You’d probably be shocked to hear that about 2.8 million customers reported financial services fraud in 2021. That’s a lot of people who have experienced data breaches, privacy issues, and financial loss thanks to poor consumer protection. 

To avoid the same from continuing to happen, having strong consumer data protections in place in the financial services industry is key.

Here are a few ways to protect consumer data and ensure that your customers don’t add to that statistic. 

Adhere to FTC guidelines

The Federal Trade Commission has a list of essential guidelines to protect businesses, including business owners and consumers. Financial businesses should adhere to certain steps to ensure consumers’ privacy protection, especially with their finances. 

Under the FTC, financial institutions should abide by the Financial Privacy Rule. This regulation governs the collection and disclosure of consumers’ personal financial information in financial institutions. 

What this rule states is that businesses cannot disclose personal financial information to unauthorized individuals. Unless someone is either the consumer or has express permission, that means no sharing of their data. 

Aside from the Financial Privacy Rule, businesses in the financial service industry should also comply with the Safeguards rule. This requires financial institutions to ensure security and safeguards in customer information protection. 

Another provision released by the FTC aims to prevent pretexting. It’s the process of companies accessing the financial information of their consumers under pretenses. The FTC also requires financial services to comply with the following:

• Comprehensive security and privacy program implementation
• Independent expert assessment
• Provide robust transparency
• Deleting consumer information that’s illegally obtained.

Remember, financial companies that violate the FTC guidelines must pay civil monetary penalties. They might also need to pay fines when not adhering to the following guidelines and regulations set by the FTC:

• Telemarketing Sales Rule
• Children’s Online Privacy Protection Act
• CAN-SPAM
• Fair Debt Collection Practices Act.

Implement monitoring

Monitoring is essential for financial services industry institutions. This ensures information confidentiality and flags any suspicious transactions. 

An ongoing monitoring process helps you track and review all relevant consumer information, especially clients you’re doing business with. For instance, you should check high-risk clients periodically in case of criminal threats. 

Implementing an effective monitoring process can also help protect financial institutions from possible risks, such as loss of reputation and non-compliance. Other benefits of monitoring your clients’ activities include the following:

• Track suspicious out-of-town or cross-border behaviors
• Increase the institution’s client efficiency.

Suspected account activities should enable financial institutions like banks to prepare and submit SARs or Suspicious Activity Reports. 

Several other protection systems are also effective, such as:

• Creating centrally-managed endpoint solutions
• Combine personalized security with global security to monitor real-time threat alerts
• Establish automated compliance controls
• Ensure there is the integration of security solutions into regular operations.

Create and manage effective access control policies

Creating access control sets restrictions on who can access consumer data in the financial services industry. It improves overall security and efficiency, reducing the chances of suspicious transactions and phishing. 

A few essential steps in controlling access to financial data within these types of institutions include:

• Establish IT security through biometrics, visitor management system, and identity management solutions
• Utilize Open Supervised Device Protocol as a communication platform across your institution’s multiple access control systems
• Implement smart visitor management systems, such as badge-based demarcation, pre-registration of client visits, and distribution of OTP or security alerts.

Implementing access control systems also takes into account an institution’s multi-factor authentication. It’s a security technology that combines multiple authentication methods to verify a client’s identity before proceeding with a transaction. 

Generally, multifactor authentication combines the user’s password and their biometric verification, or tokens. This security method creates various layers of defense to minimize fraud and unauthorized transactions.

Special care should be taken when placing access control on sensitive data access. This includes monitoring and controlling all access to sensitive data, enabling access to sensitive data only in a temporary way, anonymizing data access per users or roles, and placing security policies on all access to data.

Set up strong cyber security protocols

A report by IBM revealed that financial institutions suffered the most cyberattacks for four consecutive years. As a result, creating strong cybersecurity protocols is even more critical for businesses in this industry.

The most effective way to set them up is to implement a strong security framework. You can choose from several core security frameworks, including the following:

• NIST Framework - involves five core information security (identity, protect, detect, respond, and recover)
• FFIC Information - discusses all relevant guidelines about cybersecurity. 

In addition to this, another cybersecurity tip to implement is employee education. Remember that they are the ones communicating with clients, so they serve as a company’s first lines of defense. Employees should be well-educated about threats and phishing schemes. They should be aware of vague subject lines or emails with irrelevant attachments. 

Financial institutions should also ensure continuous threat monitoring. This allows early detection of a suspicious compromise. The earlier the threats are detected, the faster protection measurements can be undertaken.

Engage in consumer education

Consumers are also part of the conversation. That’s why it’s essential that financial institutions also provide education about possible threats and scams. 

One way to protect consumer data is to offer clients the proper support and consult them about possible security threats. One example would be to send phishing alerts when known scams are going around. 

Consumer education also involves asking clients for feedback and opinions regarding the types of information financial institutions share with them. This way, institutions are up to date with the extent of their’s customer knowledge, which can help gauge what they should be teaching them. It also makes the resources more useful to clients. 

Final thoughts

By adhering to FTC guidelines, implementing monitoring systems, and limiting access control, financial institutions can keep their customers’ information and data protected. 

Failure to do so doesn’t just affect consumers, either. When financial institutions don’t follow these steps, they can wind up paying hefty fines or getting into hot water with the law. 

If you’re looking to stay compliant and avoid penalties, making these changes could be the key. Not only does it keep your business safe, but it also strengthens client trust in your company and business model.