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Financial cloud Industry Digitizing with the Cloud

Financial Cloud for the Financial Services Industry

Cloud for Financial Services Industry

Financial cloud services is an evermore popular topic these days, especially with the rising necessity of remote work options. Financial services organizations are moving to the cloud for a competitive advantage, advanced security and the potential for innovation. The global finance cloud market was valued at more than $15 billion in 2018 and is expected to reach about $55 billion by 2024, according to report by Mordor Intelligence.

One of the driving factors in cloud finance is operational efficiency. Moreover, by using the cloud, companies are able to offer end-to-end loan processing in record time, surpassing finance industry benchmarks.

Finance and asset management is undergoing a radical transformation. Four out of five organizations that participated in a Bizagi report say that providing a better customer experience that can respond to customer needs enables competitive advantage.

Digital Transformation

Companies continue to explore the cloud for financial services and its benefits. Additionally, cloud software provides companies the ability to focus on revenue and wealth management, while maintaining customer relations.

CSPs arose as a leaders in the digital transformation of various industries. These industries like retail and distribution represent sectors with medium to low regulatory oversight. This reduces some of the complexities associated with implementation.

However, adopting the cloud for highly regulated industries like banks, insurance and healthcare companies did not follow this trend. CSPs lacked the maturity to meet financial organizations’ regulatory and compliance requirements. But this has changed in recent years, with cloud adoption increasing within the industry according to a Gartner study.

Both the banking and insurance industries are adopting cloud services. The study also states that by 2020, 36 percent of institutions will use the cloud to support more than half of their transactional systems of record.

Regulations and Standards

The entry way to the cloud does have its challenges and it’s important to understand the full picture. Those who work in an industry as heavily regulated as that of financial services don’t need  reminders of their importance. There’s an expectation that Financial services organizations protect sensitive data and are subject to strict data security requirements. Data protection, business continuity, data privacy are considered when outsourcing their infrastructure over to a cloud service provider.

Financial services are among the most regulated industries with regards to data privacy and security. There’s a long list of regulations that include: PCI, DSS, GLBA, GDPR, Dodd-Frank, FFIEC, SOX and the USA Patriot Act.

Reluctance to Adopt the Cloud

With 71 percent of financial service businesses agreeing that digital transformation needs to happen fast in order to prevent commercial failure, what problems stop these companies from committing to the cloud?

In a survey released in March 2015, the majority of participants cited data security as their primary concern, with application development and testing being their primary desire of utilizing the cloud.Financial Industry Respondents Statistics on Digitizing with the Cloud

Reasons to Adopt the Financial Cloud

Despite those concerns, the reality is financial cloud security is actually an upgrade, and actually deter or remove any potential risks to data. A cloud provider uses top grade security features and a team of highly skilled systems engineers that monitor suspicious activity around-the-clock. Cloud service providers (CSP) , like our IT Support for Financial firms also implement automated backups every day to reduce risk of data loss in case of a breach. The cloud is better than traditional systems with security. Using pattern matching technology to recognize anomalies when they appear, cloud providers prevent risks rather than create it.

CSPs are extremely secure and have redundancies in place. Regardless, it’s up to each financial institution to understand what they are buying from a CSP, the type of risks associated with the service provided, and the regulatory requirements. For example, depending on the importance of a FI’s service and the sensitivity of their data, the FI can choose the level of encryption. Passwords and encryption keys can be managed in various ways; some CSPs, like Nerds Support, offer additional services like “security as a service.”

Some CSP’s, like Nerds Support, take the added step of achieving compliance with HIPAA and PCI DSS regulations. In doing so they show the capacity to meet stringent security requirements, enabling customers to leverage security capabilities to meet these compliance requirements.

A Customized Cloud

Financial institution need to assess all the risks involved in their processes. Some of those tasks cannot be outsourced. That’s why the financial organization goes through a strict evaluation and assessment of the provider to ensure the quality of service is guaranteed as promised when choosing a provider.

