Security is paramount for online financial services due to the sensitive nature of the information and transactions they handle. This is a serious matter considering Malaysia’s high number of online fraud cases. According to the Executive Chairman of Securities Commission Malaysia (SC), Datuk Seri Dr Awang Adek Hussin, the number of fraud-related complaints between 2020-2022 rose by 100%, with total losses amounting to tens of millions of Ringgit.
Enforcing robust security measures has become a no-brainer. It won’t only prevent fraud and unauthorized access but also protect the integrity, confidentiality, and availability of sensitive data. Here’s why financial service providers need to implement more robust security measures.
Protection of Sensitive Data
The data breach has become one of the most alarming issues in Malaysia’s financial industry. Between April to June last year, more than 660,000 Malaysian accounts were breached. This number was a staggering 733% surge compared to the previous quarter, making Malaysia one of the top five countries with the most significant rises in compromised accounts during Q1-Q2 in 2022.
Strong security measures are needed to prevent more data breach cases, especially at online financial institutions that deal with a vast amount of sensitive customer data, including personal information, account details, and financial records.
Prevention of Fraud and Cyberattacks
Financial institutions are prime targets for cybercriminals seeking to steal money, compromise accounts, or commit fraud. Between January to July 2022 alone, Malaysians lost RM415 million to scammers. This situation had reached a worrying level that Bank Negara Malaysia (BNM) instructed the banking industry to tighten its security controls, especially for mobile and internet banking services.
Implementing security measures can help financial services monitor transaction patterns and user behaviours for anomalies. These anomalies can indicate potential fraudulent activities and trigger alerts for investigation.
Maintaining Customer Trust
Trust is the foundation of any financial relationship. A security breach can erode customer trust, leading to reputational damage and potential loss of business. Thankfully, you can prevent that from happening by enforcing security measures. When customers trust that their financial services will act in their best interest, they’re more likely to engage in financial transactions without hesitation, improving the ease of business.
Customer trust will also help financial institutions motivate customers to take security more seriously, adopting recommended practices to protect their accounts.
Legal and Regulatory Compliance
The financial industry is subject to numerous laws and regulations that mandate the protection of customer data and financial transactions. In Malaysia, the protection of customer data and financial transactions is regulated by several entities, including the Personal Data Protection Department (PDPD). Financial institutions must comply with the PDPD’s provisions to protect customer data.
Besides PDPD, entities like the Malaysian Communications and Multimedia Commission (MCMC), Cybersecurity Malaysia, National Anti-Financial Crime Centre (NFCC), and Securities Commission Malaysia often collaborate to safeguard financial transactions in the country.
Meanwhile, BNM, as the central bank, issues regulations and guidelines to ensure the integrity and security of transactions and customer data within the financial industry. Compliance with these regulations will also build customer trust, assuring them that their data is treated transparently and responsibly.
Innovation and Digital Transformation
As financial institutions increasingly adopt digital technologies, security becomes a critical enabler of innovation. Digital transformation and innovation allow financial institutions to streamline processes, enhance services, and provide more convenient access to financial products while ensuring customer interactions’ integrity, privacy, and trustworthiness.
For instance, BNM recently instructed financial services to migrate from SMS one-time-passwords (OTP) to a stronger authentication method. Thanks to advanced technology, many authentication methods are available, ranging from biometric authentication, AI-powered fraud detection, big data analytics, cloud security, and blockchain smart contracts.
Adaptation to Evolving Threats
Cyber threats are constantly evolving, and so should financial institutions. While you may have implemented robust security measures, a continuous evaluation is still needed so that you can adapt your security systems to any new threats. This action is crucial to ensure the continued effectiveness and resilience of safeguards.
Show your customers that you’re committed to staying ahead of evolving threats. Besides proactively monitoring systems and networks, staying informed about emerging cyber threats and trends can help you anticipate evolving risks and make necessary mitigation plans.
Security measures provide a robust defence for finance services against various threats. Enforcing these measures will protect customers’ sensitive data and foster a sense of trust and security that leads to long-lasting customer relationships.