4 Minutes Read.
The Equifax data breach in 2017 caused a significant data loss for more than 145 million people in the U.S., U.K. and Canada. Cybersecurity has become a top priority for financial institutions around the globe, particularly in the digital lending. The Equifax incident was considered a wake-up call for the industry. But even before that, data security in lending space has been a critical issue for institutions and regulators.
The Equifax breach caused some reassessment of cybersecurity on both the part of financial institutions and government regulators. The U.S. Federal Trade Commission (FTC) took several steps to help consumers safeguard their credit information and provided businesses with some new guidelines after the Equifax breach. Nevertheless, there are still some gaps.
Compliance rules can identify what outcomes of cybersecurity protections should be. However, they only provide that basic foundation. Because threats are evolving, cybersecurity needs to constantly evolve as well. As the Equifax case showed, regulation cannot really protect against a new threat – it can merely improve based on what is learned after a breach occurs.
Thus, financial institutions need to adopt a proactive approach to anticipating threats and not simply rely on compliance requirements for protection.
From Digital Lending to Security
Regulators and financial institutions are increasingly looking to automation and artificial intelligence (AI) to provide security tools. This is partly due to the success of the technology in applications such as digital lending. The U.K.’s Financial Conduct Authority (FCA) has been particularly supportive of efforts by banks to adopt AI-driven solutions to detect security threats and money laundering.
AI is a natural fit for cybersecurity. It is driven by complex algorithms that allow it to look at and detect patterns in vast amounts of data. It can then incorporate new patterns it discovers into subsequent data analysis, improving its ability to detect unusual activity.
The use of automation also has another benefit in that it greatly reduces the risks from human intervention. Many security breaches can be attributed to human error or intentional actions, so removing the opportunities for those to occur helps to strengthen cybersecurity.
Protection Inside and Out
Automation and AI can provide better security within a financial institution’s systems. Truly effective cybersecurity, however, requires a change in approach to how threats and actual breaches are handled. One concern of regulators is that many cyberattacks are apparently not reported by banks.
Banks are careful to guard their customers’ confidentiality and their own reputations. A loss of trust by customers can be devastating. Ironically, being careful not to share information may damage a financial institution more in terms of customer trust. The reason secrecy can be counterproductive is that experience has shown that collaboration is the most effective tool for stopping threats such as viruses and DDoS attacks.
To stay abreast of evolving threats, financial institutions need to find ways to collaborate without compromising the security of customer data. MonJa provides a secure digital lending software and is constantly developing innovations to keep up with the latest trends in digital lending. To learn more about the cybersecurity challenges faced by financial institutions and the role automation and AI-driven solutions can play in overcoming them, download this free e-book today.
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