Connect with us

Technology

Ensuring Compliance with Stringent Data Security Regulations

James Carver

A review of compliance requirements faced by financial sector organisations

Authored by James Carver, Managing Director, Business Continuity and Risk Management, Onyx Group

Compliance Requirements in the Financial Sector
Banking and financial services companies are faced with increasingly stringent compliance requirements when managing their data. Compliance requirements can relate to anything from data backup to how the original data is stored, creating a need for safe and reliable data storage solutions.James Carver

A number of high profile cases have been reported involving inaccurate records and data loss, as a result of failing to comply with regulations. Most recently, in October 2012, the Financial Services Authority (FSA) fined the Bank of Scotland (BOS) £4.2 million1 for failures in their systems which meant it held inaccurate mortgage records for 250,000 of its customers.

It is vital to protect any information that relates to any transaction or that could be used as part of a transaction. As a result, every stage of communication, whether it is written or verbal, needs to have an audit trail and be defendable against litigation. For example, it is common practice for voice recordings to be taken and emails to be archived and stored securely.

Each “type” of data has a life cycle and generally each organisation will employ a compliance officer to ensure that it is handled in line with regulations. Depending on the institution, the number of compliance requirements can vary. Guidelines exist to help individuals manage processes and safeguard against risk, such as data loss and the illegal use of privileged information. Data backup strategies are recommended to protect against accidental deletion of data, virus outbreaks, floods or fires, disk failures or theft.

Organisations and institutions that might be making investment decisions for financial institutions, such as pension funds, are also guided and protected by regulatory compliance. In addition to this, some organisations can operate on both sides of a “deal” so they might be offering advice to both buyers and sellers. When this is the case, there needs to be clear, demonstrable demarcations with data and user separation, so as one discipline does not influence the actions of the other.

What do I need to adhere to?
There are a number of regulations that must be adhered to in order to ensure that data is safe and secure. For example, the AICPA (American Institute of Certified Public Accountants) developed and maintains the SAS 70 (Statement on Auditing Standard 70)2, which relates to the processing of transactions by service organisations and can be used to show transparency to customers and regulatory bodies. Some of the many service organisations that are guided by this include insurance claim processors, credit processing companies and clearing houses.

The SAS 70 audit has grown increasingly popular with the implementation of the Sarbanes-Oxley Act of 2002, which suggests using SAS 70 as an important resource to show the effectiveness of a service organisation’s internal controls and data security safeguards.

Overcoming Compliance Challenges
It can be challenging for companies to fully understand compliance requirements as their interpretation can differ from the Financial Services Authority’s (FSA) understanding. For example, regulatory guidelines often use phrases such as “we would expect a company operating in this market to have effective disaster recovery (DR) procedures”, giving an element of choice as to whether companies wish to do so, or as to whether that provision is adequate. Another example is the discrepancy in the area of taking voice recordings from mobile phones. While some companies strictly adhere to regulations and record mobile phone conversations, others simply use internal company policy and ban mobile phone use, but then do not log instant messaging (IM) or conversations via online chat services. These discrepancies can often result in companies receiving fines for non-compliance. Further confusion results when the fines are higher than what the company expects to receive.

Companies like ourselves can offer advice and experience to assist in the understanding of compliance requirements but ultimately the banking or financial services firm must make their own interpretation of their compliance position and the rules, based on the market(s) they operate in, who they service and risk.

Due to a growing need for transparency, companies can be asked to prove that they are adhering to legislation at any time and therefore must have the necessary data security tools in place.

There are a number of IT solutions that have been verified after intense scrutiny from the regulatory authorities and that are known to comply with what an organisation would be expected to present to any regulatory body.

These include email archiving and voice recording technologies, as well as full DR solutions to protect a business’s IT infrastructure in the event of floods, fires or theft, for example.

Some of these types of records have been used in the Leveson Enquiry for example and the Libor scandal, in which Barclays was fined £290m in June 2012 after some of its derivatives traders were found to have attempted to rig the London inter-bank lending rate, which is considered to be one of the most crucial interest rates in finance.

In such cases, banks are expected to be able to produce communications in support of both their version of events and to defend against allegations.

From a DR perspective, many companies gain commissions on trading on markets, or need to make decisions on market changes. Being off-line means they cannot earn commissions or react to change and revenues can be affected. As such, they have very tight Recovery Time Objectives (RTOs).

