Cloud Data Security: Best Practices for Financial Institutions

Published On: May 29, 2024Categories: Blog

Securing your data is not optional — it’s necessary for building and maintaining a successful financial services organization. However, the necessity of cloud-based platforms has complicated data security.

Third-party cloud, on-premise, and hybrid clouds expand your attack surface, which can risk a data breach and non-compliance penalties.

Organizations across all industries are concerned with cloud security. The top three priorities are preventing cloud misconfigurations (51%), securing major cloud apps in use (48%), and defending against malware (43%). 

Additionally, the top cloud security challenge in the cloud is data security, as indicated by 30% of respondents. Data protection is critical, but it can be challenging and never-ending since it lives on the cloud. 

Financial institutions require a multifaceted approach to cloud security, so we’ll break down data protection strategies into three overall categories: technical controls, procedural controls, and compliance requirements. Read on to learn how to keep your cloud data secure.

The Need for Cloud Data Security

Cloud data security is mission-critical for all financial institutions, as a data breach can incur steep non-compliance penalties and possibly irreparable reputation damage. 

However, the current landscape of cloud computing and how it integrates with internal and customer-facing systems creates a broad attack surface. Never before have financial institutions had more vulnerabilities, and all it takes is one being exploited to create lasting damage.

The Ever-Expanding Financial Attack Surface

An attack surface is the total number of vulnerabilities, attack vectors, and pathways malicious actors can use to carry out any possible cyberattack. 

In the past, a financial institution’s attack surface was a narrow perimeter that could be defended and adequately protect sensitive systems and data. But those days are long gone — the modern attack surface is a sprawling landscape of possible threats waiting to become an attack. 

Common elements of a modern organization’s attack surface include:

  • Network endpoints: Every device, whether an employee-owned smartphone or a desktop in the office, is a vulnerable endpoint. While securing endpoints alone isn’t enough, they still need to be secure along with the identities that use them to access sensitive systems.
  • User interfaces: Interfaces represent a pervasive vulnerability that greatly expands a financial institution’s attack surface. Bad actors will continually analyze any publicly accessible cloud-based interface, while internal interfaces represent an attack vector for compromised credentials. 
  • Data in transit and at rest: Every data byte must be secured throughout its lifecycle and daily use. Data being transferred must be secure from eavesdropping or man-in-the-middle attacks, while stored data should be securely encrypted to prevent unauthorized access. For cloud-based services, protecting data in transit is critical.
  • Third parties: Many partners and vendors will need access to internal systems, especially regarding the cloud-based platforms you’ve adopted. Bad actors can exploit your platforms and other types of third parties with the intent of attacking your system — and each of them has a similar attack surface as you do.

Fortunately, you can reduce your attack surface by adopting the latest security practices that mitigate or minimize possible vectors.

Best Practices for Technical Controls

Technical controls encompass a wide range of technologies and related processes, all of which aim to protect data. However, a common mistake is focusing only on technical controls while minimizing the other two categories: processes and compliance requirements. 

Remember that as we explore these controls, they don’t exist in a bubble but rather support the holistic goal of cloud data security.

Data Discovery and Classification Tools

Cloud data security has several moving pieces; data can live in areas that teams aren’t identifying. Additionally, misclassifying or not classifying data can result in failing to protect sensitive data.

Data discovery and classification tools are critical for financial institutions. Data capture has become exceedingly common as the modern IT ecosystem evolves and public-facing portals are developed. A single-user transaction might generate dozens of data points that need to be protected.

An ideal data classification tool requires minimal configuration and then evaluates and tags data based on the level of protection it requires, among other capabilities. 

Inventa from 1touch takes data discovery and classification to a whole new level by working like an antivirus — you don’t need to point it at data; it’ll automatically find and classify it as configured.

Data Encryption

Encryption is typically a standard practice for cloud-based platforms, typically using strong protocols for data encryption at rest and in transit. AES-256, for example, would take a supercomputer an impossible amount of time to crack and is commonly used for storage.

Your responsibility is twofold:

  1. Make sure any cloud-based partners you team up with meet industry standards for encryption.
  2. Any time systems you control interact with cloud platforms, data encryption should not be compromised in any way. Encryption can only do so much if privileged accounts are compromised.

Encryption has become increasingly common, but don’t take it for granted. Put in the time and effort to keep data protected at all times.

Audit Trails

Metadata is the data behind the data — when it was created, accessed, modified, or moved. This type of data tells the story of the data’s life cycle.

Any type of sensitive data should also have audit trails that showcase metadata and how it has changed over time. Audit trails should move with the data, so if downloaded from a cloud-based system, its metadata should be visible to authorized users.

Depending on your specific needs and compliance requirements, you may not need this for every data category. However, any data classified as sensitive should have comprehensive audit trails to backtrace any issues or prove compliance.

Best Practices for Security Procedures

Technology and procedures go hand in hand, but they’re still separate. Procedures form the basis for which technologies and platforms you choose, keeping compliance in mind throughout. 

We’ll be breaking down a few fundamental procedures necessary for cloud data security while highlighting how they involve technical controls and compliance requirements.

