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Financial institutions, from banks to insurance providers, are obligated to safeguard access, management, and sharing of both financial and personal data. They must preserve the confidentiality of non-public information and comply with regulations such as the GDPR, CCPA, GLBA, and other similar laws. Navigating these regulatory landscapes can be challenging, potentially impacting an organization’s competitive edge. Furthermore, any security breaches pose a substantial risk, both financially and in terms of reputation, to these institutions. 

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Financial Services

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Challenges

High Volume of Cyberattacks

The financial services industry has seen a dramatic rise in cyber security incidents over recent years. In 2023, the United States financial sector experienced 744 data breaches, a significant increase from just 138 incidents in 2020. This surge places the industry as the second most frequently targeted sector for cyberattacks leading to data compromises, highlighting its growing vulnerability to evolving threats.  

Stringent Regulations

Financial companies are tasked with robust data governance to comply with complex regulations designed to prevent fraud and insider trading. A key aspect of this governance is ensuring the confidentiality of sensitive information such as earnings reports, a vital step in preventing market manipulation. Additionally, data governance policies are crucial in safeguarding against conflicts of interest, such as ensuring that employees do not misuse personal client information for personal investment gains. 

Insider Threats and Fraud Prevention

With the amount of money handled, the financial and insurance industry is a prime target for insider threats, where employees or contractors may be tempted to misuse or steal data for financial gain. Types of sensitive data under threat include financial records, CRM data, strategic business plans and private employee records. Insider threats can be very sophisticated and difficult to detect, causing organizational data and integrity to be compromised.  

Exchange of customer data with vendors/service provider network (set up for encryption/data in motion and at rest)

In a report by SecurityScorecard, 78% of financial institutions experienced a third-party data breach in the past year. The staggering figure highlights the inherent risks in the widespread practice of data sharing within the financial sector. Sharing sensitive customer data across a diverse network of agents, brokers, partner banks, and service providers, each with their own security protocols, creates intricate access management challenges. Different stakeholders require varying levels of access, complicating compliance with multiple security standards and regulations.  

Safeguarding Confidential Data in Financial Services

To overcome the challenges surrounding cyberattacks, regulations, insider threats and third-party data sharing, financial companies need to protect the access, handling, and disclosure of data to maintain the confidentiality of non-public information and to prevent data loss. A comprehensive and proactive approach to data security must contain the following elements: 

Centralized Policy Platform + Centralized Audit

A unified policy management and data governance system forms the bedrock of effective internal controls. By centrally managing business, security and compliance needs as attribute-based policies, financial institutions can streamline their data governance, ensuring consistent application of policies across all organizations and data types.  

Automation and Prevention

Automating access control and data protection helps enable preventative Segregation of Duties (SoD) controls. Instead of detecting and mitigation violations after they happened, real-time policy enforcement can automatically prevent conflicts of interest or inappropriate access from happening in the first place.  

Data-Centric Security Enforcement

Enforcing data-centric security policies in real time is crucial for implementing “need-to-know” access. Policy enforcement enables controls like dynamic data masking, which obfuscates sensitive data with modified content. This ensures that critical fields, such as client account details and transaction histories, remain accessible solely to authorized individuals. It also enables Attribute-based Access Control, which helps to manage complex access requirements and maintain data confidentiality in third-party data sharing.  

Centralized monitoring

Centralized monitoring serves as a key component in the fraud prevention and risk management strategy of financial institutions. By monitoring and logging of all data access activities in real time, organizations are better positioned to identify suspicious and anomalous behaviors. A centralized activity log also facilitates accurate and simplified audit and compliance reporting.  

Challenges

Complex Regulatory Environment

Global financial and insurance enterprises are required to maintain compliance with a variety of regulations, which require organizations to track,  control access, and audit to sensitive data, including PII, non-public information, and private financial records.

Regulations Include

  • Sarbanes-Oxley (SOX) Act 
  • Basel III 
  • Regulatory agencies such as the SEC  
  • Equity Exchanges such as the NYSE 

Insider Threats

With the amount of money handled, the financial & insurance industries are a prime target for insider threats, where employees or contractors may be tempted to misuse or steal data for financial gain. Attacks can be very sophisticated and difficult to detect.

Sensitive data under threat includes

  • Financial Records 
  • Customer Relationship Management (CRM) Databases 
  • Strategic Business Plans  
  • Private Employee Records  

Complex Access Requirement

Driven by agency collaborations and clientele needs, financial and insurance companies are adopting front-end user portals to all their backend applications. This creates the challenge of managing complex access requirements while providing a seamless user experience.

