life admin – by 2023, many customers have already shifted from in-person financial interactions to mobile and web-based ones, particularly since the COVID-19 lockdowns made this something of a necessity for many of us.
Of course, we have been experiencing digital transformation in the financial sector for many years. It has helped streamline processes and make access to financial services easier for busy customers. More than this, financial technology (or ‘fintech’) has helped financial firms meet the demand for increased customisation and personalisation of services that today’s consumers have come to expect. Without this kind of agility and innovation in the sector, financial organisations can’t remain competitive.
Many financial institutions also rely on big data to increase this further and gain bigger market share. After all, tapping into social media, consumer databases, e-commerce trends, and news feeds can help financial firms better understand their customers and attract new ones. Still, all this data must be managed and stored somehow, which usually means turning to a cloud-based solution thanks to the speed, accessibility and scalability offered.
This means that not only do financial firms need to ensure that the cloud services they opt for are reliable (misconfiguration of cloud resources is one of the leading causes of cloud computing security incidents), but they must also be able to proactively deliver managed protection and identify and assesses vulnerabilities across their cloud network for long-term risk mitigation.
Enables flexible working
Thanks to the pandemic, more and more financial services organisations are operating remotely. Indeed, with over a quarter of UK financial services staff preferring to work from home even after lockdown restrictions were removed, it’s clear that businesses in this sector need to adapt for long-term remote working.
Of course, allowing staff to work remotely allows for better work/life balance and can be great for increasing both morale and talent acquisition/retention. However, connecting to a network remotely can be risky and requires additional cyber security measures to be put in place to make it viable. Remember, it only takes one hacked or infected device to compromise the entire network, infecting hundreds of machines and potentially accessing sensitive customer data.
For financial institutions, establishing a work-from-home program shouldn’t be left to chance and regular cyber assessments, user awareness training, and software asset management (SAM) can all help contain and mitigate the additional security threats remote work poses.
Helps build trust
It’s perhaps obvious that customers will feel safe working with financial services firms that are committed to online safety. As tech-savvy customers expect more and better digital services from financial organisations, they also expect those businesses to be able to protect the vast amount of personally identifiable information (PII) they hand over in return.
The consequences of a cyber-attack upon financial firms goes way beyond operational and regulatory repercussions, and financial business that cannot adequately manage nor contain the growing cyber threat targeting the industry risk irreparably damaging their reputation in the market.
Of course, all business sectors struggle with the current cyber security skills shortage, but financial services companies are often high-profile targets and must be particularly vigilant when it comes to cyber security. In order to to enhance and maintain cyber maturity, then, as well as offering expert risk mitigation tactics and reporting capabilities, many financial services businesses will benefit from the insights of a vCISO (a virtual Chief Information Security Officer). Always on hand to share strategic insights, meet compliance requirements, and manage cyber policies, employing a vCISO can offer firms invaluable cyber security resource and expertise right off the bat – no need for time-consuming recruitment.
Supports innovation and change
Back in 2021, the World Economic Forum (WEF), in cooperation with the National Association of Corporate Directors (NACD) and the Internet Security Association (ISA), published the Principles for Board Governance of Cyber Risk report. The report details six principles to help boards of directors with cyber risk governance, with the first principle, that ‘cybersecurity is a strategic business enabler’, underlining the inherent role of cyber security in business innovation and growth objectives.
In 2023, it is still the case that teams operating from within a strategic cyber security framework are much more likely to affect growth, innovation, and cost optimisations. However, it’s interesting to consider how we position cyber security in 2023 and whether we should think of it as something more than just a ‘business enabler’.
It’s true that strategic and considered managed cyber security enables impactful digital transformation; it allows for financial services organisations to continually challenge the status quo, adapt to changing trends, and provide added value and better digital experiences to consumers. However, much of this innovation stems from the fact that cyber security is as much an ethical consideration as it is a business one.
In an industry which has suffered from damning publicity and lost consumer faith in recent years, integrating effective cyber security because it’s the right thing to do and it protects people goes a long way toward building a better financial future for all. One that, yes, is prosperous for business, but one that is also built on different, more ethical, foundations.
Of course, the link between digital transformation and cyber security is particularly pertinent in the financial sector as financial institutions increasingly look to technology-based resolutions to the industry’s challenges. Even the recent Edinburgh Reforms build on the UK’s desire to harness the benefits of emerging technologies, including committing to shortly publish a consultation on proposals to establish a UK Central Bank Digital Currency, which could one day see Brits using a digital pound.
As regulators keep a watchful eye on cyber events in the financial sector, find out more about how Littlefish can help your business remain cyber secure in 2023 by using the ‘get in touch’ button.