Can BFSI community cloud solve data security challenges in banks?
The RBI banking report for 2023–24 says that the cases of bank frauds rose to 18,461 in the first half of the current fiscal year, with the amount involved more than doubled to Rs 2,136.7 crore. Are we anticipating further losses of this kind in Indian banks? If we don’t want to use cutting-edge cloud technology in banking, are we voluntarily losing the economy? It’s time to give the subject careful thought, and let’s investigate how the BFSI community cloud may protect India’s banking industry.
What is a BFSI community cloud?
Specialized BFSI community cloud, exclusively for banking, financial services, and insurance, cannot be compared with generic public cloud offerings. Since they are mainly designed to cater to the sector-specific needs of financial institutions, they address one of the many challenges banks and their insurers face head-on: security and regulatory compliance, in addition to data sovereignty issues.
Financial institutions can access strong infrastructure, advanced security features, and regulatory-compliant platforms using banking and cloud computing while protecting sensitive financial data within national borders.
Key data security challenges in BFSI
The BFSI sector faces several critical data security challenges as it increasingly adopts cloud technologies. These challenges must be addressed to protect sensitive financial data and maintain customer trust.
Lack of monitoring
A lack of monitoring in cloud environments also presents a big security risk. Financial institutions cannot determine security threats and breaches when they are not in control and do not have full monitoring capabilities. Due to this lack of management, both data privacy and regulatory compliance are in danger.
Data breaches
The overall cost of Indian data breaches rose by 28% from 2020 to $2.18 million in 2023, as reported by RBI for the year 2023–24.
The most common problem is the breach of data, which happens to be mostly brought on by a weak password, poor key management, and inadequate security authentication. BFSI companies should financially invest in the very latest encryption and security solutions to reduce risks and shield client data from online attacks.
Insecure APIs
Unsecured APIs provide a significant security risk but are necessary for managing cloud services. Attackers may access sensitive financial data using exposed or exploited APIs. Safe API techniques are necessary to stop data breaches in cloud environments.
Rising cyber attacks
Ransomware, phishing, and insider threats are top-rated cyberattacks targeting the BFSI industry. With the increasing expertise of thieves, financial institutions must strengthen their defenses against data breaches and reduce potential losses.
Cloud-based financial services are vulnerable to cyberattacks such as DDoS and Man-in-the-Middle attacks. Therefore, BFSI firms need strong cybersecurity measures since these attacks can damage operations, steal confidential information, and hurt the institution’s brand.
Data residency and sovereignty
To increase control, security, and compliance, a number of countries, including India, require that private financial information stay within their borders. If data residency compliance is neglected, the potential for severe fines and additional regulatory problems highlights the importance of data sovereignty in protecting sensitive financial information.
Regulatory compliance
Financial organizations must also strictly comply with regulations, including GDPR, RBI guidelines, and local data protection laws. A single non-compliance might attract heavy penalties and legal troubles and lead to a loss of customer trust; therefore, ensuring cloud computing in banking is perfectly in line with regulations is a big need.
How BFSI community cloud tackles data security challenges
In the banking industry, protecting sensitive data is critical. To ensure data integrity and privacy, banks must have a robust, comprehensive approach to internal and customer-facing operations. The BFSI community cloud uses advanced security measures, efficient data management, and regulatory compliance to overcome these problems.
Advanced security features
Modern security features are built into digital banking platforms to protect secure financial information. These banking cloud computing platforms include multi-factor authentication, robust encryption, and ongoing monitoring to ensure that data cannot be compromised or accessed without authorization. The BFSI community cloud employs the same multi-factor login and biometric authentication techniques that banks use for their clients to safeguard access to vital infrastructure and banking systems. By examining user interactions with digital banking systems and technologies like Interactive Voice Response (IVR), behavioral biometrics can enhance security.
Compliance
Any BFSI community cloud should adhere to national and international data protection laws, including the GDPR, PCI DSS, and RBI requirements. Because of built-in features that may keep an audit log for every transaction or security event, this digital banking platform can respond quickly to emergencies like ransomware attacks or unauthorized data access. The company complies with all regulatory requirements thanks to frequent upgrades and rigorous testing protocols, including Know Your Customer (KYC) and Non-Disclosure Agreements (NDAs).
Data sovereignty and residency
Since many nations demand that sensitive financial data remain inside their borders, data sovereignty becomes a major challenge. Cloud banking addresses this issue by allowing data to reside in local data centers, meeting the compliance levels of data residency laws, and minimizing exposure to cross-border breaches. Such a BFSI community cloud keeps infrastructures secure against the exposure of sensitive data across jurisdictions, helping financial institutions comply with their national customer data regulations.
Secure infrastructure and processes
The BFSI community cloud ensures that sensitive information is stored and processed securely while adhering to industry best practices. Production data is encrypted, and access is closely controlled, so only authorized personnel and service providers work on critical infrastructure. Data masking ensures the protection of customer information during the testing process as well. It also extends the management of insider threats with secure processes. Integrating Data Loss Prevention (DLP) solutions into community cloud platforms enables banks to minimize the risks of employees’ access to personal customer data such as names and credit card numbers. Risk assessments and security audits are further used in compliance with industry standards such as PCI DSS and GDPR.
Collaboration and standardization
Cloud technology in banking will enable customers to collaborate securely across multiple financial institutions. It has provided a single, secure environment where interaction is carried smoothly through standardized practices in the BFSI sector. The digital banking platform ensures that all stakeholders, from internal teams to third-party vendors, follow the same stringent security protocols, which reduces vulnerabilities and helps them gain the trust of clients and regulators.
Ongoing continuous communication with customers
As the BFSI community cloud notifies their customers from time to time on security enhancements and authentication policies, they facilitate constant feedback regarding system upgrade changes and security system upgrades. With such facilities, banks can enable customer alert systems coupled with customer-defined spending limits to advise customers instantly whenever suspicious transactions arise. In addition, proactive interaction among customers concerning such updates would cause a threat to emerge immediately, and there would be more accountability to the systems through better transparency.
Wrapping up
It is according to 87% of the organizations that indicate a lack of cloud visibility and therefore is challenging to identify security issues.
Cloud computing in banks may prove to be the industry’s perfect solution for growing data security concerns. As an industry leader, Advanced community cloud services from ESDS ensure data sovereignty, legal compliance, and enhanced security features that protect private financial information.
As the future of banking security is defined by innovations like AI-driven threat detection, sovereign cloud advancements, and blockchain integration, ESDS continues to lead the way with scalable, secure, and reliable cloud solutions. For the BFSI sector, embracing ESDS’s BFSI community cloud services is no longer a choice but necessary for maintaining operational efficiency, safeguarding customer trust, and staying compliant in the digital era.
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