12 Best Practices for Banking & Finance Cybersecurity Compliance

Financial data has always been a prime target for cybercriminals due to its high value. Therefore, banks, loan services, credit unions, and investment and brokerage firms are highly vulnerable to cyberattacks. Moreover, security incidents in the financial sector are extremely costly (surpassed only by the healthcare industry), with the average total cost of a data breach reaching $6.08 million in 2024.

For efficient data security in the banking industry, you need to ensure proper compliance with the relevant cybersecurity standards, laws, and regulations, both local and international. In this article, we distill the main requirements and recommendations for the finance industry into twelve efficient best practices your organization can follow to ensure cybersecurity compliance.

Why does cybersecurity compliance matter for finance?

Banks and financial institutions must constantly adjust their usual work processes and security controls to frequent cybersecurity landscape changes. With factors like teleworking, AI attacks,  and the shift to the cloud, cybersecurity is becoming increasingly critical.

Financial institutions work with highly sensitive data such as personally identifiable information (PII) and financial records. Cybercriminals can compromise this data, use it for financial fraud, monetize it, or commit other malicious acts for their own benefit. 

Following manufacturing at the top, finance is the second-most attacked industry, according to the X-Force Threat Intelligence Index 2024 by IBM Security.

To ensure secure operations and the proper protection of sensitive data, local and international regulatory bodies have established security compliance requirements for financial organizations.

Cybersecurity requirements for financial services companies can help you determine:

1. What should be protected
What pain points to pay attention to when building an organization’s cybersecurity strategy

2. How to improve cybersecurity
What practices and technologies to implement for better protection of the organization’s IT infrastructure and data.

Fines for non-compliance can be extensive: the maximum GDPR penalty can reach up to €20 million (~$22 million), or up to 4% of the organization’s total global turnover of the preceding fiscal year, whichever is higher. For example, in 2024, Ireland’s Data Protection Commission (DPC) fined LinkedIn €310 million (~$335 million) for GDPR violations.

What can you do to make sure your organization stays compliant?

Organizations typically have to comply with more than one set of requirements. There are obligatory and advisory financial data security regulations as well as international, federal, and regional laws. By following the requirements of all applicable banking cybersecurity regulations, laws, and standards, financial institutions can build advanced strategies to achieve the required level of cybersecurity.

It’s easy to get lost trying to find out which IT standards, regulations, and local laws are relevant to an organization. So what should financial industry players focus on?

In the next section, we’ll examine some of the key cybersecurity standards, laws, and regulations for banks and other financial institutions.

Key cybersecurity requirements for financial services companies

Compliance requirements have different purposes and different operational and jurisdictional areas for organizations operating within the financial sector. Let’s take a look at the major ones, starting with global cybersecurity standards.

Global cybersecurity standards

There are three major international security standards in banking for financial institutions:

PCI DSS

Any organization, institution, merchant, and payment solution provider must comply with the Payment Card Industry Data Security Standard (PCI DSS). This standard specifies requirements for storing, processing, and transferring payment card data. The goal of the standard is to reduce cases of credit card fraud and protect cardholder data.

ISO/IEC 27001

The International Organization for Standardization/International Electrotechnical Commission (ISO/IEC) 27001 standard is part of the large ISO/IEC 27000 family of cybersecurity standards. The 27001 standard provides recommendations and proper procedures for managing security risks, concerning financial information in particular. Although the standard is not mandatory, it’s highly recommended for financial institutions to pass the ISO 27001 certification audit.

SWIFT CSP

Any financial organization using SWIFT services must comply with SWIFT Customer Security Programme (SWIFT CSP) requirements. This framework specifies requirements for ensuring proper access management, incident response, and data security in financial services and banking.

In addition to global cybersecurity requirements, there are also country-specific ones.

Local guidelines, laws, and directives

Some requirements vary from region to region. Let’s explore the most well-known:

SOX

The Sarbanes Oxley Act (SOX) contains recommended practices that can prevent organizations from processing fraudulent financial transactions. In particular, it specifies what financial records should be stored, for how long, and how they need to be protected. This law is applicable to all public companies registered by the US Securities and Exchange Commission (SEC).

GLBA

The Gramm–Leach–Bliley Act (GLBA) is a US law that governs the way financial institutions handle customers’ private data. In particular, it requires companies to establish strict data access policies and provide customers with full information on how their data is stored, processed, and secured.

FINRA

The Financial Industry Regulatory Authority (FINRA) is an organization that provides guidelines and sets requirements for US broker-dealers. Key FINRA requirements include maintaining written data protection policies to prevent the compromise of consumer data. FINRA also sets rules for detecting and mitigating cyber threats.

PSD 2

The Payment Services Directive (PSD 2) regulates electronic payments within the European Union. This EU directive contains requirements for the way electronic payments are initiated and processed and sets strict rules for the protection of consumers’ private data.

BSA

The Bank Secrecy Act (BSA), also known as the Currency and Foreign Transactions Reporting Act, is a US law that requires financial institutions to prevent and notify authorities about money laundering, terrorist financing, and tax evasion. BSA also requires banks to have incident response plans addressing cyber-related crimes.

