In this post, you’ll discover why financial services have unique data protection challenges, key features your business should have to meet those challenges, and how to create a data protection strategy that helps you operate more effectively.
Why Data Protection for Financial Firms Matters
The stakes are higher in finance
Data protection is a term used to describe practices, technology and regulations that protect people’s rights when it comes to their personal information and ensure that this information is kept secure and private. Financial institutions handle an incredible amount of very sensitive information (e.g., personal client identifiers, account numbers, transaction histories, credit profiles and internal financial forecasts). Therefore, many regulations have been created to address these issues.
In short, when you hear data protection for financial firms, it means defending data confidentiality, integrity and availability… because any breach, corruption or downtime has real business consequences.
Risk of regulatory fines, reputation damage and operational failure
Data protection strategies hold the key to operational strength in financial services.
An operational disruption caused by ransomware locking up customers’ data will suspend transactions, lower quality of service and create major losses.
When done correctly, protecting the data of finance firms contributes to supporting the creation of value for the company.
Key Components to Building Your Firm’s Data Protection Strategy
Establishing a firm commitment to data protection in accordance with industry expectations involves establishing capabilities to deliver the following:
Available Solutions for Building a Comprehensive Data Protection Strategy
1. Identify and classify sensitive data
You can’t protect what you haven’t identified. Financial firms must know where data lives- on-premise, cloud, mobile, third-party systems- and classify it (PII, transaction data, internal forecasts, etc.). The finance sector holds a wide range of sensitive data … account numbers, transaction history, balances, credit and debit card information.
2. Strong access controls and segmentation
Providing appropriate access to users is extremely important. It is good practice to restrict users’ access to only what they need to perform their job, through Role Based Access Control, and by using Multi-Factor Authentication and Network Segmentation to reduce the potential impact of any data breach.
- The main objectives of an organization that is storing and processing data include the implementation of Data Minimization Principles, Access Control Policies, Multi-Factor Authentication and Advanced Threat Protection.
- Encryption and Management of the Lifecycle of Data.
- Data should be protected whether it is “In Use”, “In Transit” or “At Rest”. Retention Policy, Deletion Procedure and Backup Procedures are also critical elements of the overall Security Strategy. Financial institutions process significant amounts of transactional and personal information… adequate security measures protect data and support customers’ confidence and compliance.
4. Audit trails, logging & third-party risk management
Finance businesses must demonstrate oversight and control. From logging user access, data changes and system events to managing third-party vendors, these are key to protecting data. Third-party risk management is one of the pressures financial firms face.
5. Incident response, monitoring & continuous improvement
You’ll never reach zero risk. What matters is readiness: monitoring anomalies, responding swiftly, learning from incidents and updating your controls. Regular risk assessments and keeping software updated are critical.
6. Compliance-driven framework aligned with business objectives
Data protection must be aligned with regulatory requirements (e.g., FINRA, SEC, NIST CSF, SOX, and local financial regulation) and your business goals.
Building Your Data-Protection Strategy: A Finance-Focused Approach
Step A – Assess current state
Begin with a high-level review: Where is your sensitive data? Who has access? What controls exist? What’s the gap to compliance? What incident processes exist?
Step B – Define roles, responsibilities and governance
Given regulated finance business dynamics, build a governance model: data-owner roles, control owner roles, vendor oversight, audit loops and board-level reporting.
Step C – Prioritize based on risk & value
A finance business cannot remediate everything at once. Focus on data sets of highest impact (e.g., customer account data, transaction flows), highest exposure (e.g., cloud storage, third-party APIs) and highest regulatory sensitivity.
Step D – Deploy controls and monitor
Apply the controls listed earlier (access, encryption, logging, incident response). Monitor, test, and measure. Use KPIs like “time to detect” or “time to respond”.
Step E – Review and refine continuously
Threats change, regulations evolve and fintech/analytics demands grow. Make sure you schedule periodic reviews.
Checklist: Are You Covering Key Aspects of Data Protection for Financial Firms?
- Have you mapped sensitive data across systems and classified it?
- Will encryption be used as a means of securing data that is stored, transmitted, or accessed through an internal application?
- Is there an intrusion detection system in place besides an audit log, change control procedures and an external vendor management program?
- Has an emergency response plan been created, tested, and documented outlining roles, responsibilities and escalation process?
- Does a risk assessment get performed regularly and does the company keep the most current operating system versions installed?
If you answered “no” to any of the above, you may be exposing your finance business to unnecessary risk.
How Compuwork Supports Finance Businesses with Data Protection
At Compuwork, we specialize in helping regulated financial firms build resilient IT ecosystems. We understand the unique demands of finance: high-stakes data, regulatory oversight, continuous operations and fintech integration. Our approach includes:
- Deep industry-specific data governance frameworks tailored for financial firms
- End-to-end protection strategies: data discovery, access controls, encryption, monitoring & incident response
- Vendor and third-party risk management designed for finance-ecosystem complexity
- Continuous improvement programs so your data protection keeps pace with threats and regulation
Takeaway
We want to partner with you to elevate the level of data security in your organization. We can work together to improve your organization’s capacity to secure its dataplace today. We will evaluate your organization’s current capability of safeguarding its data, and provide a comprehensive strategy on how to protect your customer’s information and protect your organization’s reputation.
Ready to see where your compliance stands?
Schedule a free risk assessment with CompuWork’s cybersecurity compliance experts today.
Frequently Asked Questions about Protecting Data for Financial Services Companies
Why is data protection so important for the finance industry?
Data protection is important in the finance industry because financial institutions maintain many different types of sensitive data regarding their customers and clients. Examples of this type of data include PINs, transaction history, and account information. A data breach caused by a company’s failure to properly implement data protection can expose a financial institution to regulatory scrutiny, eroding customer confidence, and multiple disruptions to operations, etc. The implementation of a sound data protection program will ensure that all electronic systems that your organization has in place will maintain confidentiality and integrity, while also remaining accessible to those authorized to access them.
What are some examples of risks that arise from insufficient data protection practices in financial services?
Examples include; unauthorized access to customer accounts; Ransomware; Down-time of services; Risks posed to third parties; Not maintaining compliance with all applicable regulatory standards such as FINRA, SEC, SOX, GDPR, NIST CISF and PCI DSS. Each of these risks could seriously affect a financial organization’s financial performance or reputation.
What regulations will affect a financial organization regarding data protection?
Depending on your geographic location and business type, you will generally have to comply with the regulations established by local financial authorities as well as sector based security frameworks. Compliance is not optional. It is an operational requirement for financial firms.
What is the frequency of data protection strategy reviews by financial service firms?
The standard is at least once per year, along with a review after major technological or regulatory changes. As today’s technology and threat landscapes change, reviewing your processes at least annually (unless there is a significant change) ensures that your controls remain effective.
When third parties come into play for a financial services organization, how is risk from those third parties accounted for in data protection?
Third-party services are a potential source of exposure for your financial services organization through vendors and cloud service providers. Any service that provides you access to personal information requires you to understand how they are securing that information and how you can monitor those services. Conducting a security analysis of third parties is critical to maintaining compliance with various regulations.
In what manner can Compuwork enhance the data protection capabilities of those in the financial services sector?
Compuwork provides data governance frameworks, end-to-end protection strategies, third-party risk programs and continuous improvement support built specifically for the finance sector. We help firms assess their readiness, close gaps, and build resilient operations.
