Data Backups You Can Bank On: Business Continuity in Finance Industry
A major operational disruption can devastate any business, leading to costly downtime and sometimes insurmountable recovery costs. But when there’s a break in business continuity in the financial services industry, it doesn’t just disrupt a single business – it can disrupt entire markets.
Data is central to the operation of every financial organization. It encompasses every account, every balance, every customer record and every transaction. Losing this data is basically no different than losing the actual money in a financial account: if there’s no record of it, it doesn’t exist.
In this post, we examine what business continuity in finance actually looks like: how data is protected, which safeguards are needed to minimize disruptions, and why these measures are so essential.
90% of banks targeted by ransomware
Cybercriminals understand how valuable a financial institution’s data is. This makes the banks a prime target for ransomware: the more valuable the data, the greater likelihood that a company will pay a ransom to restore it.
Consider these alarming stats highlighted by Forbes:
· 90% of financial institutions have been targeted by ransomware in the last few years.
· The finance industry is hit by cyberattacks 300x more frequently than other sectors.
· On average, cybercriminals make more than 1 billion attempts to breach a single American financial institution every year.
In many cases, the attackers are quite successful. In 2017, financial services companies lost more than $16.8 billion to cybercriminals. And it’s getting worse, not better. The rate of breaches has tripled over the last 5 years, according to Forbes.
100-year-old bank fends off cyberattacks
Adams Bank & Trust is just one of the many financial institutions that has been forced to deploy new technologies to fend off cyberattacks like ransomware.
Headquartered in Ogallala, Nebraska, the bank holds more than $750 million in assets with 19 offices throughout Nebraska, Colorado and Kansas. Founded in 1916, Adams Bank struggled in recent years to deal with the increase in attacks: it was hit several times by ransomware, each incident resulting in entire directories of files being infected, which sometimes required days to restore.
Older data software made the bank’s systems more vulnerable to ransomware. And while the bank’s overall IT infrastructure was not severely disrupted, the incidents prevented some departments from accessing their files for an extended time, resulting in significant productivity losses.
To fend off future attacks, the bank deployed a more advanced disaster recovery solution, allowing it to restore backups much faster after a ransomware attack.
The importance of business continuity in finance
Adams Bank and its customers are fortunate that the disruptions from each attack were relatively minimal. But what if they hadn’t been?
What if customers had lost access to their accounts?
What if an outage lasted several days or weeks?
What if the bank were national or global, affecting millions of account holders around the world?
The consequences would be far-ranging, which is why business continuity in financial services is so critical.
Consider what’s at stake:
· A bank’s survival: Businesses that can’t quickly recover from a disaster, whether cyberattack or natural disaster, are at a significantly greater risk of going out of business—permanently. That applies to companies in every industry, including banks. While larger financial institutions have more resources to deal with disruptions, smaller community banks can be put on shaky financial footing after a major attack.
· Highly sensitive data: A bank’s data is arguably some of the most sensitive data anywhere. It includes not only customers’ personally identifiable information, like names, addresses and social security numbers, but also their financial records. Even when this data remains protected by encryption during attacks like ransomware, any kind of perceived breach in privacy or security can be devastating for a business.
· Customer confidence: When account holders can’t access their accounts, they get concerned. That’s true even when an outage is planned, as when bank’s online accounts undergo maintenance. So imagine the reaction when banks lose all account data for days. Customers lose confidence in their banks, and many eventually move their money elsewhere.
· Market confidence: Now, imagine a loss of customer confidence on a much larger scale. If a widespread ransomware attack like WannaCry were to take down the world’s biggest financial institutions, it would be disastrous. The disruption could boil over into financial and investment markets. Account holders might attempt to cash out their accounts en masse, affecting the entire industry.
For these reasons and many others, the financial services industry needs to take as many precautions as possible to prevent data loss and maintain continuity.
