5 Data Security Regulatory Requirements for Financial Services

May 16, 2023
May 15, 2024
5 Data Security Regulatory Requirements for Financial Services

Almost everyone in the financial services industry knows how important complying with data security regulations is to their business. But how many teams are confident their firms can maintain compliance going forward? 

With 91% of firms using cloud services, whose permissive and fluid natures make them notoriously difficult to secure, we would wager that the answer is fewer than you think. Innovation is already making existing compliance requirements harder to meet. And as financial services firms surf a wave of cloud adoption, regulators are not wasting any time responding.

Whether through regulations like the Sarbanes–Oxley Act (SOX) or the New York State Department of Financial Services (NYDFS) Cybersecurity Regulation, legislators are racing to front-run consumer data security risks. The result will be stricter compliance requirements at the same time as data use exponentially expands.

Financial services firms can and should get ahead of this challenge. This blog post details five core data security compliance challenges faced by security teams at financial services firms and explains how Cyera helps solve each one.  

1. Safeguarding Nonpublic Personal Information

Personal data is fueling a revolution in everything from marketing to risk assessment. But it also comes with a downside. The more personal data a financial services firm uses, the more difficult it will be for security teams to show regulators where data is and how it is monitored.

For example, compare how the Gramm-Leach-Bliley Act (GLBA) mandates financial institutions to safeguard nonpublic personal information (NPI) to how financial services firms do so.

The Federal Trade Commission (FTC) defines NPI as "personally identifiable financial information" collected by a financial institution in connection with providing a financial product or service unless that information is otherwise "publicly available." Examples of NPI include names, addresses, phone numbers, bank statements, social security numbers, and credit history.

The GLBA requires specific security safeguards around access controls, asset inventory, and encryption. The processes that financial services firms use to meet requirements around controls must keep pace. But even as financial services firms move to embrace cloud environments and DevOps, many still rely on disconnected tools and manual processes. 

Solution: Continuous discovery

Even in sprawling cloud environments, Cyera can continuously discover NPI within your datastores to create an inventory of all NPI and alert SecOps teams of compliance violations. For example, Cyera can help your firm detect when overly permissive access is granted to users in a datastore that contains NPI. 

2. Continuous Monitoring

Point-in-time monitoring cannot keep pace with how financial services firms use data. Regulators know this and are insisting that firms conduct continuous monitoring via frameworks such as the National Institute of Standards and Technology and Cyber Security Framework (NIST CSF).

The NIST CSF comprises five core functions: identify, protect, detect, respond, and recover. Since NIST controls are fundamental to other regulatory requirements, complying with them makes sense for many financial services firms. 

Many financial services firms struggle with the NIST CSF because their data security assessments are point-in-time only. 

Solution: Monitoring without disruption

Cyera can provide your firm with continuous monitoring of your sensitive data exposures and alert you to issues as they occur with multi cloud data detection and response (DDR). Cyera can help identify the classes of data a financial services firm has, whether or not it's sensitive, and what level of risk it poses.

3. Conducting Risk Assessments and Encrypting Data

To combat cyber threats that exploit data security and encryption enforcement gaps, regulators increasingly require that financial services firms conduct risk assessments. For example, the New York State Department of Financial Services (NYDFS) is currently in the process of mandating "periodic risk assessments" and resilience testing.

Although assessing risk to data and building resilience is a clear win for financial services firms, taking action to do so when most companies are racing toward digital transformation is a significant challenge. In a Deloitte survey on the financial sector's cybersecurity maturity level, just half of the respondents were confident that they were resilient when it comes to handling customer data. 

Solution: Data risk assessment 

To help boost resilience efforts, Cyera can help you gain full visibility of your data, determine whether any of it is exposed, and solve material security issues, fast. Additionally, Cyera can offer remediation guidance so that you can resolve identified issues quickly.

4. Audits

When it comes to audits, security teams face a circular challenge. The more data they use, the more regulations and governance restrictions they are subject to, and therefore the more they need to conduct audits. There’s also a challenge with trying to find and understand what sensitive data they have across siloed environments. The result is a delay in delivering the right information required to complete an audit.

Armed only with piecemeal information from (typically) out-of-date inventories and reactive scans, surveys, and attestation from across the business, teams lack confidence that their audit responses are comprehensive. When they attempt to remedy this and information is aggregated, it's already outdated. And if the audit response is due within a given timeframe, this additional manual effort often results in late response fines.

Solution: Dynamic datastore inventory

Cyera reduces the time to conduct audits by maintaining a dynamic datastore inventory and automatically classifying and adding deep context to your data. Cyera shows you exactly the data you have, where it resides, and remediates exposures that could result in security, privacy, or regulatory compliance failures. So when audits arise, you can have the confidence that you are actively assuring compliance and quickly comply with the audit request.

5. Maintaining a Segregation of Duties

Central to regulations like the Sarbanes–Oxley Act (SOX), segregation of duties or separation of duties (SOD) reduces centralized control over processes and data. From a data security point of view, SOD means that no person should be able to exfiltrate sensitive data.

Although the concept is relatively straightforward, it can be quite complex for financial services firms to safeguard data with SOD at scale. Hence it is a common SOX violation. In practice, SOD is often done through extensive manual reviews of who has access to what.

Solution: An enterprise-wide system for SOD compliance

Cyera helps you achieve SOD compliance by letting you know who are the users with access to specific datastores or data classes. For example, Cyera can tell you whether access is limited to certain employees or anyone with an internet connection. Moving beyond data silos, Cyera uncovers where sensitive data is located and who the data owners are across SaaS, IaaS, and PaaS for both structured and unstructured data. 

Cyera can show you what permissions are enabled and whether users can read, write, copy, or delete the data. And if any of the users represent undue risks due to stale accounts, weak passwords, or a combination of that plus access to confidential information, Cyera will highlight those issues. 

Future-proofing Compliance with Cyera

Regulatory guidance has been a net positive for financial services firms by increasing safeguards to sensitive data and boosting consumer trust. Regulators continue to demand that FSI firms show that they understand their expanding cloud data footprint and apply more stringent controls. Consequently, legacy systems of maintaining data security compliance need to catch up.

Cyera’s data security platform provides deep context on your data, applying correct, continuous controls to assure cyber-resilience and compliance.

Cyera takes a data-centric approach to security, assessing the exposure to your data at rest and in use and applying multiple layers of defense. Because Cyera applies deep data context holistically across your data landscape, we are the only solution that can empower security teams to know where their data is, what exposes it to risk, and take immediate action to remediate exposures and assure compliance without disrupting the business. 

Start gaining visibility and control over your sensitive data by scheduling a demo today.