In the last couple of years, the banking industry has seen more and more banking customers beginning to rely on digital banking tools. This phenomenon is mainly because digital banking makes it convenient for people to manage their financial lives. They pay bills, send money, shop online, and even open bank accounts or apply for loans online. During this COVID 19 pandemic, digital banking has helped consumers carry out banking tasks from the safety of their homes.

57% of consumers prefer online banking over traditional branch banking, according to the world retail banking report. During the pandemic, it has been observed that 55% of consumers now prefer using mobile banking up from 47% in the pre-pandemic era.

However, all of these raise a very important question. And that is how much of your data is protected and kept private?

When you are using digital channels, there is a transfer of personal and financial information through these digital channels. Whether you are using online or mobile banking, payment apps or your cards to make purchases online, your data is collected and stored. This data needs to be kept secure and private.

According to a 2020 study published by KPMG, 87% of consumers say data privacy is a basic human right. Also, banks have begun to notice that a solid data privacy policy is crucial to earning customer trust and loyalty. Therefore, the protection of consumer data is of paramount importance. But it is easier said than done.

Challenges faced by banks in protecting consumer data

There is immense pressure on banks and other financial institutions to be proactive in managing consumer data as they are always being targeted by cybercriminals.

There are government regulations that banks need to comply with that offer consumers some protection when it comes to how their information is tracked and used by digital banking services and financial institutions.

Also, the pace of technology change has challenged the banks in maintaining the infrastructure that routinely processes massive amounts of sensitive data and needs to constantly evolve to ensure it all remains secure.

The 2021 Data Breach Investigations Report by Verizon states that financial institutions suffer the 2nd most number of data breaches when compared to other industries. Therefore, banks need to always be at the top of their game in proactively protecting their own and their customers’ data.

How do banks ensure that their customers’ data is protected?

Data Encryption – Banks need to make certain that their systems use the highest encryption standards to protect their data. A properly developed banking app will ensure nobody will be able to see anything you’re doing on the app even if they manage to somehow intercept your data. Banks should use the latest encryption technology—Transport Layer Security (TLS) with Advanced Encryption Standard 256 (AES256).

Risk Assessment – Banks need to periodically assess the risk of their IT infrastructure. Information gathered during risk assessments can help analyze and evaluate the current level of protection for critical data as well as to detect weak spots and vulnerabilities for mitigation.

Monitor and Analyze User Activity – Banks need to monitor user actions on their network. It plays an important role in detecting suspicious events and discerning early signs of an attack in progress. AI/ML can be used for user and entity behavior analytics.

Maintain Data Integrity – Banks should enforce data-integrity checks at the machine-level, to make sure data isn’t corrupted or altered in any way while in transit or when stored. Data has to remain secure, untampered with, and stored on multiple systems to avoid total loss even if there are outages and system failures. Technologies such as packet duplication, parity, checksums, asynchronous data replication, etc. will help to achieve data integrity.

Manage 3rd party Risks – Financial institutions and banks need to closely monitor and manage 3rd party access to data. Their access to critical data should be limited. Also, banks need to ensure that 3rd parties comply with the same cybersecurity standards and regulations as the bank.

Manage Access to Critical Assets – Banks and financial institutions should safeguard against malicious attacks by using firewalls to ensure only authorized applications can access critical assets. Technologies such as Intrusion Prevention Systems/Intrusion Detection Systems (IPS/IDS) need to be applied. Banks need to enforce multi-factor authentication. Measures should be taken to prevent Denial of Service (DoS) attacks so that a customer’s access to their banking services is not interrupted.

Establish a Cybersecurity Policy – Governments are very actively engaged in setting and implementing standards for security, which include things like PCI-DSS (the standard for the payment card industry), SOC2, ISO27001, ISO9001, ITIL, etc. all of which banks need to comply with to operate. Therefore, banks and financial institutions must implement a cybersecurity policy that contains all the requirements the bank should meet, all the practices they intend to implement, and all the tools that they intend to use for cybersecurity. Also, the policy must be periodically revised to keep its requirements and recommendations up to date.

Data Analytics for cyber security

Cyber criminals are getting advanced day by day. They have already started utilizing AI-powered systems that are capable of running malware and installing trojans in real-time. These complex security challenges require more insights about what’s happening inside the system.
These insights can help security experts to prevent potential attacks before a cybercriminal finds an opening that he can exploit.

Banks need a data-driven approach to stay one step ahead of all cyber threats. There are various data sources including application logs, server logs, and intrusion detection systems that hold large amounts of data. Advanced analytical techniques are required to analyze this data, current and historical. Machine learning algorithms can be deployed to study and predict the threat patterns. These algorithms can automatically tally the information to find a vulnerability pattern.

Data Analytics can also help monitor the large set of activities of users in order to keep threats away. Banks can use data from a range of monitoring tools such as Nagios Core, Splunk, OSSEC etc. for reducing data breaches and for speeding up the recovery process. Data analytics can help with root cause analysis as well.

Data Analytics for Cyber Security can really strengthen the ability of financial organizations to deal with attacks and data breaches. Big Data Analytics can facilitate better detection, monitoring, and risk management.

Financial institutions need to be proactive and follow the cyber security guidelines to provide their customers with the highest level of security while giving them a modern digital banking experience. Digital banking is here to stay and the 5G revolution will further accelerate the digitization of the world. The more banks and financial institutions do to stay ahead of the curve, the more they will ensure consumer loyalty and more new customers.

 

Krishnan Jayaraman