It is fundamental that all businesses, ranging from small and medium-sized enterprises (SMEs) to multinational corporations (MNCs), implement a comprehensive data back-up system to reduce the risk of data loss.

The agility of “Cloud Storage”, in which data is stored in virtualised pools, is growing in popularity due to its many benefits. These include eliminating the need for physical storage space and reducing energy consumption, which in turn lead to cost savings. Hosting providers operate large data centres and companies that require data hosting buy or lease storage capacity from them. This also adds flexibility as storage space can be easily scaled up or down depending on the requirements of the organisation.

Cloud back-up solutions are highly secure, incorporating bespoke encryptions and security practices such as enterprise-grade firewalls. As an example, Onyx Group’s Cloud Backup provides military-grade encrypted online duplication of source data into secure storage vaults at ISO27001 accredited data centres. This data is then replicated between geographically diverse facilities for added resilience. Peace of mind is provided as 24/7 high-specification security systems and personal monitoring are in place at each data centre.

It is also important to consider authorisation rights and assess who in a company should be able to access specific data. Usage rights can be determined with passwords that give access to different areas of the IT system depending on job role.

Conclusion
The safeguarding of data in the banking and financial services sectors is crucial due to the confidential nature of information. Using cloud solutions to backup and store data gives companies the flexibility to choose between backing up data every second, hour, day or week, helping organisations to comply with stringent regulations.
Multiple data centres provide peace of mind so, if data is lost, it is backed up elsewhere, enabling business continuity. Workplace recovery centres are also in operation, meaning office space is provided to companies in the event that their workplace is inaccessible. Data can then be accessed from the relevant data centre, restoring business operation with minimal or no downtime.

References
1.    http://www.fsa.gov.uk/library/communication/pr/2012/094.shtml
2.    AICPA (American Institute of Certified Public Accountants) SAS 70 (Statement on Auditing Standard 70)
3.    Sarbanes-Oxley Act of 2002, http://www.soxlaw.com/
4.    Leveson Enquiry, http://www.levesoninquiry.org.uk/
5.    Libor scandal, http://www.bbc.co.uk/news/business-18671255

Technology

How sustainable AI improves the triple bottom line

How sustainable AI improves the triple bottom line 1

An investment in green AI enables financial services firms to align people, profit, and planet

By Nick Dale, EVP business development, Verne Global

Green investing is widely regarded as a mega trend, with chief executive Larry Fink of BlackRock, the world’s largest money manager, stating, “Climate change has become a defining factor in companies’ long-term prospects … awareness is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance.”

The recent seismic shift in public opinion about climate change has not only increased attention on the sustainability and societal impact of investing in a company, it’s also influencing the decisions being made in finance industry boardrooms overall, whether that’s implementing innovative business models or adopting new partnerships and technologies. However, as business leaders strive to make green choices, many are unaware of the hidden environmental costs of the technologies they are employing.

AI in the finance industry

The use of AI has become ubiquitous across industry sectors, and is now an integral part of the technologies being used in financial services, from optimising asset portfolios and underwriting loans to assessing risks.

AI is especially beneficial for things like quantitative trading, which uses large data sets to identify patterns that can then inform strategic trades. AI’s machine learning models can analyse vast and complex data and make predictions accordingly. But AI models are not only data-hungry, they are power hungry.

Power-hungry AI

Supercomputers train and test mountains of data for AI models, and can run 24-hours a day, for hours, days, or even weeks. These applications consume huge amounts of energy, and as AI technology continues to grow and develop, the computations behind it are also increasing in size and complexity. The carbon emissions from training a single AI model for language translation is roughly equivalent to 125 round-trip flights from New York to Beijing (AI Now 2019 Report).

The carbon cost of AI becomes even higher when you factor in the energy required to keep the computing equipment housed in data centres cool – overheating can impact performance and damage equipment. As a result, in a conventional data centre, at least 40% of all energy consumed goes towards cooling.

But sustainable AI is possible if financial services organisations take positive steps to minimise its environmental impact.

Minimising AI’s carbon footprint

Location, location, location

Many tech giants are committing to reducing their carbon footprint, with Amazon pledging to reach 80% renewable energy by 2024, and Google investing in data centres in Nordic countries specifically for better energy efficiency.

