Financial institutions need to do better with data protection

Data breaches have become one of the more dangerous and common issues facing businesses and public sector organizations in the past several years. With hackers continuously improving their skills when it comes to circumventing shoddy security standards, and more companies using advanced payments systems such as ACH cards, the need for more thorough protections has never been greater.

Some estimates put the annual cost of data breaches incurred by consumers and businesses in the tens of billions of dollars, while related crimes such as identity theft have also increased. Financial services providers need to be especially careful and not only follow regulations such as the Payment Card Industry Data Security Standards, but go above and beyond the call of duty to avoid data breaches.

Financial services most at risk
GCN recently reported that a new study found organizations in the banking sector are most at risk of data breach, and that more executives are beginning to understand the challenges of information protection and payment security. The study, conducted by the Lieberman Research Group, measured the level of concern among banking, government, health, telecommunication and travel organizations.

According to the news provider, 32 percent of banking executives surveyed said that they were very concerned about data breaches, while 35 percent stated that they were at least somewhat fearful of the threat. This is compared to 31 percent of government entities being very fearful and 30 percent somewhat concerned.

However, while the survey did find that a total of 67 percent of financial institutions are concerned about data breaches, the nation as a whole is becoming more comfortable with the security practices needed to avoid the threats. The source explained that the index reached 120 in its latest iteration, which is 11 points down from the same period last year.

Additionally, GCN noted that the index is now far below its highest level of 164 points, which was recorded in 2011. The Lieberman Research Group also sought to discover the opinions of consumers, executives and small business owners regarding the involvement of the federal government in data security regulations and enforcement.

The news provider said that 46 percent of respondents were in favor of the increased data breach notification standards, while 48 percent were against this prospect.

Tangible losses to come
American Banker recently explained that a new survey from the Ponemon Institute revealed 56 percent of companies have experienced a data breach in the past two years, while the banking system was among the most affected. The average cost of a data breach was pegged at $9.4 million.

"The whole idea of data protection and security in the financial services universe is different than in other industries," Larry Ponemon, Ponemon Institute founder and chairman, explained, according to the source. "It's more painful when people bring down your system and take over your accounts and maybe even steal money. A lot of financial services organizations realize that having a policy in place may be a good thing."

All organizations should ensure that payment protections, such as those related to ACH cards, comply with data security regulations and best practices.