The financial services industry is constantly evolving, with new regulations and technologies emerging all the time. This creates a challenge for financial services companies, which need to ensure their systems and processes are secure, compliant, and fraud resistant.
Security risks
Legacy systems are often more difficult to secure than newer systems. Partly because they were designed in a different era, when security was not as much of a concern. Legacy systems may also be using outdated software that is no longer supported by the vendor. This has the potential to become a security vulnerability for attackers to exploit.
Manual processes can also pose a security risk because they are more prone to human error. For example, a manual employee may accidentally enter the wrong information into a system, which could lead to a security breach.
Compliance risks
Financial services companies are subject to a wide range of regulations, including those governing data privacy, anti-money laundering, and cybersecurity. Legacy systems and manual processes can make it difficult to comply with these regulations.
For example, legacy systems may not be able to track customer data in a way that complies with data privacy regulations. Also, as we discussed previously, manual processes can be more prone to errors which could lead to compliance violations.
Fraud risks
Manual processes can be more prone to fraud than automated processes since they are more easily manipulated by fraudsters. For example, a fraudster may pose as a customer and call into a call center to request a wire transfer. If the employee does not verify the customer’s identity properly, the fraudster may be able to steal money from the company.
Legacy systems can also be more prone to fraud since security vulnerabilities may not have been patched. Fraudsters can exploit these vulnerabilities to gain access to sensitive customer data or to commit financial fraud.
How to mitigate these risks
What can financial services companies do to mitigate the security, compliance, and fraud risks of legacy systems and manual processes?
- Migrate to modern systems: Migrating to modern systems can help financial services companies to improve their security, compliance, and fraud controls. Modern systems are typically more secure than legacy systems and they are easier to patch and update. They may also have built-in fraud prevention tools.
- Automate processes: Automating processes can help to reduce the risk of human error and fraud. Automated processes are more consistent and less prone to errors than manual processes. They can also be monitored more easily for fraud.
- Implement security controls: Financial services companies should implement security controls to protect their systems and data from attack. These controls should include things like firewalls, intrusion detection systems, and data encryption.
- Train employees: Employees should be trained in security and compliance procedures. This training should cover things like how to identify and report suspicious activity, how to protect customer data, and how to comply with regulations.
Financial services companies can mitigate the security, compliance, and fraud risks of legacy systems and manual processes by improving the security of their systems and complying with regulations.
How companies can improve legacy systems
In addition to the above, financial services companies can also consider the following:
- A cloud-based solution can help to reduce the security risks associated with legacy systems since providers typically have more resources and expertise to protect systems from attack.
- Use a managed services provider to manage and secure your legacy systems by freeing up internal resources so that you can focus on other areas of the organization.
- Risk assessment tools prioritize your security investments by identifying and assessing the security risks associated with your legacy systems.
By taking these steps, financial services companies can improve the security of their legacy systems and reduce the risk of fraud.
Michael Rapoport – Digital Marketing Manager
