Technology and data compliance go beyond not storing data publicly. It’s about maintaining a balance between the accumulation of data along with its proper documentation. Financial and wealth management firms in 2022 need to maintain a virtualized environment, encrypted data, and updated software on an ongoing basis. Keeping regulatory compliance with these practices will be essential to maintaining the firm’s reputation.
Many companies have managed to do so by relying on a third party or Managed IT Services Provider (MSP). While such an approach may be costly, in the long run it allows for a more flexible IT budget, all the while still allowing complete control over data and records. That’s what has led many firms to look for solutions that will enable them to properly keep track of their data and protect it from loss or theft.
The Pandemic and Proactive Compliance
With the rise of AI, many firms in the Financial services industry are looking forward to welcoming a more streamlined approach to compliance.
Further, targeted attacks have caused firms to be more aware of their security practices. As a result, some businesses would like to see an environment where they can use artificial intelligence to identify threats and recommend solutions without alerting the attackers.
Despite the rise of cybersecurity attacks during the pandemic, we’ve got a long way to go before financial & wealth management agencies can utilize AI in such regard. Instead, they cope by employing a proactive approach to compliance. As opposed to reactive compliance, opportunistic compliance can give firms more security than they would have otherwise.
How Firms Can Maintain Data Compliance
To begin with, financial firms need to be better at collaborating with data integrity providers.
To implement a proactive approach to compliance, wealth management firms have to partner with a trusted IT provider to develop systems in place that can offer them insights and data about the potential risk to their clients. The more details that are known about a client’s risk profile, the greater chance of knowing if additional regulations are needed.
Take GDPR compliance, for example, which is a regulation that firms need to be aware of. Firms that have been lax about their GDPR compliance may end up with a fine of millions in potential revenue.
Additionally, financial firms need to ensure their technology providers can deliver them the information they need to comply with regulations.
MSP’s should also be better at documenting their policies and processes. It makes it far easier to ensure that the firm is compliant in the present and compliant in the future. Although implementing a proactive approach to compliance can be costly, it yields better results in the long run than reactive approaches do.
Furthermore, it’s not just important that IT solution providers SAY what technology they have in place and what they do, but also have the proof of these processes in place. Distinguished MSP’s like Nerds Support are audited regularly to be considered certified under various regulatory compliance standards, such as SOC Types 1 & 2. Doing so not only builds trust between a financial firm and its MSP on a personal side, but ensures data peace of mind on the business side.
In 2022, regulators will look at financial firms and expect them to be ahead of the curve for data security and integrity. As a result, financial firms will have to rely on AI, partnering with an MSP, or other methods to maintain compliance. But many are still struggling with maintaining compliance without expensive technology.
Preventing Lost Data
Data loss can be a significant hindrance when it comes to building wealth. In some cases, data loss can result from a cyber-attack. In other cases, and more often than people think, it could also be caused by human error.
The leading cause of data loss is that firms lack the proper technology safeguards and training processes in place. So the first step in implementing such a process that will help prevent data loss is to upgrade any outdated systems, or partner with an MSP that can do it for you.
Cyber Liability Insurance
Cyber liability insurance has become an essential piece of the financial and wealth management industry’s ongoing security. Financial firms need to be aware that cyber liability insurance will provide them with peace of mind should a high-level disaster ever strike, like hurricane-caused outage or a successful social engineering scam.
However, the continued growth of the financial and wealth management industry makes it imperative for firms to stay informed about the ever-changing landscape of cyber liability insurance.
In addition, financial and wealth management firms need to know that cyber liability insurance is more than just a one-time payment. Though it may seem expensive, it will prove to be priceless when it comes to helping firms mitigate a cyber-attack or natural disaster.
Employees are part of these firms, and they have essential roles to play in their organizations. This means that they need to set up an environment to protect their sensitive data from cyberattacks while still allowing them the freedom to do their jobs, whether remotely or in the office.
The Key Takeaway
In 2022, financial and wealth management firms will need to be more proactive in taking care of their data. They need to take measures to prevent data loss, and they can do so by implementing AI technologies that can protect their firms.
Firms also need to understand that cyber liability insurance will help them with more than just funding their lawsuit; it will also help them maintain their credibility as a professional business organization.
If you found what we spoke about in this article as valuable, and are looking to advance your business’ technology strategy, or want to learn more about what our IT for Financial firms solution can do to help maintain data compliance, give Nerds Support a call or contact us for a Free Consultation!