Jul 20 2023

The Top 3 Cloud Security Challenges in Financial Services and How to Address Them

Banks should consider these steps to protect against ransomware, phishing and to comply with regulatory standards.

Financial services organizations face unique challenges securing their data and applications in the cloud, but resisting cloud migration is no longer a viable business decision. As more banks and other enterprises migrate to the cloud, they must ensure that they are protected from security risks that come with the transition.

Cybersecurity risks continue to grow within the financial services sector. Bank Director’s 2023 Risk Survey found that 83 percent of banking leaders said their concerns about cybersecurity have increased in the past year. Further, 70 percent said their concerns about compliance with regulations have increased.

These issues become even more pressing in a cloud computing environment, where banks are handing data and applications over to a service provider. As they seek to address their top cloud security challenges — including ransomware, phishing and compliance — IT and business leaders in the financial services sector should keep several important steps in mind.

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Ransomware: Protecting Critical Data Assets

Ransomware attacks rank among the top concerns for financial institutions, especially as they become more sophisticated.

“Many ransomware variants now encrypt files, delete the original, unencrypted file, then create a new encrypted file, rendering traditional version-controlled backup processes ineffective in the process of recovering from ransomware,” says Andras Cser, vice president and principal analyst with Forrester.

To safeguard their valuable data, financial services providers should employ robust security measures. Security experts advise using multifactor authentication to enhance access controls, employing end-to-end encryption to protect sensitive data during transmission and storage, and implementing strict backup and recovery measures to minimize the risk of data compromise.

EXPLORE: Learn how zero-trust architecture can improve data protection.

Phishing: Bolstering User Awareness and Protection

Social engineering attacks, particularly phishing, continue to exploit a common vulnerability within an organization's cybersecurity defenses: its users. Financial services companies are no exception to this threat. Countering phishing attacks requires financial institutions to adopt a multipronged approach. “Annual user education and certification and using browser alerts, secure web gateways and cloud access security brokers remain the most important defenses,” Cser says.

Implementing robust email security tools also can help filter out suspicious emails and identify potential phishing attempts. Conducting regular user training programs that educate employees about the dangers of phishing, how to recognize common tactics and what actions to take to prevent falling victim to such attacks is crucial. By enhancing user awareness and strengthening email security, financial services firms can significantly reduce the risk of phishing.

DISCOVER: CDW's cybersecurity solutions help secure your financial institutions.

Compliance: Navigating the Regulatory Landscape

Financial institutions face rigid regulatory standards that govern their operations. Compliance is vital to avoid legal penalties and reputational damage. While meeting standards such as Sarbanes-Oxley and following guidance from the National Institute of Standards and Technology can be a challenge initially, Cser says, they offer a critical map to enhanced security. “Compliance mandates contain key requirements for data protection (encryption and access rights management), identity management (zero trust and least privilege), and logging/auditing (log aggregation, analysis, etc.),” he says.

Andras Cser
Annual user education and certification and using browser alerts, secure web gateways and cloud access security brokers remain the most important defenses.”

Andras Cser Vice President and Principal Analyst, Forrester

Governance, risk and compliance software platforms can help financial service providers navigate the complex compliance landscape. These platforms offer centralized visibility and control with tools that manage policies, assess risk and control user access, enabling organizations to monitor and manage compliance requirements effectively. Incorporating a GRC platform into a cybersecurity plan demonstrates a commitment to upholding robust security measures.

Financial institutions especially must take inventory of their cybersecurity measures and create a plan to address the risks. As McKinsey advises in a 2022 report, “To achieve a secure work environment, you need to know what technology you have, what and who it is talking to, and then watch it like a hawk. Vigilance is key.”

By proactively addressing these security challenges, financial services providers can confidently embrace the benefits of cloud services while ensuring the protection of their data and maintaining compliance with industry regulations.

MORE FROM BIZTECH: Learn how cloud security can support your financial institution.

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