Navigating Data Security in Financial Services

Today’s rapid technological developments have transformed the financial services industry. In particular, the expansion of FinTech and the adoption of personal banking technologies have led to many new financial services, processes, and delivery methods.

These technological expansions mean that the finance industry as a whole handles massive amounts of sensitive data on a daily basis. But with these new opportunities come new threats, making data security vital to contemporary financial operations.

However, data security has been a struggle for financial institutions both big and small. Information gathered by Boston Consulting Group indicates that financial firms and service providers are 300 times more likely to experience a cyberattack than other companies.

According to this same report, financial firms are also largely ill-prepared to handle the current digital threats against their companies and their industry as a whole. To remain competitive and avoid the considerable costs of a data breach, leaders and managers in financial services should be aware of the biggest digital threats to their industry, as well as the best cybersecurity solutions available to them.

To start, there are 3 key elements of maintaining data security in financial services to consider:

  1. Prioritize Data Security for All Employees
  2. Audit the Cybersecurity Practices of Third-Party Vendors
  3. Establish a Reliable IT Team and Infrastructure
Keep reading or check out this infographic to learn more about 3 key elements of maintaining data security in financial services.

Keep reading to learn more about these 3 tips and how to use them against top threats to the financial services industry.

Top Threats to Data Security in Financial Services

A 2019 report from Verizon found that data breaches in financial services accounted for 10% of all data breaches globally that year. Understanding the major external and internal threats to data security in your industry is the first step in building a stronger IT framework for your organization.

External Threats to Data Security

A digitized hand reaching out from a laptop screen as a concept for threats to data security in financial services.

Many leaders are unaware of the biggest computer security threats to business IT. Understanding the different types of cyberattacks that threaten data security in financial services—what they are, how they operate, and what puts you at risk—is vital to ensuring your organization’s protection.

Distributed Denial of Service (DDoS) Attacks

Distributed denial of service (DDoS) cyberattacks cause a website or application to become unusable for a period of time. In a DDoS attack, a cybercriminal can target a specific network by overwhelming it with requests. This creates a service backlog that prevents real users from being able to use a site or app.

DDoS attacks can also be used to mislead cyberdefense efforts. For example, cybercriminals will sometimes launch a DDoS attack to direct attention away from their efforts to hack a company’s data system. This could help cover the tracks for the deployment of a CryptoVirus, which can spread through a company’s network and render its data useless.

In 2015, DDoS attacks were the most frequent cyberattacks aimed against financial institutions.  One reason for the recent rise in this type of cyberattack has been the increased presence of the Internet of Things across the finance industry.

The Internet of Things (IoT) describes the “smart devices” (such as voice-controlled home appliances, like the Amazon Echo) that allow companies to use consumer data and patterns to develop more customized consumer experiences. DDoS attacks exploit the weak security of the internet connections which power IoT devices. As the finance industry continues to adopt and rely on IoT technologies, DDoS attacks will remain a major threat to data security in financial services.

Backdoor Attacks

In a backdoor attack, a hacker can access a secured data system by installing a “backdoor” malware application. These applications can grant hackers undetected access to a company’s entire data system, including confidential employee and customer information that can be used for identity theft, blackmail, and other harmful purposes. With an advanced backdoor attack method called a trojan attack, a backdoor application can continuously operate once it is installed, even once the data system’s vulnerability has been fixed.

As seen in this February’s attacks against the U.S. financial sector, backdoor attacks have played a large role in threats to data security in financial services during 2020. In recent years, hackers have also administered new trojan malware to target banking institutions. With these trojan attacks, hackers steal money directly from the target company, as well as collect confidential company data that can then be sold to other cybercriminals.

These trojan attacks typically begin as phishing emails, which are sent to banking employees by hackers and are disguised to look like internal company emails. Unsuspecting employees then open email attachments with malicious coding, allowing the hackers to access the target company’s internal data systems.

