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Data security is falling behind as over half of FIs experience data breaches

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Data security is lagging behind, Thales found

Almost two-thirds (62 per cent) of financial institutions in the US have experienced data breaches, compared with 55 per cent of non-US institutions, as data security is struggling to keep pace with digital transformation, according to a study.

The global survey from Thales found that US financial institutions have the highest rate of data breaches compared to other industries, with 41 per cent of having experienced a data breach in the past year. In the rest of the world, 27 per cent saw a data breach in the past year, and 9 per cent suffered multiple breaches.

External threats remain the biggest threat facing non-US financial organisations, with cybercriminals most likely attacker, according to the report, which stated that 60 per cent of respondents answered cybercriminals, 50 per cent privileged users and 50 per cent cyber terrorists.

For the US, FIs cited threats in the following order: 54 per cent said cyberterrorists, 50 per cent said partners with internal access, 46 per cent said competitors, 45 per cent said cybercriminals, 44 per cent said nation-states and 44 per cent said other IT accounts.

“The right level of data security is paramount for financial services organisations today as these firms are a constant target for hackers,” Paul Hampton, Senior Manager at Thales told IBS Intelligence.

“So while security spending is still going up, albeit more slowly recently, the 2019 Thales Data Threat Report-Financial Services Edition actually show the situation is getting worse. By focusing on outdated protection solutions like perimeter security, financial organisations are leaving themselves vulnerable to hackers that will, given the time, break through.”

Another finding was that while organisations report having plans for adopting data security technologies such as encryption and tokenisation, actual implementation rates are low.

Less than a quarter of respondents said they were using encryption to protect cloud environments as well as newer sources like big data, blockchain, containers, IoT and mobile payments. While, at the same time, 98 per cent of global financial businesses are reporting that they are using sensitive data with digital transformation technologies. Just 29% or less are using data encryption within digital transformation environments.

Hampton noted that the industry must focus on protecting the data at its source through solutions like encryption, key management and two-factor authentication.

“By doing this, financial companies can protect their data while ensuring they’re complying with strict regulations. For those that don’t adopt these technologies, they not only face being hit with regulatory fines, but they could find themselves losing brand trust and, ultimately, customers,” he said.

Tina Stewart, Vice President Market Strategy for Cloud Protection and Licensing Activity at Thales, said: “Fraud and security teams are expected to be the enablers of innovation while securing an increasingly complex financial services environment. Rapid digital transformation is being driven by agile FinTech start-ups and the open banking trend shows no signs of slowing down. In addition, protecting sensitive data becomes even more difficult with shrinking security spending and encryption rates that are far too low.”

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