The greatest risk for any organization, however, is not being ready to implement a digital transformation. Larger organizations face internal resistance. There is a resistance to change that plagues both large and small companies.

As more and more companies adopt cloud solutions, however, those in the financial services industry are looking to implement the cloud themselves to keep up. The need to incorporate on demand, easy-to-use services to meet ever changing customer expectation.

The skepticism by financial institutions is understandable. However, they were using Amazon Web Services which is a public cloud provider. There are CSP’s that cater to mid-market businesses and offer personalized services to their partners in the financial services industry. These types of services are more characteristic of private or hybrid clouds.

For example, CSP systems engineers at Nerds Support take the time to evaluate their partners’ current IT infrastructure through an extensive consultation process, rather than pushing a one-size-fits-all cloud service.

Things to Consider

The point here is that CSP’s are not all the same. They vary in the services they provide and how the go about implementing the cloud itself.
When adopting a cloud strategy, financial services decision makers should watch out for:

• Cloud providers that are unwilling to use compliance and up-to-date security to improve and personalize their service.
• Cloud providers that lack the financial services expertise necessary to maintain compliance and regulation standards.
• Make sure that your cloud contract states you keep ownership over all your data.

Customer Support is Important

In the early years of cloud computing, customer support was a huge issue for users. Users plagued by poor response times, inexperienced technicians and overall poor customer experience. Since then, CSP’s have taken great strides in improving support. Cloud technology has been around long enough to better implement through industries that benefit.

If you need a rapid response to client issues, make sure that your cloud services provider has options available for technical support. These options should include phone consultations, email and user training.

The reason to emphasize this point is because a CSP partnership is one that works best when it’s long term. Choosing a cloud provider that dissatisfies means going through the grueling process of migrating from one account partner to another. The problem is, many of these applications don’t easily transfer to other systems.

What are you waiting for?

It’s time for the financial services industry to leverage financial cloud to improve productivity, security and service. The opportunities and capabilities are there. For more information on  financial cloud services, call us at (305) 551-2009 or contact us with the button below.

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How Financial Services Keep Data Safe On The Cloud

If you’d like to read more about how financial companies are using the cloud to innovate, click here.

A 2019 Global Wealth Study by Boston Consulting group reported financial services firms are hit by cyberattacks 300 times more than other companies. Financial institutions have a lot of sensitive data cybercriminals can monetize if accessed. That is why the financial services industry is so heavily regulated .

The US has experienced huge breaches of consumer data the last few years. The most famous example in recent memory is the Financial Technology, or FinTech, company Equifax. They experienced a data breach in 2017. The breach compromised the personal financial information and social security numbers of more than 146 million people.

FinTech gives consumers access to mobile banking, personal financial data and other services. However, since FinTech is so recent, it doesn’t have a regulatory framework yet. In the US, for example, in the mobile payment industry there are eight federal agencies with minor oversight over finance. Moreover, all 50 states have their own rules. It’s a very different story for Financial organizations and as we’ve seen above, for good reason.

As we’ve seen, lacking a regulatory framework impacts more than just a financial firm. It puts consumers at risk. In the financial industry, achieving regulatory compliance should be the focus for financial institutions big and small.

Cloud Security and Compliance

For a financial firm, credibility is everything. No organization wants to be fined, shamed or, worst of all, left behind by clients. Therefore, firms need to understand the challenges ahead to achieve compliance. Compliance is one of the biggest reasons financial firms are skeptical about engaging in a cloud strategy. However, once you understand how compliance is achieved in the cloud, the transition won’t seem so daunting.

Cyber Threats

As mentioned above, cyber security threats are sophisticated and aimed at getting your firm’s information. Hackers use a variety of methods to compromise your infrastructure for financial gain.  You can’t discuss cloud compliance without mentioning cloud security. As the workforce becomes increasingly mobile it gets easier to attack organizations operating on insecure networks. As a result ransomware is the most common attacks and is now a $2 billion- per-year industry.