Data Breach Risks in User Portals

User portals are especially vulnerable to breaches as they contain sensitive information. In 2018, a data breach occurred in a portal used for the Affordable Care Act’s federal insurance marketplace, compromising the personal and credit information of about 75,000 consumers. 

Safeguarding Confidential Data in Financial Services

To overcome the challenges surrounding regulations and insider threats, financial companies need to protect the access, handling, and disclosure of data to maintain the confidentiality of non-public information and to prevent data loss. A comprehensive and proactive approach to data security must contain the following elements: 

Fine-Grained Data Access Control

Policies that cover data classification, access controls, data retention, and data breach response, while remaining up-to-date and effective.

Protect Data Throughout Lifecycle

An approach that ensures data is persistently protected throughout its lifecycle, from creation to disposal enabling financial companies to protect their sensitive data against insider threats.

Continuous Monitoring of Data Access

Financial companies must have real-time visibility into their data and network activity to identify potential threats. Monitoring and data access activities helps expose security vulnerabilities to be addressed and prevent breaches before they happen.

Compliance Auditing

Compliance audits should cover data security policies, data access controls, data handling procedures, and employee training. By regularly auditing their data security practices, organizations can identify and address vulnerabilities in their security controls.

Automate & Prevent

By automating the enforcement of data security policies, enterprises can mitigate security risks, reduce compliance costs and enhance preventive controls, effectively stopping breaches before they materialize.

NextLabs Solution

Robust Data-Security Policies

NextLabs’ unified policy management platform, CloudAz, enables companies to create and implement data security policies that are enforced dynamically at that time of access request. The policies can apply the regulatory controls applicable to the user, data, and environment in real-time.

Data-Centric Security

NextLabs solutions provide data-centric security controls that protect sensitive data at all times, regardless of its location. These solutions can encrypt data at rest and in transit, control data access based on policies, and apply dynamic data masking to protect sensitive data. Companies can define and enforce granular data access policies based on user roles, locations, and devices.

Centralized Real-Time Monitoring

CloudAz’s centralized monitoring provides real-time visibility into data activity and events. This allows organizations to monitor data access and data usage to detect potential security incidents. CloudAz can provide alerts based on security policies, enabling rapid response to security incidents.

Smart Audit and Report

CloudAz provides centralized auditing and reporting capabilities that enable companies to demonstrate compliance and ensure the integrity of their data security policies. Compliance reports can include data access, data handling, policy enforcement, and insights into potential security gaps.

Automation with Preventative Controls

With dynamic authorization and ABAC, the NextLabs platform automates the enforcement of data access policies, improving data security by reflecting changes in attribute values immediately and reducing the cost of policy management. This allows enterprises to reduce the operational expenses of R&D and COGS as well as decreases the time to market.

NextLabs Solution

CloudAz Centralized Policy Platform

NextLabs’ unified policy management platform, CloudAz, enables companies to author and centrally manage security policies that are enforced dynamically in real-time. It offers simplified policy authoring with business-friendly policy language, preserving policy integrity with approval workflows and version control. This streamlines the management of complex data protection requirements for chemical companies, protecting sensitive data anywhere and everywhere.  

CloudAz Dynamic Authorization Policy Engine

When a subject requests access to sensitive information on controlled substances, CloudAz’s Dynamic Authorization policy engine evaluates security policies and real-time attributes to make the authorization decision. This enables consistent policy enforcement across multiple applications, automatically preventing unauthorized disclosure of sensitive information, which is key to maintaining compliance and trust with employees, regulators, investors, and the public. 

SkyDRM Digital Rights Management

SkyDRM is an enforcer and DRM solution that enables secure collaboration among multiple vendors and supply chain partners. Users can apply digital rights like View, Edit, Print, and more, to files shared with external personnel. This ensures that sensitive data remains protected in cases where a network is comprised. Even when files are downloaded by subcontractors, SkyDRM enforces controls over what actions they can perform with the data. 

DAE Dynamic Data Masking

DAE (Data Access Enforcer) helps companies manage IP protection within the complex network of global collaborations, obfuscating the value of sensitive data in unauthorized fields. Centrally managed policies define masking patterns and rules to determine who, what, when, where, and why to mask field(s) in real-time. This secures sensitive information such as chemical formulas and methods shared among internal teams and external business partners. 

CloudAz Report Server

CloudAz’s centralized monitoring provides real-time visibility into data activity and events, enabling organizations to vigilantly monitor data access and usage, especially regarding potential security incidents involving privileged users. CloudAz helps identify anomalies and provide alerts when it comes to risky behavior. It addresses not only malicious data misuse, but also mitigates risks associated with human error and lack of awareness among insiders.  

NextLabs Resources