Security breaches within financial services damage far more than just reputation

Opinion by Simon Bain

It costs the banking and finance industry far more than a dent in their reputation if personal data is compromised.

It costs the banking and finance industry far more than a dent in their reputation if personal data is compromised.

It hits them where it hurts – the balance sheet - and we are not just talking dives in the share price, we are talking dramatic increases in the cost of doing business, such as professional indemnity insurance and increasingly, the impact this could also have on the ratings agencies themselves.

This is what I would call the hidden cost of crisis management, and it is all before we start looking at the total cost associated with upgrading and improving IT security systems.

Credit card processing companies have to manage and authorise millions of card transactions every day. They have to store, search and access each transaction individually to make sure that it can be authorised and processed.

This amounts to millions of transactions every day. Each of these transactions requires a database to house the record and also a messaging platform, such as the cloud or dedicated banking payment platform, to pass the transaction through.

It is the job of the processing companies to securely and speedily create a seamless purchase transaction for their customers (the banks) and the banks customers. If the transaction is slow or has any type of interruption, then the card user is able to move their custom on.

This can lead to a number of compromises taking place within the data, the main one being the database records held in plain text. This leaves the data open to unauthorised access. To help alleviate this threat, the majority of the records can be encrypted leaving only parts in plain text. This is done to enable a record to be searched and then accessed, via the plain text part. Both of these scenarios leave the database vulnerable to attack.

Generally, due to the current firewall and other messaging security that is placed around the database, this attack would be from an internal source, such as a disgruntled employee, or a contract worker who has been brought in to undertake routine maintenance on the data. In either case, having any of the data in plain text would mean instant or simple access to the information and a major security breach.

Even if the majority of the record was encrypted using current database industry standards, this would still leave the data open and vulnerable, as this technique places the encryption within the database engine. When a hacker gains access to a database they generally do so by using credentials that the database trusts, and therefore all encryption would be rendered irrelevant and the records shown in plain text.

Hacking will always be with us, it is not something that we can stop. However allowing unencrypted data to be held in a database is unforgivable. People's private information should be just that – private.

We see hacking as inevitable, so we have worked hard to find ways of making the database information useless to any would-be hackers. So what we've done is create a way for all database records to be fully encrypted, while remaining searchable. This means that there are now no excuses for not having the information stored in your databases encrypted.

At the end of the day this is about managing risk, the role today's corporate compliance officer is supposed to be responsible for. If a credit or debit card transaction were ever to be compromised, and this compromise became public knowledge, then the company concerned would have the possibility of being sued. Not only by their customers but also those individuals and organisations who had been defrauded due to the breach.

In addition to this, insurance premiums would rise and market cap could suffer, along with any credit ratings agency rating. This in turn could lead to the organisation being stripped of their ability to manage the transactions, directly leading to loss of sales and revenue.

Simon Bain is CTO of Simplexo


Find this article useful?

Get more great articles like this in your inbox every lunchtime

Upcoming Events