Nick Dale

Nick Dale

This is because in the Nordics, data centres are largely powered by renewable energy sources. Iceland, in particular, uses 100% renewable hydroelectric and geothermal power – with no nuclear power sources – and is connected to a reliable power grid. These renewable energy sources are much less harmful to the environment because, unlike fossil fuels, they don’t cause pollution and don’t generate greenhouse gases. Not to mention, renewable energy is based on natural resources that can be replenished within an average human lifetime, as compared to fossil fuels, which can take thousands—or even millions—of years to replace.

Over 80% of compute doesn’t need to be near the end-user, and in those situations, choosing data centre locations in cool climates has a significant impact on carbon emissions. AI compute can be located in places like Iceland, which can utilise all-year-round, free cooling due to its temperate climate.

Data centres that are located in hot climates, like Arizona in the US, require high-powered cooling systems in operation around the clock. With average high temperatures of 40° Celsius in the summer, these data centres can use up to 4 million gallons of water a day to absorb heat through evaporation into cooling towers. Consequently, when location doesn’t hamper performance or accessibility, housing AI compute in data centres with natural cooling is a no-brainer.

Energy efficient and cost-effective

Many in the financial sector have traditionally viewed sustainability as a trade-off between profit and planet, but when it comes to green AI, financial services firms can have it both ways. By housing the servers that train AI models in data centres powered by renewable energy sources, businesses can substantially reduce energy expenses and benefit from long-term, fixed pricing.

And when renewable energy sources are combined with year-round, cool climates, the energy demands and costs of AI can be dramatically reduced. AI is here to stay, but by making the right choices, companies in the finance sector can still drive profitability whilst making real and measurable progress on sustainability.

Continue Reading

Technology

Survey of IT decision makers exposes the increased pressures IT organisations face amidst covid-19

Survey of IT decision makers exposes the increased pressures IT organisations face amidst covid-19 2

Independent Survey Uncovers the Limitations Traditional IT Infrastructure Imposes, Exacerbated by a Remote Workforce

Nebulon, Inc.®, the pioneer of Cloud-Defined Storage, released today the results of an independent survey completed by IT decision makers at 500 companies in the IT, financial services, manufacturing, retail, distribution and transport industries across the UK, US, Germany and France. Conducted in June of this year, the survey exposes the biggest challenges enterprises face in transforming their on-premises application storage environments, which have only been exacerbated during this COVID-19 era. While IT organisations cite multiple restrictions, the survey reveals limited infrastructure automation and high CAPEX as the most significant challenges for those deploying enterprise storage array technology, forcing them to re-examine IT spending and operations even more so than usual amidst the pandemic.

While increasing automation and reducing costs may seem like mainstream initiatives for any large organisation, the pandemic and resulting workforce restrictions mandate significant progress in days or weeks, versus months or quarters. The results of the survey, undertaken by Vanson Bourne, further reinforce this as respondents also highlighted their on-premises application storage environments are difficult to maintain, and reveal that they lacked the in-house expertise necessary to manage them. Even more disconcerting, respondents indicate that their traditional external storage arrays are not suited to handle new workloads, including containers and NoSQL databases. This is unsurprising as modern workloads have been architected for local versus shared storage resources.

British IT decision makers specifically ranked “expensive” highest, with 57% making this one of their top three challenges, followed by “time consuming to maintain” (50%) and “difficult to automate at scale” (49%). Respondents from smaller organisations (1,000-2,999 employees) were more likely to mark “lack of in-house expertise” highly compared to larger organisations (3,000+employees) (59% compared to 31%) while these larger companies were more likely to consider cost a top challenge (61% compared to 35%).

“The impact of the pandemic is forcing CIOs worldwide to reconsider their operations,” said Siamak Nazari, Co-Founder and CEO of Nebulon, Inc. “Reducing costs through server-based storage alternatives without the restrictions of hyperconverged infrastructure, and reducing operating cost pressure through cloud-based management of the application storage infrastructure are crucial initiatives for IT organisations looking to survive this new normal.”

For companies with a growing class of mission-critical data that cannot or should not move to the public cloud, Cloud-Defined Storage is an alternative to expensive storage arrays, offering enterprises a cloud-managed, server-based approach for mission-critical storage. By combining a cloud-based control plane, called Nebulon ON, with server-based storage that is powered by the Nebulon Services Processing Unit (SPU), Nebulon enables organisations to reduce cost for enterprise storage by up to half without compromising on enterprise data services. This is made possible by Nebulon’s unique architecture that makes use of commodity SSDs in industry standard servers, Ethernet in favour of Fibre Channel, and by eliminating operational complexities by moving management to Nebulon ON with an as-a-service model.

