The compliance and security challenges in the financial services industry–one of the most highly regulated industries in the world–continue to grow.
From meeting a plethora of compliance regulations to addressing threat actors and exponentially growing technologies, financial services industry sectors are constantly playing catch up to the ever-changing landscape of data protection.
Therefore, an email backup and archiving solution is a vital business tool to address these financial services industry trends. For one, a robust email archiving solution enables them to stay in compliance by quickly allowing access to their email records for auditing.
It also provides financial service companies with a form of insurance in case of an external threat attack or accidental/malicious deletion. Backup and archiving solutions allow nearly instant restoration of mission-critical data to keep business operations running smoothly.
Security and Compliance Challenges in the Financial Services Industry
Financial service companies face cybersecurity risks like any other business. According to research:
- Financial firms are 300 times more likely to experience a cyberattack than other companies/industries.
- The industry is spending an average of $5.72M per data breach, the second-most expensive of any industry.
- 63% of financial firms and institutions saw an increase in destructive attacks (17% higher than last year).
As a heavily regulated industry, one of the most pressing concerns for financial service companies is compliance. According to the Conference of State Bank Supervisors’ annual National Survey of Community Banks:
- Nearly 90% of banks say regulatory risks remain the top concern regarding banker risk perceptions.
- 39.9% of bankers believe specific regulatory responses have become extremely important as guidelines for working constructively with borrowers on loan modifications.
- 19.8% of bankers think regulatory responses significantly promote consistency and flexibility across banks worldwide.
Data aggregation, security, management, storage, and retrieval are paramount for financial services companies. With these capabilities, financial firms mitigate data loss, accidental deletion, and other risks associated with hybrid working environments that firms now embrace. Enhanced record-keeping also assures smooth audits and, in terms of litigation, unhindered discovery.
Additionally, with backup and archiving, financial services acquire the ability to stay compliant with regulations and climate risk reporting requirements. This is extremely important, especially now with a less stable economic landscape.
Non-compliance can cost millions—organizations can lose almost $6M in revenue because of a single non-compliance event. Moreover, the massive cost of non-compliance is not just the result of the fines and penalties that regulators and courts impose. There are also business disruption costs, productivity losses, and revenue losses to consider. In 2020 alone, several banks worldwide were fined $14.2B for non-compliance. The United States alone accounted for 78% of those issued fines. Losing millions of dollars because of this can impair a business and lead to shutdowns and bankruptcy.
Financial Services Industry Regulations
Various entities and agencies enforce financial services industry regulations to ensure compliance. These include:
- SEC – The US Securities and Exchange Commission (SEC) is responsible for regulating the securities market and protecting investors. They facilitate capital formation that helps companies grow and entrepreneurs start businesses.
- FINRA – FINRA stands for Financial Industry Regulatory Authority. This organization regulates about 3,800 broker-dealers with 635,000 brokers, requiring businesses in the financial services industry to monitor and archive broker communications.
- OCC – The Office of the Comptroller of the Currency (OCC) supervises and regulates more than 1,200 national banks, federally licensed branches of foreign banks, and federally licensed savings associations, which account for greater than two-thirds of the total assets of all commercial banks in the US. It is an independent bureau within the Department of the Treasury.
Here are several of the most notable and significant local, federal and international regulations for data archiving and record keeping in the financial industry:
- GDPR – General Data Protection Regulation (GDPR) is a sweeping law that provides a rigorous framework for protecting the data of EU citizens. Provisions in the law affect data access, consent, portability, and mandatory data breach notification. GDPR fines have two tiers when it comes to penalties:
- Lowest tier fines – up to $11.03M or 2% of the company’s annual revenue, whichever is greater.
- Higher tier fines – up to $22.07M or 4% of the company’s annual revenue, whichever is greater.
- FRCP – The Federal Rules of Civil Procedure (FRCP) require companies to be prepared to present electronic records in case of a lawsuit. Recent changes to FRCP narrow the eDiscovery window, requiring firms to produce records quicker but also limiting the scope of records that are required.
- The Sarbanes-Oxley Act (SOX) – This law requires all publicly traded companies in the United States to keep their electronic data for up to seven years, depending on the data type. This can run into thousands of petabytes of data for larger companies, costing hundreds of thousands of dollars to ensure the data is stored and accessed securely.
- The Gramm-Leach-Bliley Act – This requires financial institutions to protect the security, confidentiality, and integrity of non-public customer information through administrative, technical, and physical safeguards.
Backup and Archiving for Financial Services Industry Sectors
Backup and archiving solutions play a vital role as insurance for financial institutions against threats and risks like ransomware attacks or accidental deletions.
Dropsuite specializes in helping financial services companies keep their highly sensitive data safe, secure, and protected. Our cloud-based solution allows financial services to efficiently backup, store, preserve and, if necessary, quickly restore data at a moment’s notice across a range of cloud-based ecosystems – Microsoft 365, Google Workspace, IMAP-POP, and Hosted Exchange.
Dropsuite’s easy-to-use, secure, and scalable backup and recovery tools not only provide business compliance; but enable business continuity. Businesses in the financial services industry sectors may set flexible retention rates that match the industry’s compliance requirements and regulations. This enables financial service firms to address lawsuits and discovery processes through legal or time-based holds applied to pertinent financial data in any of the cloud-based ecosystems mentioned above.
Dropsuite also addresses compliance concerns, security risks, and other compliance and security challenges in the financial services industry through the following use cases:
- Journal archiving – Dropsuite empowers administrators and auditors to facilitate eDiscovery and other compliance-quality archiving activities through an immutable archiving of inbound and outbound email communications. Journaling is a tamper-proof caliber of email archiving that meets the rigorous standards of regulated authorities and the courts.
- Record-keeping and Supervision – Enable proactive and transparent management of obligations and oversight. Set and automate a backup system that captures and retains accurate records and data–whether it’s email communications, instant messages, or files and documents from platforms like Microsoft 365 and Google Workspace.
- Data loss protection – State-of-the-art encryption protects email communication data from theft, loss, or damage, whether in transit or at rest. This secures a financial service company’s future viability and provides its customers and employees peace of mind.
- Audits and searches – Dropsuite’s ‘super search’ capabilities allow financial service companies to respond to regulators with speed and certainty. These quick and easy-to-perform searches are especially useful in HR and compliance-based queries. The struggles of finding emails and files needed at a moment’s notice can be a thing of the past.