Data encryption is the use of computer programs to turn plain text into cipher text. In other words, encryption uses mathematical algorithms to turn regular words and numbers into secret codes based on ancient Egyptian scribe.
If you own or manage a small financial institution, you may be wondering if you need to utilize encryption. The answer is a resounding “yes!” From a legal, ethical, and common sense perspective, the majority of your data needs to be encrypted.
Under the Gramm Leach Bliley Act, financial institutions must safeguard people’s nonpublic personal information. That includes addresses, social security numbers, and income, but it also includes deposit amounts, loan information, payment details, and related information. Additionally, under the privacy rule of that act, you must let your customers know about the policies and practices you use to keep their information safe. For instance, if you only let certain employees access customer information or if you share certain details with the credit reporting bureaus, you should let your customers know.
On top of that, under the principles of the Federal Financial Institutions Examination Council (FFIEC), financial institutions must encrypt all details that pass over the internet. For example, if customers sign into your website to view their account details, that must be encrypted. Similarly, if you send customers emails about overdrafts or similar issues, that information must also be encrypted.
Even if encryption were not the law in many cases, you need to encrypt data to be competitive. Customers expect their information to stay safe, and if it’s compromised, they will likely take their business to another financial institution. If your data is not encrypted and a hacker steals information, that could be financially devastating for your institution.
After a data breach, you have to invest time and money into identifying the breach, repairing the issue, and notifying your customers. Generally, if you want to preserve your brand image and keep your customers, you have to explain what steps you are taking to safeguard their information going forward. You also need to reassure clients that any data you lost will not hurt them. For instance, if you lost names and social security numbers in a data breach, you may want to offer affected clients identity theft protection or credit monitoring services. When you use encryption, you protect your business from all of these threats.
Unfortunately, passwords and firewalls aren’t enough to stop hackers. You need dual-factor authentication for passwords and encryption to protect digital assets such as software and records. Ideally, the encryption should be 128-bit key. This essentially applies a new “secret code” to every transaction, and it’s virtually unbreakable.
Your IT team should go through multiple rounds of testing before you implement your encryption, and you should audit the system regularly to ensure it’s working as required. Finally, make sure that you don’t store the key with your data or transmit it over email.
Bank security can be hard, but we make it easy. At SQN Systems, we believe that IT security solutions need to be reliable, flexible, and straightforward for you to implement. Contact us today to learn more about fraud protect you can trust.