NIS2

The Directive on the Security of Network and Information Systems 2 (NIS2) aims to strengthen the security of critical EU infrastructures. The Directive sets cybersecurity requirements for organizations vital for the EU economy across many industries, including banking and other financial institutions.

DORA

The Digital Operational Resilience Act (DORA) is a European Union regulation designed to strengthen the financial sector’s ability to withstand, respond to, and recover from ICT-related disruptions and cyber threats. DORA establishes uniform requirements for ICT risk management, incident reporting, and oversight of third-party service providers.

Make sure you know your local cybersecurity laws and standards, as some states and municipalities may have their own, such as the New York Department of Financial Services (NYDFS) Cybersecurity Regulation and the California Consumer Privacy Act (CCPA).

Industry-specific cybersecurity requirements are not the only ones that financial institutions should consider.

Other requirements to consider

In addition to industry-specific laws, regulations, and cybersecurity standards for the financial industry, there are other requirements that banks and financial institutions should pay special attention to. In particular, guidance from the National Institute of Standards and Technology and the General Data Protection Regulation is quite helpful for securing sensitive data, ensuring flawless operations, and avoiding expensive fines.

NIST

The National Institute of Standards and Technology (NIST) is a US government agency that develops and oversees a variety of information security standards, including NIST 800-53. NIST has recommendations on cybersecurity risk management, data protection, threat detection, and incident response. While targeted mostly at federal institutions, NIST recommendations can be followed by any organization that wants to ensure a high level of security for its sensitive assets.

GDPR

The General Data Protection Regulation (GDPR) is a data privacy framework that sets rules for collecting, storing, transferring, and processing the personal data of EU residents. Compliance with GDPR requirements is mandatory for any organization that processes the private data of EU residents, no matter where such an organization is registered and operates.

Organizations can use specialized GDPR compliance software to meet the requirements of this regulation. There are laws similar to the GDPR outside the EU, such as the UK-GDPR and CCPA.

While there are various differences and peculiarities between them, major data privacy and cybersecurity requirements still have common ground. In the next section, we’ll show you the best practices in cybersecurity for meeting compliance.

12 cybersecurity compliance best practices for financial institutions

We’ve compiled a set of twelve best practices that cover the most prevalent requirements and will help improve your organization’s security.

1. Regularly assess risks and audit your cybersecurity

Keep your finger on the pulse of your banking information security.

First and foremost, you must inventory your organization’s security posture and identify potential threats. The GLBA Safeguards Rule, for example, requires financial institutions to conduct periodic written risk assessments. By doing this, you will get full visibility throughout your IT infrastructure and be able to identify internal and external risks to the security of your systems and data.

Start with identifying vulnerabilities that could compromise sensitive data: potential insider threats, cyberattacks, and third-party-related risks. Make sure to consider risks stemming from information systems as well as data processing, storage, and exchange.

Based on the risks you identify, assess the sufficiency of your cybersecurity tools to respond to cyberattacks and system failures.

2. Establish a cybersecurity policy

Strive for coherence.

A cybersecurity policy is what coordinates an organization’s cybersecurity movement. Serving as an objective guide, your cybersecurity policy should explicitly define all the measures and tools your company has adopted, or must adopt, to protect your valuable assets from cyber threats. Having a written cybersecurity policy makes it easier for banks to establish an effective cybersecurity routine and maintain proper data security in the long term.

For the best results, implement a hierarchical cybersecurity policy with strict agreement between practices, standards, and procedures. Be diligent about keeping all records of current policy requirements and recommendations up to date, and make sure your employees are aware of and follow your cybersecurity policy.

3. Appoint a data protection officer

Hire a security expert.

The GLBA, GDPR, PCI DSS, and other regulations and standards require organizations to appoint a data protection officer (DPO). Hiring a professional, experienced DPO is a win-win solution: on the one hand, you’ll be one step closer to compliance; on the other hand, having a professional DPO increases your organization’s resilience to data security threats. If having a full-time in-house specialist isn’t financially viable for your organization, you might also consider using the services of a DPO consultant.

A DPO can give your organization valuable data protection advice and recommendations on implementing proper security controls, as well as ensure timely notifications of any cybersecurity incidents to all stakeholders and relevant authorities.

When looking for a DPO, pay special attention to expertise in data protection and cybersecurity compliance for banks. Knowledge of how financial organizations operate is also a plus. Assist your DPO when needed, and remember: to make it work, your company must be open to change.

4. Secure your network

Build a fortress no one can break.

Protecting your environment is a must for your organization’s cybersecurity compliance. For example, the SWIFT Customer Security Controls Framework (CSCF) recommends restricting internet access to sensitive systems to reduce the possible attack surface. You can also segment your main network into smaller subnetworks and segregate the most critical assets from the rest of the IT environment to make them less vulnerable. Be sure to also deploy fundamental security measures such as firewalls.

