Introduction
In 2024, financial firms will face an increasingly complex data security and compliance landscape. Customers will expect their sensitive financial data to be protected, regulators will demand adherence to strict laws and standards, and cyber threats will continue to evolve. Firms that adapt and follow best practices for data security and compliance will be better positioned to avoid fines, maintain customer trust, and focus on core business growth. This article examines the key trends shaping data security and compliance for financial firms in 2024 and provides recommendations across people, processes, and technology.
Heightened Regulatory Scrutiny
Financial regulators worldwide are enacting stricter data protection and privacy laws. In particular, the expansion of General Data Protection Regulation (GDPR) principles beyond the EU will compel firms to re-evaluate their data governance policies and procedures. By 2024, the regulatory gaze will sharpen on:
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Data collection, storage and usage – Regulators will expect minimized data collection and retention. Firms must know what data they have and delete it when no longer required.
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Data subject rights – Individuals will gain more control over their personal data. Firms must enable data subject requests like access, correction and deletion.
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Data transfers – Cross-border data transfers will face increased oversight. Firms must assess transfer mechanisms and localization requirements.
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Vendor risk management – Outsourcing and third-party partnerships will require enhanced due diligence and ongoing oversight.
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Notifications for data breaches – Firms will need to notify regulators promptly in the event of breaches. Proactive planning for incident response will be crucial.
To avoid significant fines and business disruption, financial firms must implement comprehensive data governance and compliance programs ready for proactive and reactive regulatory inspections.
Rising Customer Expectations
Today’s consumers demand personalization, ubiquity and security in financial services. By 2024, customers will expect firms to:
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Secure sensitive data like account numbers, passwords, signatures, financial documents and transaction records with encryption and access controls.
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Anonymize or minimize collection of data like geolocation, biometrics and web browsing habits.
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Be transparent about data collection, explaining what is gathered and why.
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Provide privacy controls and options regarding data sharing and marketing communication preferences.
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Notify quickly if a breach may have impacted their personal data.
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Enable convenient access to their own data to view, update or delete as desired.
Firms that fail to meet these expectations risk reputational damage and customer churn. A robust data governance framework must be backed by policies and tools that give customers visibility and control over their financial data.
Emerging Cyber Threats
Cybercriminals continue to evolve their techniques for illegally accessing or disrupting critical financial data. Key threats on the horizon include:
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Ransomware attacks that encrypt data until ransom is paid.
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Supply chain compromises via vulnerable third-party partnerships.
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Insider threats from malicious employees or contractors.
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Phishing schemes using social engineering for credential theft.
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API and software vulnerabilities enabling remote data access or manipulation.
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Botnets and DDoS attacks overwhelming systems via zombie devices.
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Deepfakes using fake biometrics or media to bypass authentication.
Firms need layered defenses combining policies, user education, technologies like AI-driven behavioral analytics, and cyber insurance to manage these threats. Partnerships across the industry to share intelligence will also help stay ahead of attackers.
Recommendations for 2024 Readiness
Financial firms have an opportunity to transform their data security and compliance posture to meet future challenges. Focus areas include:
People
- Establish a dedicated data protection team with cross-functional expertise.
- Appoint regional Data Protection Officers to liaise with regulators.
- Train all employees regularly on privacy and security policies.
- Vet third parties on their data controls and compliance track record.
Processes
- Classify data types with appropriate security levels, retention and usage policies.
- Assess data flows, third-party touch points and cross-border data transfers.
- Adopt data protection by design and default in all processes.
- Enable individual data subject rights requests.
- Test incident response plans via breach simulations.
Technology
- Implement end-to-end data encryption especially for sensitive data.
- Deploy user and entity behavior analytics to spot threats.
- Adopt multi-factor authentication and access controls.
- Monitor systems, networks and user activity via security tools.
- Backup data regularly with air-gapped, redundant copies.
Conclusion
As financial services digitize further, data is becoming the lifeblood of the industry. Firms must make data security and compliance a top strategic priority to avoid crippling fines, brand damage and opportunity costs. By investing proactively in people, processes and technology and partnering across the ecosystem, financial firms can establish trust and transparency with customers while also satisfying regulatory obligations. The recommendations provided will help secure advantages in the evolving digital economy through strong data stewardship.
