For financial services companies, one of the major issues now and for the foreseeable future is security of customer data. Being able to demonstrate to clients that you have appropriate procedures in place to protect client information has now become a commercial differentiator.
As the acceleration of technological advances continues to be a driving force behind the rapid progression of the financial services sector, this innovation has real world implications and concerns for institutions in terms of the security of client information.
Cyber security challenges facing the financial services sector
Recent legislative changes including the PSD2 (second Payment Services Directive), GDPR and Open Banking are all transforming initiatives for how financial services institutions manage and protect customer data. The reputational damage of data breaches could potentially put a company out of business.
The European Banking Authority, and the FCA, recognised the need to provide additional guidance when it comes to authorised firms outsourcing to cloud service providers (as opposed to traditional outsourcing to non-cloud service providers).
As a result, a wider range of companies, such as fintech companies, will now face the challenge of remaining agile and competitive in fast-moving markets, whilst managing the administrative and practical challenges of maintaining compliance with the Guidelines.
The Guidelines come into force on 30 September 2019. Any outsourcing arrangements entered into, reviewed, or amended by Covered Entities after that date must comply with the Guidelines. Covered Entities must also update all existing outsourcing arrangements in line with the Guidelines by 31 December 2021.
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