Nebulon ON uses AI to analyse application workloads during operations, provides actionable recommendations for IT organisations and provides a single API endpoint that greatly streamlines automation at-scale. Customisable application templates, tailored for customer’s application clusters, eliminate the guesswork in configuring infrastructure and produce repeatable, reliable infrastructure services for modern, mission-critical workloads. With the architectural and operational simplicity of Cloud-Defined Storage, application owners gain a self-service infrastructure provisioning that is unmatched with existing on-premises storage solutions.

“IT organisations have been seeking a cost-effective alternative to external storage arrays for years,” said Nazari. “With our Cloud-Defined Storage offering, they finally have the opportunity to reduce costs while also deploying a self-service solution for application owners that also reduces the operational burden.”

Continue Reading

Technology

Are you ‘prescribing’ the right security solution to your merchants?

Are you ‘prescribing’ the right security solution to your merchants? 3

By Sandra Higgins, Chief Marketing Officer at Sysnet Global Solutions, draws parallels between taking multivitamins for the body to keeping small businesses ‘healthy’ using an all-in-one security solution

When it comes to leading a healthy lifestyle, eating the right food, taking regular exercise, and maintaining a positive mindset are key. However, despite these best intentions and practices, you still might not get all the nutrients your body needs to ensure it is working as effectively as possible. To combat this, a doctor might suggest taking a daily multivitamin as an insurance policy, to guarantee the body gets all the minerals and vitamins it needs, avoiding any shortfalls. Makes sense, right?

This same logic can be applied to businesses and the importance of cybersecurity and compliance solutions, especially in the current climate and the risks associated with remote working. Like a doctor prescribing a multivitamin to help their patients’ minds and bodies function effectively, in the same way, acquirers can offer security ‘prescriptions’ to help merchants keep on top of business health. The prescription is then deployed by a security software provider, much like a pharmacy would, dispensing the multivitamin of data security services and tools to help keep businesses in good health.

Just what the doctor ordered

With a wide variety of data security and compliance solutions available, like the streams of vitamins you see on pharmacy shelves, smaller businesses can often become overwhelmed by the sheer volume of available tools and may forego sourcing their business ‘medication’ altogether.

Taking the stress out of trying to understand what the business needs, it’s an acquirer’s responsibility to prescribe one solution that allows merchants to stay security fit and prevents them from becoming overwhelmed at the choice available. That way, merchants don’t end up buying the wrong solutions or supplementary add-ons at additional cost, that they don’t actually need.

The benefits of an all-in-one solution

Like with medicine, merchants need to know the long-term benefits of prescriptions before administering it, and with an all-in-one solution, the benefits are vast. In addition to easy compliance with payments standards such as PCI DSS and access to security tools that are appropriate to business set-up, other benefits of all-in-one security solutions include;

  1. Increased energy levels. With business security taken care of, business owners will have more time to focus on what matters, giving them more energy to run other areas of the business.
  2. Reduced fatigue. If a business has to work hard to manage its security levels, or its owner is losing sleep over not managing it at all, resulting in overdrive just to perform simple tasks, being compliant with regulations, like the PCI DSS standard, becomes much harder.
  3. Long-term healthy lifestyle. By taking an all-in-one security solution, businesses will become ‘compliance and security fit’. Everything will run more efficiently, without security issues slowing things down and preventing a business from moving forward.
  4. Improved mood. Certain studies have shown that a daily multivitamin has positive effects on a person’s mood and emotional well-being. Not having to think so much about security and compliance lifts a burden and has the same effect – business owner don’t feel guilty about not paying it enough attention and there’s no need to worry about breaches or facing fees from not being PCI compliant.
  5. Reduced stress and anxiety. Similar to having an improved mood, by simply attending to security matters, businesses will have one less thing to worry about.

Strength in numbers

Not only is there a multitude of long-term benefits attached to having a fully managed data security solution prescribed by acquirers, allowing businesses to be faster, simpler and more profitable, it also means that costs are kept low. Many people buy vitamins in bulk to help share the cost with family or close friends. By buying security tools at scale, costs are kept down for merchants. This means that when a business is weighing up their budgets, they can be sure their compliance and security cost is entirely affordable.