One important thing to keep in mind

One of the main concerns that come up when considering financial cloud compliance is that customers don’t manage their own IT infrastructure.

That’s why it’s important to stress the fact that cloud compliance is a two way street. Managed IT service providers have a contractual obligation to their clients but clients must rely on best practices and regulations to look out for their interests as well.  In other words, a specific provider, be SaaS or HaaS will offer certain compliance and security features, but it’s up to the client to responsibly implement those features. With that said, we move on to the features themselves.

FinTech Compliance Cloud Computing Statistics

What’s Covered by a Financial Cloud provider?

It depends. Since the every cloud provider differs in their services and the way they present information, CPA’s and financial companies should review each cloud option carefully. That means choosing the appropriate cloud provider. Like shoes, cloud providers are not a one-size-fits-all.

Things to look out for when choosing a cloud provider:

1) What data will be stored in the cloud and what will remain in house. Why?

2) Where the data will be stored. Some providers don’t give you this information.

3) Service Level Agreement (SLA). Due to the compliance and regulations standards in the financial services industry, your firm might have to carefully review the types of services the provider offers and which align with your needs.

4) Encrypting Data. Keeping with compliance standards means encrypting sensitive data to protect it.

5) Systems & access controls. Data security is a big compliance mandate. You should know who at your firm has access to what data and what your cloud provider has access to as well.

Regulations and Guidelines

The important thing is that a firm become aware of the regulatory policies and procedures it’s expected to comply with. The Financial Cloud provider should have documentary records of how they plan to meet compliance in the cloud.

The GLBA ( Gramm- Leach- Bliley Act) and the SOX (Sarbanes- Oxley) Act are two main pieces of legislation that deal with the storage and maintenance of information within a financial institution. Therefore, to help with compliance a cloud provider should share information and supply your firm with access to necessary documentation.

Nerds Support’s white paper on compliance details SOX compliance and regulations.

Conclusion

Whether your firm chooses a private cloud or public cloud, compliance guidelines must be met to ensure optimal security. Cloud service providers and financial organizations should continue to improve their processes. Otherwise, your organization will be penalized or even breached. The data migrated from a firm to the cloud is valuable and entrusted to you by your clients. And when you mishandle that data, you run the risk of losing everything.

Texas Ransomware Cyber Attack

Ransomware Attacks & Financial Firms

Ransomware Attack On Texas

Tuesday, August 20, 2019 a ransomware attack took place in 22 municipalities in Texas. Computer systems were hacked and held for ransom in a widespread ransomware strike. The cities of Borger and Keene were among those affected. Borger residents couldn’t access birth certificates or pay their utility bills.

Ransomware attacks are a growing problem for governments on a city, state and county level, according to a report by the Cybersecurity and Infrastructure Security Agency (CISA). The type of ransomware was not revealed and no state networks were breached in the attack according to Texas officials.

What is known is that the ransomware came from a single source.

Ransomware

Ransomware is the most common tactic used by cyber criminals because it’s relatively simple to execute and it’s cheap.

This has led to a rise in ransomware attacks since 2017 and most victims are small cities and counties. These cities are perfect because they often have underfunded IT staff and are therefore most vulnerable.

The same reasons that make these places so vulnerable to attack make financial firms vulnerable as well.

Cyber criminals are leveraging ransomware attacks to steal from industries of all kinds, but financial services firms are among the most lucrative.

Here are the reasons why:

  1. They store valuable, sensitive and confidential data that can be sold on the dark web or to a competitor.
  2. They usually have significant amounts of money available. This making them more likely to pay a ransom to get back encrypted data if there’s substantial downtime.
  3. Their IT security is believed to be lacking and inefficient, especially within smaller banks and credit unions.

The Looming Threat of Ransomware Statistics

Ways to Avoid Ransomware & Cyber Traps

Effectively combating ransomware requires implementing technical and cultural measures. This includes:

Training

Ransomware attacks are perpetrated through an email containing an infected link or attached document. Knowing what to look for is half the battle and greatly reduces the chances of falling victim to these attacks.

