Data Security Regulations for Financial Data

By: Tom Banta on September 1, 2020

The financial services industry faces some of the most stringent data security compliance regulations. Given that these companies routinely handle sensitive customer data that is uniquely vulnerable to fraud, the extra scrutiny should come as no surprise. Cybercriminals routinely target the financial services industry not only because they’re more likely to find credit card and banking information, but also because the interconnected nature of the industry gives it a very broad attack surface with multiple points of vulnerability.

Data Security and Financial Services

Unfortunately, 35 percent of all data breaches involve the financial services industry, making it the most-breached sector when it comes to cyberattacks. There are three main types of cyberthreat these organizations typically confront.

Web Application Attacks

Many financial institutions rely on web applications to promote and deliver their services as well as connect to back-end databases filled with sensitive information. Since many of these applications are hosted in the cloud as software-as-a-service (SaaS) tools, they can be quite vulnerable to a targeted attack (such as cross-site scripting or SQL injections).

Distributed Denial of Service (DDoS) Attacks

One of the simplest and most deadly forms of cyberattack, DDoS attacks turn network architecture against itself by bombarding servers with data packets requesting access until they finally crash. Not only do DDoS attacks result in system downtime, but they can also disrupt network workflows and leave data vulnerable to attackers standing by to exploit vulnerabilities.

Insider Threat

While the term “insider threat” often conjures up images of a disgruntled employee or a slick corporate spy, it typically involves simple carelessness or other mistakes. Phishing scams that trick employees into clicking on malicious links or downloading files can introduce malware into a system that attackers can then use to execute crippling ransomware attacks. Poorly designed data security and management controls could also inadvertently expose an organization to substantial insider threat.

Key Data Compliance Standards

Financial services organizations are typically required to comply with a range of compliance standards to ensure they have the proper controls and processes in place to mitigate risk and protect customer data.

SOC 1 and SOC 2 Attestations

A SOC (system and organization controls) report details a broad range of security processes designed to meet specific Trust Services Criteria (TSA) of the AICPA. For financial institutions, SOC 1 reports are often needed to demonstrate that the organization’s controls governing a client’s financial reporting are capable of safeguarding the associated financial data. A SOC 2 report covers broader data security controls and management, although the exact scope of the report can vary depending upon the organization and industry. In any case, SOC reports are especially important for vendor relationships since organizations are legally accountable for the security practices of any contractor they entrust with customer data.

ISO/IEC 27001:2013

One of the more comprehensive and critical compliance standards, ISO 27001 evaluates risk to information assets (such as data, IT systems, or intellectual property) and whether or not an organization’s policies and procedures are sufficient to preserve the Confidentiality, Integrity, and Availability (C, I, & A) of data. Since many financial services organizations (especially banks) manage data on their own infrastructure or equipment, ISO 27001 certification is typically necessary to demonstrate that they have done everything in their power to identify and mitigate potential risks to customer data.

PCI DSS 3.2

Any financial services organization that handles credit card information needs to comply with some aspects of PCI DSS 3.2, the credit card industry’s security and risk management standards. With twelve general data security requirements and another 200 sub-requirements that fall under six broad categories, the standard ensures that processing systems are capable of preventing, detecting, and responding to cyberattacks that could lead to exposure of a customer's card and account information.

How to Protect Your Financial Data

One of the best ways for financial organizations to protect sensitive customer data is to build their network within the secure environment of a colocation data center. While the burden of meeting compliance standards still falls squarely upon the company itself, data centers provide a highly secure, and fully compliant, infrastructure for those network systems. This is often a welcome relief for financial services companies that have long relied upon their own on-premises data solution.

Colocation data centers also deliver a high level of uptime reliability that ensures customers will always be able to access their financial data when they need it most. The robust and highly secure connectivity options available within a carrier-neutral data center also makes it possible to better protect network systems from common forms of cyberattack. vXchnge’s vX\defend solution, for instance, is a powerful DDoS mitigation service that leverages blended connectivity to ensure that data can be rerouted in the event that a single provider suffers a DDoS attack.

The highly secure nature of data centers also helps to protect them from the problems associated with insider threat. Access control can be strictly limited to prevent unauthorized persons from exposing data to potential threats. With direct cloud on-ramps, it’s also easy to set up zero-trust network access (ZTNA) to provide even better security for the remote workplace. This helps to minimize the threat of phishing attacks that so often spread through networks that lack zero trust protocols to prohibit lateral movement within the system.

Secure Your Financial Data with vXchnge

With multiple colocation facilities located in key growth regions throughout the country, vXchnge helps financial organizations to penetrate new markets and deliver services to underserved customers. Our data centers are engineered for perfection to meet the exacting standards of the financial services industry. Thanks to our award-winning in\site intelligent monitoring platform, colocation customers can manage every aspect of their deployment remotely without having to set a foot inside the data center.

To learn more about our innovative colocation services for the financial services industry, contact one of our data center experts today.

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