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The Importance of Data Security in Financial Services Software Development

The pandemic forced online habits to shift rapidly, providing cybercriminals a fertile learning ground. Although cyberattacks have grown exponentially in the last few years, the financial sector seems to bear the brunt of it. Cybercriminals embarked on a crime spree targeting financial services with data breaches, ransomware attacks, bank account theft, and more.

By 2022, cyberattacks aimed at financial services firms grew by 257%. Criminals actively target banks and other financial institutions to steal valuable data they can resell on the black market. Such developments highlight the need for heightened data security and privacy in finance.

Financial sector players are increasingly switching to custom financial software to bolster their cybersecurity efforts. Such solutions have exceptional safety measures to help bankers effortlessly ward off cyberattacks.

Data Protection Is a Legal Requirement

Besides giving your firm a competitive advantage, personal data protection is a precondition for existence. All enterprises handling or processing financial data are legally obligated to keep it safe, secure, and away from marauding hackers.

Financial institutions are subject to various strict regulatory requirements. These include Payment Card Industry Data Security Standard (PCI DSS), the General Data Protection Regulation (GDPR), and Health Insurance Portability and Accountability Act (HIPAA). These regulations require financial service providers to implement robust security measures to protect sensitive personal information.

A core approach to data security and privacy in finance goes beyond the standard encryption, access control, and firewall. It requires a solid organizational structure with built-in reporting procedures for cybersecurity operations.

Custom financial software helps create a safe networked environment compliant with all industry regulations. It also helps you build an office culture steeped in cybersecurity awareness.

Covering Industry-Specific Mandates

Financial service providers must adhere to basic security standards, including PCI DSS compliance and other regulations. PCI DSS requirements apply to all firms that accept online credit card payments.

The requirements set the gold standards for secure data storage and transmission. The PCI DSS standards set the minimum requirements for data encryption, protection, and access control of customer banking data.

Working with a financial services software development partner can provide a custom solution meeting these specs. They can design, develop, and test the custom solution to ensure your firm isn’t exposed to compliance risks.

It Accounts for Dynamic Cyberattacks

Cybercriminals patiently monitor computer networks, probing for weaknesses and vulnerabilities for weeks or months. As financial service providers upgrade to sophisticated networks, their systems are impenetrable. That forces cybercriminals to switch tactics to exploit and capitalize on human errors.

Hackers usually target financial service employees with phishing schemes and malware attacks. If an employee unwittingly installs the malware or opens a phishing email, it grants the criminals access to the network.

Once in your system, hackers will steal valuable information and trade secrets and install ransomware. Worse still, they can take over your system and target your customers with fraudulent emails to steal user credentials. They often extort money from your customers or subject them to identity theft.

Financial services software development companies provide turnkey solutions that account for changing landscape. Such solutions bear enhanced security measures to lower your firm’s susceptibility to such attacks. They use regular risk assessment and incident reports to build credible threat models and create prevention strategies.

It Reduces Financial Loss

The financial sector has among the highest cybercrime costs. At $5.97 million, the average cost of a data breach in the financial sector is astronomical. The cost could be higher if the data breach leads to a ransomware attack.

DDoS attacks, malware, phishing, data exfiltration, and advanced persistent attacks are favoured by hackers targeting confidential transactional data. Cybercriminals use to steal user account information and commandeer transactional systems to siphon funds or disrupt operations.

Data breaches are prohibitively expensive because they carry direct and indirect costs.

Direct costs are common during ransomware attacks, and the ransom demands vary from thousands to millions of dollars. Hackers often set the ransom demand as a percentage of the company’s annual turnover. However, experts estimate the direct costs of a data breach to account for a small portion of the overall costs.

The indirect costs associated with data breaches are often higher. Between the resultant downtime, recovering lost data, and cleaning up the malicious software, the costs can add up. On average, a business takes 22 days to fully recover from a ransomware attack.

It Protects Against Reputational Damage

Reputational damage almost always results whenever a financial institution suffers a data breach. The resultant damage can prove costly if news of the breach goes viral on social media or is picked by media outlets.

Reputational damage can severely hurt financial service providers, leading to additional financial losses. You’ll likely lose customers in droves and have trouble attracting new customers. Rebuilding a damaged brand image following a data breach can prove tedious and challenging.

Besides the ransom paid and the mounting indirect costs, you’re also likely to incur huge fines from the regulatory authority. Getting hacked amounts to a breach of contract, and government oversight bodies levy hefty fines for these transgressions.

It Offers a Turnkey Solution

Working with a professional financial services software development partner increases your cybersecurity efforts. A reliable software development partner works with you to create a turnkey product that suits your needs. Besides designing and installing, your development partner should also test and validate the software solution.

Financial software testing and validation are crucial to the software development lifecycle. These processes ensure that your custom solution functions seamlessly, is defects-free, and meets regulatory compliance requirements.

The financial software testing and validation process covers every aspect to reward you with a solution that fits your needs. Key testing areas include functionality, performance, regulatory compliance, and user acceptance testing.

Security testing is paramount, as it helps identify potential vulnerabilities. Cybercriminals take advantage of any flaws and vulnerabilities to penetrate your computer network. Your developers must subject your solution to thorough testing and validate every aspect.

Take Charge of Your Cybersecurity With a Custom Software Solution

Cybercriminals increasingly target financial service providers because they’re a treasure trove of valuable data. Switching to custom financial service software can bolster your ability to safeguard sensitive data. A reliable software development partner can build turnkey solutions around your business processes. Custom-built financial service software reduces your overreliance on third-party solutions for safety and security.

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