Preparing for the worst: Sheltered Harbor
For years, the finance sector has already been making strides against the risks of data loss and data theft. Most recently, the industry revealed an aggressive initiative called Sheltered Harbor, which aims to ensure continuity across the industry after a major cyberattack.
Under the initiative, participating banks would deploy impenetrable data backup systems that could be accessed by other banks in emergency situations. So, for example, if a major international bank was hobbled by a ransomware attack, other banks could process transactions and other services on behalf of the affected bank.
In that sense, Sheltered Harbor not only supports the individual bank, but also the larger banking system. It ensures business continuity through the worst financial-industry cyberattack imaginable and gives account holders peace of mind that they can still access their money through other financial institutions.
Federal regulation for business continuity in financial industry
In the United States, financial institutions must also comply with a wide range of laws dictating how financial data should be stored and protected.
The FFIEC (Federal Financial Institutions Examination Council) and FDIC (Federal Deposit Insurance Corporation) are two governmental agencies that provide their own guidance for disaster recovery. A failure to comply with these federal business continuity regulations can result in steep fines and other penalties for banks.
The financial services industry also has its own agencies for issuing guidance on disaster recovery protocols. FINRA (the Financial Industry Regulatory Authority) is a non-governmental entity that designates requirements for brokerages and securities firms, including guidance for:
· Creating business continuity plans
· Deploying data backup and recovery systems
· Conducting operational assessments
· Ensuring organizational redundancy, including backup communications systems and secondary locations
Data backup and technology solutions
So, how exactly do banks protect their data from threats like ransomware and minimize the risk of major disruptions? Let’s take a look at the core functionality that today’s financial organizations require for their BC/DR systems.
– Near-constant backups: If a bank needs to restore a backup, it can’t afford to lose any unprotected data. A high backup frequency is needed to ensure that data is being replicated around the clock – ideally every few minutes, not just once or twice a day.
– Geo-redundant storage: Storing backups in one or two locations is not enough for most banks. Data needs to be stored in multiple locations for greater protection and the fastest possible access to data. A geo-redundant hybrid-backup approach, for example, stores backups on-site and in the cloud via at least two redundant datacenters located in geographically diverse areas.
– Near-instant data recovery & restoration: After Adams Bank & Trust was repeatedly attacked with ransomware, it deployed a more advanced backup solution that enabled it to rapidly rewind to a recovery point from before the infection occurred. “Tivo for ransomware” they called it – and that’s exactly the mindset that banks need to have about their data backup. Recovering backups shouldn’t take hours or days – it should take seconds.
– Backup virtualization: Virtualized backups provide the instant recovery that today’s banks require. It allows them to boot a backup as a virtual machine for instant access to critical applications and data. BC/DR systems like the Datto SIRIS enable this instant virtualization while also continuing to back up all new/modified data while running the virtual machine.
– Real-time anti-malware protection: Financial institutions require the best anti-malware solutions available. The software should actively monitor and scan every machine, and it should be updated constantly to ensure that new definitions are added as soon as they become available. Good anti-malware is an essential first line of defense against known cyber-threats.
– Ransomware detection: Not all anti-malware solutions will detect the newest ransomware strains, which is why it’s important to have additional protection. Newer BC/DR systems like Datto’s have built-in ransomware protection, which uses algorithms to detect early signs of an infection (such as data being modified in bulk). This early detection allows administrators to take action even faster, so that backups can be restored with minimal disruption.
– Infrastructure backup: It’s critical that a bank’s backup system can restore not only data but also the larger infrastructure: operating systems, configurations, applications and so on. This is what ensures continuity. If a financial institution has zero access to its critical applications after a disaster, then it will face a much direr outcome.
Free demo: BC/DR for banks and finance organizations
Take a closer look at today’s best disaster recovery solutions for financial organizations and other businesses. Request a free demo or contact our business continuity specialists at Invenio IT: call (646) 395-1170 or email [email protected].