Attacks Against Web Applications

Online word processing software, spreadsheet tools, and email services (such as Google Docs, Microsoft Office, and Gmail) are common across the business world. These programs and services give financial professionals easy access to communication and data organizing tools, optimizing daily business operations for an increasingly digital world.

In addition, the expansion of digital web applications across both local and global banking institutions has given consumers more direct access than ever to their monetary assets, accounts, and other services. However, financial web applications are also at risk of being exploited by hackers, as seen in the high-profile Equifax data breach in 2017.

In financial services, hackers tend to target online banking websites and applications. These tend to have weaker security infrastructure than other applications that are linked to internal data systems.

In fact, the FBI recently released a warning to mobile banking users regarding a potential increase in web application attacks against financial services. During the COVID-19 crisis especially, more consumers have relied on mobile banking and finance options, making these applications a key target for hackers.

Internal Threats to Data Security

According to a 2016 report published by IBM, 60% of all cyberattacks result from insiders within companies. Even if you feel confident that none of your employees would seek to harm your company, internal threats also include the actions of third-party vendors, as well as both malicious and accidental behavior. Maintaining data security in financial services, therefore, means preparing for the possibility of an internal threat.

Insider Attacks

IBM’s report found that a quarter of internal cybersecurity incidents were unintentional. Accidental malware downloads and employees falling for convincing phishing email scams are common ways that your IT system’s data security can be compromised.

The other 75% of internal attacks occurred with the insider’s full knowledge. Even if an employee doesn’t want to hurt your company, a hacker could blackmail or threaten them into malicious action. Low morale among staff can also lead to a more lax attitude regarding your company’s data security.

Because the financial services industry handles such large amounts of sensitive data on a daily basis, all employees should understand the role they play in maintaining their company’s data security. Boosting morale and requiring periodic cybersecurity training for all employees are important steps to take for internal data security in financial institutions.

Third-Party Vendor Vulnerabilities

The financial services industry has greatly benefited from associations with third-party vendors, who can provide recruitment management services, cloud data services, human resources, and more. However, while your own institution may have high data security standards, some third-party vendors may put your company’s information at risk without your knowledge.

In 2019, for instance, a large data leak in the U.S. banking sector left over 24 million financial records exposed to the public. The breach resulted from mistakes made by a Texas-based, third-party firm that offers data and analytics for financial institutions.

Performing cybersecurity risk assessments with potential third-party vendors before signing a service contract can help you avoid these types of internal threats to your organization.

3 Key Elements of Maintaining Data Security in Financial Services

Now that you know more about the threats facing your industry, how can you use this knowledge to improve your firm’s cybersecurity? Consider these 3 key elements of maintaining data security in financial services to get started.

1. Prioritize Data Security for All Employees

It is always important for everyone at an organization to be committed to its cybersecurity, but especially in the finance industry. Even low-level employees may handle sensitive client information on a daily basis. This is why it’s vital for employees, managers, and finance leaders alike to have solid data security protocols to follow in their daily operations.

Adding two-factor authentication to business logins, embedding digital threat-spotting techniques into all employee onboardings, and creating actionable incident response plans for potential cyberattacks are a few key steps that financial firms can take to improve data security among employees.

2. Audit the Cybersecurity Practices of Third-Party Vendors

Today, third-party vendors are involved in many aspects of financial operations. To reduce risks associated with third parties, be sure to conduct cybersecurity risk assessments on all potential vendors before any service contracts are signed.

Even if your company is currently involved with a third-party vendor, continuous risk monitoring is also important to ensuring that these service providers maintain proper data security standards.

3. Establish a Reliable IT Team and Infrastructure

The cyberthreats facing financial services today are more challenging than ever. While there are many ways to enhance a financial institution’s data security, it will be difficult to implement lasting changes without a robust and prepared IT team and infrastructure in place.

If you do not have an IT team, or if these activities fall outside the scope of your IT department, outsourcing additional IT help could be the solution. Fully managed IT service providers can supply your company with technology and cybersecurity solutions tailored to the needs of the finance industry.

