Cloud security for financial institutions

The sensitive nature of the data handled by the financial services industry makes it a prime target for cyberattacks. Regardless of the severity of these attacks, it's safe to say that they can have dire consequences for both customers and financial institutions. 

Financial institutions worldwide experienced a significant increase in ransomware attacks between 2021 and 2024. In 2024, about 65% of financial institutions reported experiencing a ransomware attack, compared to 64% in 2023 and 34% in 2021.

Financial businesses continue to migrate their operations to the cloud to enhance efficiency and scalability, and the need for robust cloud security is paramount. 

The financial sector's unique challenges require a mammoth effort. While we go through them, we will also offer actionable strategies to safeguard sensitive data and the industry as a whole.

The financial services industry can only operate in a highly regulated environment. For example, they are subject to strict compliance standards, including the General Data Protection Regulation (GDPR) and Payment Card Industry Data Security Standard (PCI DSS). 

As the industry manages vast amounts of sensitive customer data, including financial transactions, personal information, and intellectual property, these regulations enforce strict requirements to ensure data protection, privacy, and security. 

Although many financial service providers like banks and insurance companies are known to operate on-premises, many also leverage the cloud to take advantage of its many benefits.

Companies that choose to work with a managed services provider must ensure that they properly understand the security risks associated with cloud service providers (CSPs). The first step in this process is to properly vet cloud service providers and assess the security posture of their partners.

This approach can help financial institutions face many third-party risks and implement effective contract management and monitoring protocols.

In a world where financial crime and fraud are rampant, preventing sophisticated cyberattacks like phishing, ransomware, and identity theft is paramount. In fact, it's essential to take proactive steps to detect and respond to fraudulent activities in real-time.

Beyond cybersecurity, financial institutions must also take steps to minimize the risk of money laundering and other financial crimes.

Implementing robust authentication methods, including multi-factor authentication (MFA), biometrics, and behavioral analytics is vital. In this scenario, two-factory (2FA) might not be enough.

It's also important to enforce granular access controls based on the least privilege principle. For example, banks benefit from enforcing zero-trust protocols following the least privilege principle.

Internal cybersecurity and IT teams must continuously review and update access permissions to mitigate the risk of insider threats. Implementing identity and access governance (IAG) to automate access management processes is an excellent idea for successfully managing all this.

In the digital age, deploying advanced encryption standards (AES) to protect data while it's at rest and in transit is critical. Businesses must also follow key management best practices. This includes key rotation and encryption key management systems. 

Financial institutions, including fintech startups, can ensure data encryption across all cloud services and applications by following security best practices.

Security teams working with cloud services providers can also benefit from using security orchestration, automation, and response (SOAR) and security information event management (SIEM) platforms. 

They will also benefit from deploying intrusion detection and prevention systems (IDPS) to monitor network traffic for suspicious activities. However, using these robust security systems isn't enough. Financial institutions must engage ethical hackers to conduct regular and thorough vulnerability assessments, including penetration testing, to identify potential weaknesses before bad actors do.

When engaging in security assessments, it's also essential to establish and test the incident response plans to minimize the impact of security breaches.

Financial institutions are known to leverage compliance frameworks (e.g., NIST Cybersecurity Framework, ISO 27001, PCI DSS) that align security controls accordingly. However, it's crucial to conduct regular compliance audits and gap assessments continuously. 

Financial service companies can also implement continuous monitoring and reporting protocols to demonstrate compliance.

All organizations, not just those in the financial sector, must conduct regular and comprehensive cybersecurity training for all employees, including executive leadership. 

For example, engaging in regular phishing simulations and awareness campaigns is important. This approach can help keep staff alert to a potential social engineering attack. 

Financial service providers must also strive to develop a strong security culture. They can achieve this by recognizing and rewarding employees for reporting security incidents.

CSPM tools help organizations assess cloud configurations and identify potential vulnerabilities. Financial institutions can stay a step ahead of threat actors by continuously monitoring cloud environments for changes and anomalies and implementing automated remediation for security issues.

Here are some additional considerations financial institutions must ponder:

Cybersecurity is always going to be a game of cat and mouse. As such, staying informed about the latest cyber threats and vulnerabilities will help security teams adapt security measures accordingly.

Establishing and deploying these strategies that are up to date on emerging threats can significantly enhance financial institutions' cloud security posture and protect sensitive customer information.

After all, while the cloud helps financial institutions provide better user experiences, faster transactions, and operational efficiency, cloud security helps businesses stay out of the headlines.