How Digital Banks Safeguard Data

Cloud-based platforms are the backbone of digital banks. They facilitate the seamless integration of various banking services such as data storage, data processing, banking transactions, and real-time analytics

The rise of digital banks has disrupted traditional banking models by allowing customers to manage their finances virtually from anywhere through mobile devices. Digital banks make it easier for consumers to open and manage their accounts, improving accessibility for everyone and especially for customers in underserved rural areas.

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How Cloud-Based Technology Has Helped Digital Banks

Cloud-based platforms are the backbone of digital banks. They facilitate the seamless integration of various banking services such as data storage, data processing, banking transactions, and real-time analytics. These platforms provide a scalable and flexible infrastructure that allows banks to adapt and grow to changing customer needs and market trends.

  1. Scalable: Cloud-based infrastructure provides a scalable platform that allows digital-only and hybrid banks to easily expand or reduce operational costs based on demand. Scalability ensures that digital banks can efficiently manage their IT infrastructure, streamlining costs.
  2. Cost-Effective: One of the key advantages of a cloud-based infrastructure is the relatively low upfront cost needed compared to on-premise solutions. This means that banks only need to invest in standard IT equipment compared to acquiring expensive on-premise systems.
  3. Security and Compliance: Cloud-based platforms provide robust security measures, including encryption, access control, and threat detection features. However, cloud service providers and digital banks often share the responsibility of ensuring compliance. Cloud providers typically take responsibility for securing the underlying IT infrastructure of the cloud network like data centers, server hardware, associated software, and virtualization layer.
  4. Reliability and Disaster Recovery: Cloud infrastructure inherently provides built-in redundancy and disaster recovery mechanisms compared to on-premise systems. This minimizes downtime in the face of unforeseen events and disruptions.
  5. Big Data and Analytics: Leveraging the cloud can allow digital banks to harness the power of big data and analytics to get insights into customer experience and make data-driven decisions.

What Caused The Rise of Digital Banking?

The recent COVID-19 pandemic was a key catalyst in the rapid digitalization of predominantly traditional industries like finance. Government-mandated lockdowns, social distancing protocols, and the rapid adoption of work-from-home and hybrid office models sparked consumers to find alternative financial institutions. This surge in consumer demand led to accelerated innovation and adoption by customers and banks alike, enabling new service options and benefits:

  1. Personalized Banking: Digital banks provide a more personalized and tailored approach to banking compared to traditional banks. Financial services can be tailored to customers’ needs and communication channels like email and SMS notification allow digital banks to engage with their customers directly.
  2. Data-Driven Services: The Cloud-based infrastructure allows digital banks to access and view large volumes of data in real-time. This means that digital banks can quickly assess the eligibility of customers for certain services like loads or credit, reducing risk and improving user experience.
  3. International Transactions and Fund Transfer: Digital banks make it easier for customers to conduct business internationally and receive timely transaction details.
  4. Contactless Banking: Contactless transactions enable customers to adhere to social distancing policies while accessing crucial banking services, spurring digital banks to rise in popularity during COVID-19. 
  5. Convenience and Accessibility: People appreciate the ability to perform transactions anytime from anywhere without the need to visit a physical branch during limited operating hours. 
  6. Increased Efficiencies and Control: Customers and their digital banking providers save time and have more service options available with improved account management on the go.

The Importance of Cybersecurity to Digital Banks and Understanding the Threat Landscape

Digital banking transactions are conducted over the Internet and are an attractive target for cybercriminals. Digital banks need a robust cybersecurity system to protect client assets and financial data as well as the bank’s own critical operational business systems and information.

Digital-only and hybrid banks face a myriad of cyber threats ranging from persistent and pervasive Business Email Compromise (BEC) phishing and malware attacks to more sophisticated threats like Advanced Persistent Threats (ATPs) and Distributed Denial of Services (DDoS) attacks.

Digital Banks Ensuring Compliance with Cybersecurity

Ensuring compliance with cybersecurity for a digital bank requires a multifaceted approach that involves implementing robust security measures, continuous monitoring and remediation, and rapid incident response and recovery capabilities. Regular security practice assessments are needed to stay updated on the latest threats and mitigation strategies and technologies:

  • Employee Training and Awareness: Cybersecurity awareness is the first step in reducing cybersecurity risks. Educating employees about the various cyber threats as phishing, malware, social engineering, and ransomware enables them to identify suspicious activities or potential threats. Continuous training and awareness programs also help promote a culture of cybersecurity awareness within the organization. 
  • Encryption: Utilizing end-to-end encryption for data in transit and encryption for data at rest. This ensures that even if the data is intercepted, it cannot be read without the correct decryption key.
  • Multi-Factor Authentication: Implementing MFA adds an extra layer of security by requiring multiple credentials such as biometrics, PIN, or one-time codes which reduces the risk of authorized access.
  • Continuous Advanced Threat Detection and Incident Response:  Continuous monitoring of networks and systems allows for rapid response to any security incidents. Constantly analyzing network traffic can potentially reduce the risk of unusual activities that may pose a security threat. Having an incident response plan in place can ensure a rapid response after a security breach is detected. Incident plans have a set of predefined actions that can mitigate or limit the effects of the breach.
  • Security Audits and Assessments: Regular security audits and assessments can help digital banks identify potential vulnerabilities or weaknesses in their infrastructure before they are exploited. Audits and assessments allow digital banks to have a proactive approach to mitigating cybersecurity threats. 

Solutions Helping Digital Banks Mitigate Cyber Security Threats

Digital-only banks are a rising star in the financial industry, especially in rapidly developing countries, rural regions, and underserved populations since they provide accessibility to financial services for previously unbanked individuals. The fast-paced growth of digital banks can make them vulnerable to cybersecurity threats. 

With our expertise in cybersecurity, we can help digital banks mitigate cybersecurity threats and ensure compliance with industry best practices and regulations. Our team of cyber security professionals helps implement cyber security best practices as well as monitor the cloud infrastructure for potential threats and vulnerabilities. Our incident response teams are also readily available to reduce and mitigate the effects of a breach in case of a cyber-attack. 

Digital banks can also leverage secure cloud solutions. We understand that each business has unique requirements and needs, and our expert teams of solutions architects can help provide the right solution so your organization can fully leverage your investment to the cloud. Contact us today to learn more about how we can help you grow and secure your business in the cloud. 

4it Tech Insights

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How Digital Banks Safeguard Data

Cloud-based platforms are the backbone of digital banks. They facilitate the seamless integration of various banking services such as data storage, data processing, banking transactions, and real-time analytics

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