Enhance Your Financial Firm’s Data Security with Guardian Computer

Members of our IT team, who can help you navigate data security in financial services.

Don’t let the challenges of data security in financial services bog you down or keep you from proper cybersecurity! For over 20 years, Guardian Computer has secured data systems and everyday tech operations for clients ranging from private equity to turnaround management. We were also recently named one of the world’s best managed service providers.

With Guardian Computer’s on-call services, our tech experts can respond quickly to any IT project or cyber emergency that comes our way. For long-term support and solutions, our fully managed IT services offer you ongoing assistance, monitoring, and protection.

Call us at 504-457-0005 or contact us online to talk to our team about what we can do for you!

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7 Steps to Recover Data from a Water Damaged Hard Drive

Spilled water on your hard drive? Don’t despair just yet! If handled properly, information can often be recovered from a wet hard drive. Here are 7 steps to recover data from a water damaged hard drive:

  1. Tend to the water damaged hard drive immediately.
  2. Do not attempt to plug in the hard drive.
  3. Do not dry the hard drive with a hair dryer or in the sun.
  4. Leave the protective covering on the drive. 
  5. Gently rinse with clean, cool water and seal it in a Ziploc bag.
  6. Do not let your brother-in-law touch it.
  7. Give the drive to a data recovery specialist.

Hard drive water damage is a common problem for both work and home computers. You could lose important information, waste valuable time, and even have to replace your hard drive. Take the time to learn about this issue and the steps to recover a water damaged hard drive, so you stand a better chance of successfully recovering your hard drive any time it gets wet.

Review these steps to recover data from a water damaged hard drive in our infographic so you can act fast!

Avoid the mistakes in this infographic when taking steps to recover data from a water damaged hard drive.

What Does a Hard Drive Do, Exactly?

Your hard drive is the device used to store and access data on your laptop or desktop. Not only does it keep the pictures, videos, music, files, and other information you save, but also the information required for your computer to run. For example, the files for your operating system and software programs are also kept on your hard drive, making it a critical part of your computer’s functionality.

Will Water Damage a Hard Drive?

The first question you’ll want to ask after a spill is “Will water damage my hard drive?” The answer depends on the circumstances of the incident and the actions you take.

A hard drive stores data magnetically in its platters. When a hard drive gets wet, the water could potentially cause a short circuit, especially if it dries on the platters.

But water alone will not destroy a hard drive or delete its data. While water can damage a hard drive’s electronics, the data itself is stored magnetically. It will remain there on the platters, which is why professionals can still recover information from a water damaged hard drive.

Depending on the circumstances, however, the data may become more difficult or perhaps impossible to retrieve. This is because the disks of hard drives have little, fine heads that read the information stored on the platters. When the water dries, it can leave a film or residue over the platters and heads, making it much harder to recover data as the platters begin to degrade over time.

It is for this reason that none of our 7 steps to recover data from a water damaged hard drive include attempting to dry the drive. It is actually best to keep the hard drive wet! We recommend placing it in a Ziploc bag until you can get it to a professional.

Follow These Steps to Recover Data from a Water Damaged Hard Drive

Learn more about each of our 7 steps to recover data from a water damaged hard drive below to maximize your chances of successful recovery.

Tend to a water damaged hard drive like this one immediately for best results.

1. Tend to the water damaged hard drive immediately.

Acting fast is critical to reducing the likelihood of hard drive water damage. A quick response is key to a quick recovery!

The first step you should take is to immediately remove the hard drive from water. The longer your hard drive is submerged in water, the more likely it is that the dry parts of the drive could become water damaged. If the hard drive is on, power it down right away as well.

2. Do not attempt to plug in the hard drive.

It may be tempting to try to test your hard drive to see if it still works. But plugging it in and turning it on could just make things worse.

