Financial institutions are subject to a degree of regulatory oversight that’s not seen in most other sectors. Whether it’s banks, NBFCs, payment aggregators, or fintech platforms, they process financial data in large volumes at high speed and are a prime target for hackers and also come with some of the most demanding compliance requirements in the nation. Cybersecurity compliance services for cybersecurity in this industry are not simply IT security but encompass regulatory compliance, transaction data protection, and operational resiliency as expected by regulators.
Why Financial Institutions Face Higher Compliance Stakes
A breach at a financial institution has ramifications that extend well beyond one company. The ability of the customer to trust that the information is correct and that the system remains stable and that it is in compliance with regulatory requirements is at stake, so the reporting timelines and audit requirements are tougher than in most sectors. The time it takes for a vulnerability to be addressed or an incident report to be filed can lead to regulatory fines well before any actual financial loss happens.
This is also the reason that financial institutions prefer to collaborate with the top cybersecurity companies in India and not with a generalist IT service provider. This area needs to have a working knowledge of financial regulation as well as technical skills, and few providers are as capable in this field as they are in this field.
The regulatory framework is a set of laws and regulations that financial institutions are required to adhere to.
Financial institutions face the need to match a number of interdependent frameworks and not just one:
Cybersecurity guidelines, which lay the ground rules for banks and NBFCs regarding governance, risk management, and incident reporting.
Card Payment Data Storage: Processing or Transmission Compliance is PCI DSS, which is required for all organizations that handle, process, or store card payment data.
ISO 27001, which may be needed to meet enterprise partners and international clients who are assessing vendor risk.
CERT-In: Guidelines on Timelines of Breach Notification and Audit to be Undertaken by Panchayats.
With the amount of personal financial information these institutions manage, it is hardly surprising that they are prepared for the DPDP Act.
Not many institutions have to see them as two distinct projects. Overlapping requirements from multiple frameworks are identified throughout a well-structured compliance program, and a single control—like access logging—meets multiple regulatory expectations.
The following represents the core components of financial sector compliance programs.
The following are the basic elements of financial sector compliance programs.
The list of priorities in compliance programs designed for financial institutions tends to be different than those designed for other industries:
- Compliant and secure transaction monitoring and fraud detection solutions.
- Financial data encryption (at rest and in transit).
- Financial institutions heavily rely on third-party and vendor risk management because they partner with external payment processors, cloud providers, and fintech companies.
- Business continuity/disaster recovery planning, which is increasingly becoming part of operational resilience planning, and regulators’ testing. Operational resilience planning, including business continuity/disaster recovery planning, and regulators’ testing.
- Frequent VAPT cycles of core banking systems, mobile apps, and payment APIs, as these are so often attacked.
- Breach response plans tied to specific breach notification deadlines and not general response plans.
There are several common compliance issues in the financial sector. In the financial industry, there are a number of common compliance challenges.
One of the largest challenges is legacy infrastructure. Some financial institutions have core systems that have not been designed with modern compliance systems in mind, and it can be very costly to add granular access logging onto the existing legacy system. Another constant problem is that of third-party risk, where a vulnerability in one of the payment gateways or the payment vendor platform can leave the institution vulnerable even if their own platform is secure.
The additional challenge is to stay current with changing rules. The guidelines and the enforcement of the DPDP Act are still ongoing,, and institutions that take a ‘tick the box’ approach to compliance are likely to be out of sync when the next audit round comes around.
The characteristics of a compliance partner.
When assessing a compliance partner for financial sector experience, financial institutions should seek out experience in financial sector audits, rather than general IT security. It’s generally not possible to negotiate empanelment into a CERT,, and certifications like ISO 27001 Lead Auditor, CISA, and CISSP are verifiable qualifications that experience cannot match. Perhaps most significantly, compliance is a lifelong partnership with the right partner, one that helps the institution to remediate, retest, and monitor compliance continuously rather than leaving after one audit engagement.
Conclusion
Financial institutions, with the critical nature of financial information, the regulatory landscape, and the time-sensitive reporting requirements, have a unique burden and complexity in cybersecurity compliance. Compliance is better integrated into the institutions’ day-to-day processes and is a year-round effort, with those that make compliance part of them much more likely to manage well through any regulatory investigation and to keep customers’ trust. With frameworks such as the DPDP Act and RBI guidelines still in the process of development, it is one of the most critical decisions a financial institution can make to establish a long-term security posture: the choice of a compliance partner with sound knowledge of the financial sector.