Here are some telltale signs of a ransomware attack:

  • There are glaring grammar and spelling errors in an ostensibly professional email.
  • You receive an email at odd hours of the day or night.
  • If the link attached to the email connects to an unusual URL. Hover your cursor over the link to check the URL.

Now more than ever it’s important to address this concern. Cyber-attacks affect financial services 300 times more than other companies, according to a report from Boston Consulting Group (BCG). Despite this, BCG found that many financial institutions are poorly equipped to respond effectively to a ransomware attack.

This comes from a failure to prioritize cybersecurity as a top issue. There is an overemphasis on prevention over detection and response. There is also a lack of security awareness in company culture in general, which can worsen the problem.

If employees reuse account credentials like passwords attackers can easily obtain them and cause serious damage. The most dangerous threats come from inside a firm- from a careless employee who fall victim to phishing, spoofing and other social engineering schemes. The resulting losses across the financial services industry run up to tens of billions of dollars.

 

Securing Your Network

It’s important to train users to recognize certain kinds of attacks, but keeping a secure network requires an approached focused on strong network architecture. An infrastructure capable of detecting and eliminating malware that may have found its way into the network.

It’s possible that your network may contain numerous latent threats, so all applications and email inboxes should be properly scanned for malicious content.

Top IT Service providers, like Nerds Support, deploy firewall as well as implementing comprehensive email security to stop threats before they become problems.

They’re also allow you to segment and control access throughout the network to minimize the spread of a virus attack should it get in.

Backups

When a hacker uses ransomware, they encrypt all data and sensitive information necessary to operate. That means payroll, customer’s financial information, email, internal documents and more. The only way to regain access is to pay a ransom of some kind.

If you backup your data, however, that doesn’t have to be the case. With the right strategy, rather than paying ransom, you can just restore your files from the latest back-up and the cyber criminal’s ploy will have been stopped in its tracks.

Cloud based back-up services are the best at this. Nerds Support provides partners with daily backups and updates all systems with the latest security features to combat cyber-attacks. These advanced solutions even allow you to create a virtual copy of your servers on the cloud and restore all compromised data within minutes of a breach or attack.

The Greatest Risk Isn’t What You Think

It’s logical for a cyber-criminal to target financial firms for the reasons mentioned above using ransomware. It’s a reality of living in an ever-more-digital era. Ransomware and other malware attacks are here to stay and should not be ignored. The greatest damage to a firm is not to their business, their productivity or their infrastructure, it’s to their reputation.

Financial services organizations possess people’s most personal financial information. Social security, banking information, credit history, etc. If you’ve failed to take the necessary precautions to prevent or mitigate an attack and your firm is breached, it will be nearly impossible for anyone to trust you again.

When you take on a client, there is an agreement that you will safeguard their information. There is a supposition of trust. If that trust is broken, the thing your service is founded upon, rebuilding your reputation will be an uphill battle for years to come.

What Does it Mean?

In the case of the Texas attacks, the governments of these municipalities have resources that help them recover. They have taxpayer funding, cyber security experts and other advantages that a private organization does not have. Even with these advantages, it’s still struggling to address the overall issue of cyber-attacks.

According to the cyber security firm Recorded Future, the attacks on these 22 cities were the most organized and coordinated attack they’ve ever seen. The Texas Department of Information Resources (TDIR) are currently involved in trying to bring back all systems online as are officials from other federal agencies.

If this is the type of damage that can be done on government institutions, there is no excuse for negligence on the part of any business let alone one as frequently targeted as a financial organization. Take stock of your current IT resources and make sure your company is properly prepared in all respects against ransomware and cyber-attacks.

For more information on Malware, ransomware and social engineering visit our blog or contact us and we’ll answer any questions or inquiries you may have about how to make your firm safe and secure.