Plugging in a water damaged hard drive could not only cause further damage to the drive, but also to your computer or other devices. If a water damaged hard drive is turned on, it might become impossible for experts to retrieve your data. The water on the platters could cause the heads of the disks to rip off, leaving you without the ability to read the information stored on the drive.

3. Do not dry the hard drive with a hair dryer or in the sun.

If water can damage a hard drive, then surely you should try to dry it off, right? Wrong!

What many people don’t realize is that the water on your hard drive’s platters and heads does much more damage if it is allowed to dry. If you dry out the water, it can leave behind residue that makes it more difficult or even impossible to recover your data.

Drying a water damaged hard drive with a hair dryer, the sun, or any method involving heat is particularly dangerous. Excessive heat can damage the drive further.

4. Leave the protective covering on the drive.

The protective covering is there for a reason. It protects your hard drive from airborne dust and particles that can stick to the platters.

Don’t try to take a peek to see if water has gotten inside. Removing the protective covering could expose your hard drive to dust and particles or allow water to reach more of the drive.

5. Gently rinse with clean, cool water and seal it in a Ziploc bag.

It may not be your first thought to rinse an already wet hard drive with more water. But if the water is contaminated with any particles, they could adhere to the drive if it starts to dry out.

Gently rinse your hard drive with clean, cool water. Then store it in a Ziploc bag or other sealed container to ensure that it won’t dry. Your first impulse is probably to dry the hard drive, but it is actually best to leave it wet, as a film may form once the water dries that makes data recovery even more difficult.

6. Do not let your brother-in-law touch it.

The thought of hard drive water damage can easily send you into a panic. What will happen to your data? How much will it cost to fix this? Will you end up having to buy a new hard drive?

You might be tempted to try to fix it yourself, either to save money or to get it done faster. Maybe you have a friend, coworker, or brother-in-law who’s handy with computers. Couldn’t they fix it for you?

Unless you have professional training, experience, and equipment for dealing with water damaged hard drives, you risk causing more harm than good. If you make the problem worse, it could take more time, cost more money, and even render your data unretrievable. It’s best to take your hard drive straight to an expert!

7. Give the drive to a data recovery specialist.

Not every IT professional is capable of handling data recovery, and not every computer repair store has the state-of-the-art equipment or clean room that will give you the best results. We recommend bringing a water damaged hard drive to a data recovery specialist.

How can you find such a specialist? To start, Business.com names Datarecovery.com as the best service for hard drive recovery in 2020. Datarecovery.com offers hard drive recovery for both internal and external hard drives. You can mail your hard drive or visit one of their locations in Edwardsville, IL; Pleasanton, CA; Phoenix, AZ; or Toronto, ON Canada.

Otherwise, search for data recovery firms in your area or ones that will take your hard drive by mail. Consider the following tips to help narrow your search:

  • Look for data recovery firms that have a cleanroom where they can safely review and repair your hard drive.
  • See if you can get a price estimate and if it fits within your budget.
  • Check how quickly they work and, if needed, whether they offer rush services.
  • Find out how the extracted data will be delivered to you and if their methods fit your needs.
  • Review their cybersecurity certifications and protocols.

If possible, get your hard drive to an expert within 24 hours. This can reduce the risk of your platters degrading. If you are unable to find a suitable option locally, you can mail your hard drive overnight to a specialist instead.

Protect Yourself from Hard Drive Water Damage

Dealing with hard drive water damage is a nuisance at best and a nightmare at worst. Even if you are careful never to eat or drink around your computer, there’s always a chance you’ll get caught in the rain with your laptop or your home will flood. There’s no guaranteed way to avoid ever damaging your hard drive, but you can still protect yourself from data loss.

Regularly backing up your data is an excellent habit, both at home and at work. You can back up your data physically, such as on an external hard drive, or digitally in the cloud.

Don’t wait until it’s too late! Before another accident happens, find a data backup method that works for you and start a routine for backing up your data. Your future self will thank you!