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FCA lays out new rules for banks on reporting operational and security incidents to customers

FCA lays out new rules for banks on reporting operational and security incidents to customers

Increased visibility for customers means banks must ramp up risk mitigation

On Wednesday 15th August, the Financial Conduct Authority (FCA) will enforce new rules requiring providers of personal and business accounts to publish information that will help current customers to compare bank accounts from different providers.

Banks will have to report major operational and security incidents that have taken place and disclose whether 24-hour customer helplines are available.

The pressure for banks to report system failures is further compounded by the Bank of England and FCA’s fast approaching 5 October deadline, by which they must report on their exposure to risks and how they will respond to outages[i].  With customers having more visibility and banking options than ever, finding new ways to mitigate risk is top of mind for banks in order to maintain their reputation as secure and trusted institutions.

Financial Services firms are increasingly moving from a product-centric approach to cybersecurity. Instead, they are focusing on compartmentalising and individually securing their critical applications, such as online banking or interbank payments, in order to prevent a domino effect if one area comes under attack.

But due to outdated infrastructure, it can be difficult for financial institutions to gauge how applications are built into the network and communicating with each other in real time. This is a crucial first step when it comes to writing security policies for individual applications, and consequently preventing operational and security incidents, says Nick Hammond, Lead Advisor for Financial Services at World Wide Technology.  

Nick Hammond, from World Wide Technology, comments:  “Financial Services firms are under significant pressure to be both quick and transparent when it comes to reporting operational and security incidents. To alleviate this pressure and maintain stringent security, they are working towards ensuring a high level of application assurance.

“Whilst older rules required yearly tick-box compliance exercises, new regulations necessitate continued assurance of critical applications. But the complex nature of existing systems throws a spanner in the works. Legacy infrastructures were often built with different and sometimes conflicting metrics over the years, meaning that an intricate patchwork of applications communicate with each other in complicated ways.

Nick Hammond continues: “The network of opaque interdependencies creates a big hurdle for banks, which means many are drawing on infrastructural expertise as the first step towards securing their internal software. By gaining insight into infrastructure, firms can create a real-time picture of the entire network, allowing them to confidently rationalise the way that different applications share data within the system.

“Consequently, firms can fit the right security policies to each segmented application, preventing unnecessary or illicit data flows. In turn, this will help them maintain their reputations as trusted and secure institutions.”

[i]https://www.theguardian.com/money/2018/jul/05/banking-outages-should-be-limited-to-two-days-say-regulators

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