Cybercrime has increased by 175% since 2022. This highly vulnerable digital landscape is a wake-up call for businesses to be more intentional about data security measures. Organizations cannot undermine the importance of protecting their operations, especially as cybercriminals become more tech-efficient.
This article outlines five best practices for data encryption that every financial institution should adopt to secure its assets, uphold client confidentiality, and ensure compliance with industry regulations. Read more to learn how to encrypt your data and secure your financial future.
The Importance of Encryption in Finance
Confidentiality Obligations
Financial advisors handle sensitive client data, including bank details, identity information, and investment portfolios, which they are legally required to keep confidential. Encryption ensures that this information remains indecipherable, even if hackers somehow find it. Without decryption codes, attackers cannot retrieve sensitive information, which helps companies uphold their obligations and establish client trust.
Breach Prevention
Cybercriminals are constantly strategizing how to target financial organizations and exploit their system vulnerabilities. Using encryption stops these hackers from gaining unauthorized access, defending the company against their attempts to intercept data. With the necessary defenses in place, companies can maintain a trustworthy reputation where clients feel safe to invest and bank with them.
Regulatory Compliance
All institutions are bound by a strict code of conduct set by the General Data Protection Regulation to safeguard customer information. Failure to comply with these standards puts businesses at risk of financial penalties and losing their market share. On the other hand, compliance increases reliability, maximizes profit, and strengthens market positioning.
Secure Your Financial Assets with 5 Encryption Practices
External Device Encryption
Modern business transforms how people work by initiating hybrid, remote, and mobile setups. While the evolution of workplaces offers flexibility and productivity, it also creates advanced security risks. Device encryption renders sensitive data unreadable without a decryption key. It protects external devices by preventing unauthorized access and data theft.
In a scenario where a work laptop belonging to a finance professional is stolen or their credentials are compromised, businesses stand to lose sensitive data that contains client financial information, contacts, and the organization’s strategic plans. Financial institutions should encrypt external devices because there are consequences of exposing company details to cybercriminals. These ramifications include reputational damage, loss of income, and an erosion of customer loyalty.
To protect external devices, companies can leverage the built-in encryption tools in their operating systems, such as Windows BitLocker or macOS FileVault. Alternatively, institutions can use third-party software, which include VeraCrypt and Cryptomator.
Encryption Key Management
Financial organizations should securely store and manage their encryption keys. These are a collection of bits used to decrypt and encrypt data in cryptography, ensuring security by scrambling information that can only be reordered with the correct key.
Secure management is a protective risk mitigation strategy that businesses should use. After encryption, company information becomes inaccessible without the codes to unlock the data, making it essential for companies to consider two primary storage options:
Separate locations: Store encryption codes on a digital server and physically in dedicated server rooms—with appropriate access controls and protective measures for each. Taking a hybrid storage approach is effective because it maximizes the strengthening of both digital and physical key management.
Physical backup: In addition to storing keys in digital and physical locations, it’s good practice to have a backup set or master key. A third one is a blanket of protection in case the other two keys are compromised or lost. The master key can be used to decrypt data in crisis situations.
Transport Layer Security
Using Transport Layer Security is another noteworthy best practice that enables organizations to transmit financial data securely. In cryptography, this layer of security primarily encrypts data transmission between internet networks, including servers and web browsers. It establishes secure communication for authorized devices and websites, ensuring that data remains unreadable or tamper-proof to unauthorized people.
Whether via emails, forms, or cloud platforms, advisors and clients are constantly sharing financial information and sensitive details. Without Transport Layer Security encryption, hackers can intercept data transmissions or easily gain unauthorized access to them while they move through digital channels. Using this method of security protects sensitive information as it is passed between financial advisors and their customers. Even if cybercriminals manage to access the information, having Transport Layer Security makes it useless to them.
Key Access Control
Institutions need to determine who has access to the encryption codes. There is no value in data protection without making this determination. If key controls are available to every employee, it leaves information vulnerable and renders the encryption processes ineffective.
Key access control involves deciding who has access and having measures in place to revoke authority when a situation calls for it. For example, when an IT administrator with extensive access leaves the organization, authorities must have a strategy outlining the steps of revoking their permissions. Allowing any employee to leave with the keys in hand puts important operations at risk because the codes can be replicated and used to damage credibility.
To mitigate access control, organizations should maintain a comprehensive outline of permissions and verify entry accordingly. They should also keep a record of any changes within the company that may affect permissions, and frequently re-encrypt critical data to maintain security.
Continuous Monitoring and Updates
Encryption is a dynamic and ongoing process that requires continuous monitoring and updates. Ignoring the constant nature of data protection promotes outdated systems that are vulnerable to brute force and other cyberattacks. To remain competitive in financial markets, institutions must keep pace with technological changes in encryption. Companies can avoid falling victim to attackers by staying informed about emerging vulnerabilities and regularly adapting their protections.
Conclusion: Protect, Prevent, Comply
In an era of cybercrimes, financial institutions must prioritize protecting their assets and maintaining client trust. By using a range of best practices, from external device encryption to continuous monitoring and updates, organizations can safeguard their software against cyber threats.
Companies should take the necessary steps to engage teams in understanding the importance of data security and invest in tools that enhance protective measures. Making digital safety a priority promotes a culture of vigilance and proactivity. Strong encryption is necessary for long-term success and stability, ensuring that advisors and their clients navigate the evolving technological landscape confidently.