Regular Internal Audits

Conducting internal audits at regular intervals helps all other controls remain effective and meet compliance requirements. These audits can also identify any out-of-date software or other issues that must be addressed.

Audits should mirror those conducted by third parties who evaluate compliance or adherence to industry standards. Unlike third-party audits, internal audits won’t result in fines, penalties, or losing certifications. Instead, you’ll identify any areas that need corrective action so teams can implement changes before third-party audits.

However, you don’t have to stick to typical compliance audit topics and can expand to overall cloud data security, considering the effectiveness of existing controls. Frequent audits and addressing findings are one of the core procedures for ensuring both compliance and strong security.

Data Backups and Recovery

Recurring backups are essential to data security, but if done incorrectly, they can also expand your attack surface.

Determine how frequently you should make backups and which types of data should be backed up. Then, evaluate different backup options from vendors, focusing on their security practices—you don’t want backups compromised.

Data from your cloud-based platforms might not live within your systems, so how will you back it up? The vendor should ideally make their own backups to determine their processes.

If a data breach occurs and data is destroyed, you’ll have backups ready to restore lost data to minimize losses. 

Vendor Management

Financial institutions typically rely on several vendors who provide specialized services. Many of these vendors have access to your systems and sensitive data, so these vendors need to be carefully managed. 

Every third party needs to comply with applicable compliance and industry standards. They should also conduct regular audits and risk assessments and review existing mitigation strategies. You should also regularly review their risk assessments or audit results to ensure they are protecting your data.

Cloud-based vendors that provide critical services should be carefully reviewed and scrutinized. Any lapses in their procedures or technologies can immediately risk your data protections — ensure they keep everyone safe.

Best Practices and Requirements for Compliance Standards

Financial institutions must meet multiple compliance requirements to avoid possible fines and penalties. Fortunately, these standards are developed with a focus on data protection and cyber security — they don’t focus on checking off boxes for the sake of it.

As a result, you can map compliance requirements to the technical and procedural controls we’ve explored above, minimizing the workload necessary to stay compliant. You may still need to revise processes or implement new technologies in some areas, but you probably won’t be starting from scratch with each regulation.

Let’s break down the core requirements of common compliance standards facing the financial sector to keep in mind while implementing technical or procedural controls:

  • General Data Protection Regulation (GDPR): This far-reaching regulation mandates strict data privacy protections for everyone in the European Union, affecting any organization with users from the EU.
  • Payment Card Industry Data Security Standard (PCI-DSS): Any business that handles cardholder information must comply with PCI-DSS, which dictates how this information is stored, transmitted, and processed.
  • Health Insurance Portability and Accountability Act (HIPAA): With similar requirements as GDPR, HIPAA applies to healthcare information for patients in the United States. Any financial services that process healthcare-related payments must meet HIPAA requirements for privacy and security.
  • Sarbanes-Oxley Act (SOX): This standard strictly regulates financial data, requiring comprehensive audit trails and internal controls to protect against corporate fraud and ensure the accuracy of all financial statements. SOX primarily applies to publicly traded companies but is also worth considering for private companies.

You can see how many of the above compliance standards overlap and involve the technical or procedural controls from above. Mapping each requirement to specific controls will go a long way toward simplifying compliance management and avoiding non-compliance penalties.

Accurate and Efficient Data Discovery in Finance is Critical

You’ll struggle to properly secure and manage sensitive data if it remains undiscovered. Even if you implement highly effective security controls powered by best practices and next-gen tools, data that remains in the dark won’t be accurately classified and secured.

Security and compliance practices require accurately classifying data to determine how it’s protected. While true for all industries, financial services are under a high degree of scrutiny, must meet several regulatory requirements, and are constantly under threat of attack from cyber criminals.

Financial institutions must know where every byte of data lives to determine how it should be protected as dictated by overarching data management categories. Without the right automated data discovery platform, even the best security protocols may fall short, risking compliance and data breaches in the process.

Enable Streamlined Data Classification for Effective Cloud Data Security

Technical and procedural controls ensure all data is protected and your organization fully complies with applicable regulations. The expanding attack surface of cloud platforms has made these comprehensive controls more important than ever, you cannot allow an unauthorized user to access sensitive data.

Cloud data security depends on identifying and accurately classifying all sensitive data so it can benefit from your controls — having an effective discovery and classification tool is critical. You simply cannot rely on outdated security paradigms that focus on protecting the perimeter, and everything within it is considered secure.

Your financial data can live in many different locations, from individual mobile devices using cloud-based apps to third-party vendors of cloud services. Financial institutions need to update to the latest security practices, focusing on protecting the wealth of sensitive data under their control. 

Failing to secure sensitive and protected data can lead to steep compliance penalties and, at worst, enable devastating data breaches. That’s why equipping your security and compliance teams with accurate, automated data discovery and classification is essential — ensuring all sensitive data is found and protected by your security protocols.

Inventa from 1touch enables automatic data discovery and accurate data classification to support protection efforts. We’re an industry-recognized leader in rapid and accurate data discovery and classification, forming a strong backbone for the rest of your cloud data security initiatives.

Ready to increase data classification efficiency to protect your entire data estate properly? Learn more about Inventa and schedule a demo today to get started.