Finance Data Security: Guide to Securing Financial Information

What is finance data security?

Finance data security refers to the tools and practices involved in protecting a financial organization’s data from unauthorized access. It's essential for these organizations to keep sensitive data secure to prevent cybercrime.

The CIA triad: core elements of data security

The CIA triad refers to three essential components of data security: confidentiality, integrity, and availability. Confidentiality is about protecting data from unauthorized access, while integrity means making sure that data hasn’t been changed by an unauthorized user. Availability refers to keeping data accessible for authorized users whenever it’s needed.

Types of financial data

Opportunistic cybercriminals often attempt to infiltrate financial systems to get ahold of payment information and other data that can be used to steal money. There are several types of data that financial companies must protect from unauthorized access, including:

• Client data: Over the past 20 years, the financial sector has suffered around $12 billion in losses from over 20,000 cyber attacks. Cybercriminals are constantly going after information related to finances, so financial companies must prioritize securing client data.
• Transactional data: This includes purchase details as well as personal and financial information belonging to buyers or sellers, collected at the point of purchase.
• Accounting data: Shows the history of a company's profits and losses. This is often sensitive information that shouldn’t be shared with any unauthorized parties.
• Financial statements: Documents that include important financial information to help companies make budgetary decisions.
• Payroll data: Includes information on employees’ wages and banking information.
• Tax data: Tax returns and payment records include sensitive data that should only be reviewed by authorized staff and tax officials.

Common financial data security measures

Read on for some foundational data security measures financial companies can implement to protect sensitive information.

Strong encryption

Encryption scrambles data for unauthorized users, protecting it from bad actors. To keep financial data safe, it’s recommended to adhere to the U.S. government standard of 256-bit encryption.

Rigorous access controls

It’s important for financial organizations to make sure that only necessary team members have access to sensitive information. Limiting access to data can help protect against breaches because it limits the number of accounts that hackers can use to steal sensitive information.

Secure password policies

Establishing strong passwords can protect against cybercriminals who try breaking into accounts with brute force tactics or password guessing attacks. It’s best to have policies in place that set criteria for the length and complexity of passwords. Make sure to have staff change passwords regularly based on these criteria.

Security audits

Regular security audits and penetration testing will identify security weak points, empowering organizations to make improvements that stop cyber attacks.

Regulatory compliance

Complying with federal and state data security laws helps financial organizations avoid fines and protect customer data. In the next section, we’ll outline some of the most important regulations.

Finance data security laws and regulations

There are several federal and state laws in place to ensure that sensitive financial data is protected. Here are few financial data regulations:

The Gramm-Leach-Bliley Act (GLBA)

The GLBA requires that financial institutions such as banks and insurance providers explain how they share information and protect sensitive data. The Act establishes technical requirements for how these organizations must maintain data security, such as criteria for encryption and access controls.

The Payment Card Industry Data Security Standard (PCI DSS)

PCI DSS establishes data security standards for organizations that collect and store data from credit and debit cards. The standard was developed to make sure customers can confidently complete digital transactions without concern that their financial information could be at risk for theft.

The Sarbanes-Oxley Act (SOX)

SOX is aimed at improving the reliability of financial statements from publicly owned companies, but it also regulates how data is stored and secured. According to SOX, public companies must protect data with 256-bit encryption.

Securities and Exchange Commission (SEC) rules

The SEC of the U.S. government sets forth a number of rules to protect investors and prevent fraud. Several of these touch on finance data security, such as a rule that states companies must have written policies that explain how customer data is protected. Other SEC rules set forth criteria for how to safely maintain electronic records.

Best practices for financial data protection

To protect sensitive financial data, there are a number of best practices businesses should follow, including:

Monitor financial activity for anomalies

Regularly check bank statements and credit reports for any unapproved transactions. This could be a sign that bad actors have gained access to your company’s payment information.

Maintain audit trails

Audit trails show who has had access to an organization’s data, when the access occurred, and what changes were made. By ensuring that all instances of data access are trackable, companies can more easily detect fraud and suspicious activity. Audit trails also demonstrate to stakeholders and external parties that data is actively monitored and kept secure.

Uphold secure data management practices

Staff should receive regular training on business practices that uphold financial data security. This includes being aware of phishing threats to avoid, creating strong passwords, updating password frequently, and understanding how to manage financial data without putting it at risk.

Invest in data security

Companies can’t uphold an effective data security strategy without the right tools. It’s important to protect financial data with strong security solutions that use 256-bit encryption for files in storage and in transit.

Use cloud-based services

Cloud-based services offer more protection than systems that operate and store data on hardware. Creating physical copies of data is risky because devices can be misplaced or stolen. Instead, store encrypted data in the cloud for enhanced security.

Choose trustworthy vendors

A company should always make sure any vendors that have access to financial information are reliable and trustworthy. Reputable vendors will follow proper protocol to safeguard financial information that they store and access. They will also agree to using secure payment methods to do business.

Future trends in financial data security

Cybercrime is projected to surge in the coming years, costing companies a projected $13.82 trillion worldwide by 2028. To protect client data, financial businesses will have to adopt new technologies that support a robust security strategy. Some financial data security trends to anticipate include:

• More companies will leverage AI to counter cyber attacks: As cyber threats evolve, more companies will use AI to identify patterns of attacks and help protect against breaches in real time.
• Increased investment in supply chain security: To ensure hackers aren’t able to access a company’s systems through its vendors, more businesses will start investing in supply chain security. This includes conducting data security risk assessments for vendors and adding explicit security requirements to supplier contracts.
• Greater adoption of cloud-based technologies: While many companies have already adopted cloud-based systems, the prevalence of these platforms will continue to grow along with cybercrime rates.
• Secure file-sharing platforms will gain popularity: Collaboration is key, and with cybersecurity threats on the rise, having secure platforms that make it easy to share information is essential. Moving forward, more companies will invest in file-sharing platforms that combine security and functionality.

Related Read: Great security doesn't have to get in the way of a great user experience

Protect financial data with a strong security solution

Cybercrime is a serious threat facing every industry, particularly those that deal with sensitive financial data. Finance companies should invest in strong security solutions and train staff to safeguard this sensitive data.

Professionals in the finance industry should also be familiar with standard practices for upholding data security as well as data security laws and regulations. By understanding these essential topics and following best practices for financial data protection, financial businesses can prevent data breaches and work confidently without compromising highly sensitive information.