When buying a multivitamin, customers will likely buy from a reputable brand so that you can rely on the quality and effectiveness of the daily dose, as reputable multivitamin providers undergo meticulous analysis and rigorous quality controls during the manufacturing process. In the same vein, humans wouldn’t want a substandard multivitamin for their own body, so businesses wouldn’t expect this from an acquirer’s prescription.

Easy to consume

Multivitamins can provide patients with numerous health benefits but the biggest benefit of all is having these solutions in one place. It makes it easier to ensure the body gets all it needs to stay healthy. It is the same thing for businesses. Taking a security ‘multivitamin’ will greatly take the stress out of addressing compliance and security, and provide a business with more time to focus on other pressing tasks.  If small businesses, in particular, can get into the habit of taking a regular multivitamin, a straightforward all-in-one solution, to address compliance and security at their business, they will be more open to trying other things too that may lead to an evolution of the business.

Continue Reading

Call For Entries

Global Banking and Finance Review Awards Nominations 2020
2020 Global Banking & Finance Awards now open. Click Here

Latest Articles

Return to work: Flexibility, preparation and communication are key 4 Return to work: Flexibility, preparation and communication are key 5
Business2 days ago

Return to work: Flexibility, preparation and communication are key

By Matt Weston, Managing Director, Robert Half UK As lockdown restrictions ease for the foreseeable future, conversations across the business...

How sustainable AI improves the triple bottom line 6 How sustainable AI improves the triple bottom line 7
Technology2 days ago

How sustainable AI improves the triple bottom line

An investment in green AI enables financial services firms to align people, profit, and planet By Nick Dale, EVP business...

The impact and implications of Covid-19 on financial reporting 8 The impact and implications of Covid-19 on financial reporting 9
Finance2 days ago

The impact and implications of Covid-19 on financial reporting

By Mark Billington, Regional Director, Greater China & South-East Asia, ICAEW The economic consequences of Covid-19 have been unprecedented, affecting...

Contis enters RBS Capability and Innovation Fund bid seeking £35 million for disruptive SME growth strategy   10 Contis enters RBS Capability and Innovation Fund bid seeking £35 million for disruptive SME growth strategy   11
Business3 days ago

Contis enters RBS Capability and Innovation Fund bid seeking £35 million for disruptive SME growth strategy  

Leading payments provider, Contis, has applied for two grants from the RBS & BCR Alternative Remedies Package, totalling £35 million.   Unlike most applicants who...

Four years of digital transformation in four weeks: UK lockdown puts pressure on brands to digitally deliver 12 Four years of digital transformation in four weeks: UK lockdown puts pressure on brands to digitally deliver 13
Business3 days ago

Four years of digital transformation in four weeks: UK lockdown puts pressure on brands to digitally deliver

Nearly a third (32%) of consumers would switch providers if a brand’s website is unavailable for more than 24 hours...

Demonstrating the value of collaborative leadership during crises 14 Demonstrating the value of collaborative leadership during crises 15
Business4 days ago

Demonstrating the value of collaborative leadership during crises

By Jean Stephens, CEO, RSM International In 2000, a leading expert in behavioural science, Daniel Goleman, outlined the six key...

Empowerment Accelerates Continuous Improvement 16 Empowerment Accelerates Continuous Improvement 17
Business4 days ago

Empowerment Accelerates Continuous Improvement

By Larry Sternberg, JD, Fellow, Talent Plus, Inc. Empowerment First, let me clarify how I am using the word “empowerment”...

What is loneliness and how can you manage it? 18 What is loneliness and how can you manage it? 19
Top Stories4 days ago

What is loneliness and how can you manage it?

By Iris Schaden Your Business and Personal Coach A mere century ago, almost no one lived alone. Today, many do...

How banks can build digital transformation into business continuity 20 How banks can build digital transformation into business continuity 21
Business4 days ago

How banks can build digital transformation into business continuity

By Andrew Warren, Head of Banking & Financial Services, UK&I, Cognizant Businesses around the world are falling victim to the...

Akerton Partners 22 Akerton Partners 23
Finance4 days ago

Akerton Partners

Akerton Partners S.L. is a Spanish independent mid-market corporate finance advisor founded over a decade ago, in 2008, amid a...