The more advanced your security is, the less likely a breach of any of its components becomes. To achieve this, you can take the layered security approach — that is, using multiple strategies at different levels of security, including systems, networks, applications, processes, and data management.

5. Encrypt valuable data

Data can only be compromised if it can be read.

Encryption is an efficient way to secure your data and is required by ISO/IEC 27001, GLBA, GDPR, PCI DSS, and NIS2, among other standards and regulations. First, it’s recommended to encrypt critical records and information on your customers and clients: personally identifiable information (PII), income levels, collections history, credit score, etc. Information security in the banking sector also involves encrypting financial transaction data such as payment histories, deposit balances, purchases, and account numbers.

To protect your data in full, look for cybersecurity solutions for financial services that allow you to encrypt data both in storage and in transit. This way, you can significantly minimize the risk of a devastating data breach.

To preserve the privacy of PII, you can also implement pseudonymization during user activity monitoring.

6. Limit access to critical assets

Prohibit access unless necessary.

By reducing the number of people with access to sensitive information, you can considerably minimize the risk of a security breach. Implementing the principle of least privilege ensures that the people in your organization are only given the access rights necessary to carry out their job duties.

This is where privileged access management (PAM) solutions can come in handy.

7. Verify user identities

Make sure your users are who they claim to be.

Unsecured user authentication can lead to unauthorized access, which in turn can expose you to data theft, malware, fraud, and other negative outcomes. That’s why it’s critical to follow the basic principles of zero trust and always verify user identities. One way of doing this is by using multi-factor authentication (MFA), which is a requirement of the majority of cybersecurity standards and regulations in the financial sector.

8. Establish secure password management

Credential compromise is one of the main security breach vectors. To combat this, NIST Special Publication 800-63, PCI DSS, the GDPR, and other standards and regulations give recommendations and requirements for creating password policies. Deploying a dedicated password management solution allows you to automate and optimize password handling in your organization.

9. Continuously monitor user activity

Watch and record users’ actions.

User activity monitoring plays a crucial role in detecting and preventing both insider and outsider threats. It’s also the key requirement of many cybersecurity policies, including PCI DSS and SOX. By observing and analyzing user behavior within your network, you can proactively detect suspicious activity and spot early signs of an attack in progress. And in the event a cybersecurity incident does occur, you will have all the evidence of the crime. Therefore, it’s crucial to implement PCI DSS or SOX management software that provides user activity monitoring capabilities.

10. Manage third-party risks

Don’t trust outsiders accessing your systems.

Third parties are often granted more access rights than they need. Yet, a mistake made by a third party can result in anything from a minor service crash to a major data breach. In fact, 15% of all data breaches in 2024 involved a third party, which is a 68% increase from 2023, according to the 2024 Data Breach Investigations Report by Verizon.

For this reason, financial institutions and banks must monitor and manage their third-party vendors closely and carefully. You should also ensure your subcontractors comply with the same cybersecurity requirements that you do by adding a corresponding requirement to your service-level agreement.

11. Build an incident response plan

What will you do if your security is breached?

Alongside a strong cybersecurity policy, every financial institution should have a well-thought-out incident response plan (IRP). This document should provide clear response scenarios for cybersecurity incidents that could happen in your organization. A written IRP will serve as a guideline and help direct your security team’s actions in critical situations.

An IRP should specify what is considered a cybersecurity incident and what actions must be taken if one occurs, what to do to restore lost data or affected systems, and other possible details that will help you mitigate the consequences of an incident. It should also clearly describe the roles within your incident response team and state who to notify first in case of an incident.

12. Report security incidents in a timely manner

Never conceal an incident.

Most bank security compliance requirements compel organizations to notify governing institutions and involved parties about any data breaches. Notification terms can vary from within 72 hours, as set by the GDPR, to as soon as possible, as requested by the GLBA. To report a problem quickly, you have to detect it fast. For this, you need an efficient incident response tool.

Consider describing the reporting procedure in your incident response plan, as it’s one of the most important compliance requirements.

How to maintain cybersecurity compliance in the financial sector with Syteca

Syteca is a comprehensive cybersecurity platform that can help financial institutions secure their IT environments against insider threats. 

Syteca’s feature-rich toolset allows your organization to protect sensitive financial data and meet the requirements of industry-specific cybersecurity standards, laws, and regulations. Here’s how:

Syteca can help you comply with PCI DSS, SOX, SWIFT CSP, GLBA, DORA, NIS2, and more.

Conclusion

Banking and finance is one of the most strictly regulated sectors, as banks and financial institutions work closely with customers’ private information, social security data, and financial records. To reduce cybersecurity risks and properly protect sensitive information, make sure your organization meets the requirements of the relevant laws, regulations, and cybersecurity standards we have mentioned in this article.

You can make use of these twelve best practices for banking and finance cybersecurity compliance to protect your organization’s most critical data and systems. Syteca’s access management, user activity monitoring, alerting, and reporting capabilities can ensure cybersecurity compliance, data protection, and timely detection and response to cybersecurity incidents in your organization.