Secure File Transfer for Financial Services: Best Practices for MFT and Automated File Transfer

The financial services industry relies heavily on technology to serve its clients, function, innovate, and grow. As a result, secure file transfer is critical to ensuring the confidentiality, integrity, and availability of sensitive information like financial data, customer records, legal documents, and intellectual property. Traditional file transfer methods like email and SFTP are needed to meet privacy, security, and compliance requirements. Managed file transfer (MFT) and automated file transfer solutions offer comprehensive and streamlined alternatives for secure file transfer in financial services.

The Importance of Secure File Transfer in Financial Services Industries

Secure file transfer is a critical component of daily operations for financial services organizations. Here are just a few examples:

Banking

Banks, credit unions, and other lending organizations rely on secure file transfers to exchange sensitive financial information, such as account balances, transaction histories, and loan applications. Given the confidential nature of this information, it is critical for bankers to ensure the secure transfer and handling of confidential financial information.

Traditional file transfer methods, such as email and FTP, are not suitable for most banking operations, as stronger security measures are required to protect against cyber threats that can lead to data breaches and compliance violations. The consequences can be catastrophic, leading to penalties and fines, litigation, customer loss, and brand erosion.

Banks therefore need secure file transfer solutions that employ advanced security measures like data encryption, multi-factor authentication, and role-based access control (RBAC). Managed file transfer (MFT) solutions offer an alternative that provides comprehensive security features and centralized control over file transfer activity. MFT solutions enable banks to manage, track, and audit file transfers, ensuring that all sensitive financial data is transferred securely and within compliance.

Investing

Investment firms from small, boutique advisors up to multi-national banks use secure file transfers to exchange confidential investment data such as trade orders, portfolio holdings, and market research. This information contains personally identifiable information (PII), financial data, and intellectual property; therefore, it’s critical to ensure its secure transfer with customers and regulators.

Investment firms manage clients’ portfolios and make informed investment decisions based on customer needs, market trends, and analysis. Any unauthorized access to confidential investment information could result in significant financial, legal, and reputational consequences, such as an SEC investigation, litigation, reputational damage, and client loss. This information must also be handled and shared in compliance with the Gramm-Leach-Bliley Act (GLBA). The GLBA Financial Privacy Rule, for example, stipulates that a financial organization must give “clear and conspicuous notice” of its privacy and data confidentiality policies at the start of a customer relationship and follow up with annual notices.

Traditional file transfer methods like email, file sharing, and FTP are only suitable for some content. These methods lack the necessary security features to protect against cyber threats, which can result in unauthorized access to confidential investment data. Using outdated methods increases the risk of data breaches, severely impacting investment firms’ reputation and financial stability.

Credit Cards

Credit card companies need to implement secure file transfer solutions that use industry-standard encryption and authentication protocols to ensure the security of sensitive information, namely credit card data, during transfer. This is particularly important for credit card data entered into online web forms and transmitted over the internet.

Managed file transfer (MFT) solutions provide credit card companies with advanced security features to protect sensitive data during transfer. These solutions use encryption to protect data from unauthorized access, ensuring only authorized users can access sensitive information. In addition, MFT solutions provide multi-factor authentication and access control features that limit access to sensitive data based on user permissions.

Credit card companies must comply with various regulations, including GLBA, but also the Payment Card Industry Data Security Standard (PCI DSS). Compliance with these regulations requires secure file transfer solutions that meet specific security standards and provide audit trails of all file transfer activity.

Insurance

Insurance companies are responsible for protecting their clients’ PII found on policy documents and claims data. Intellectual property like actuarial data must also be protected. Insurance companies offering life, health, home, auto, and other types of coverage must ensure that this information is transferred securely and complies with data protection regulations like GLBA.

Insurance companies face significant risks if they fail to secure their clients’ sensitive information during transfer. Cybercriminals could intercept this data and use it to commit identity theft, medical fraud, and other crimes. Moreover, insurance companies could face legal consequences, such as lawsuits and fines, for violating data privacy regulations.

Secure managed file transfer (MFT) provides insurance companies with the necessary security capabilities to protect sensitive information during transfer. MFT solutions for example, offer advanced encryption, multi-factor authentication, and identity and access management, ensuring that only authorized users can access sensitive information.

MFT solutions also offer centralized control and monitoring of file transfer activity, enabling insurance companies to track and audit all their file transfers. This functionality helps insurance companies to comply with data protection regulations such as GDPR, HIPAA, and PCI DSS.

Challenges With Traditional File Transfer Methods

Traditional file transfer methods such as email and FTP present significant challenges for financial institutions and their file transfer workflows. These legacy file transfer methods lack the robust security features required to safeguard sensitive data from external threats, leaving the content vulnerable to interception by hackers and unauthorized third parties.

Email attachments are particularly susceptible to interception and can be easily accessed by cybercriminals looking to exploit sensitive information. Phishing attacks prey on unsuspecting victims to surrender their email credentials, enabling hackers to access emails and impersonate the email account holder. Man-in-the-middle attacks can intercept emails and their file attachments during transmission from sender to recipient. Credential stuffing and brute-force attacks leverage weak passwords to access email servers and enterprise content management (ECM) systems that store sensitive information. These and other attacks can easily compromise the confidentiality and integrity of financial data when emailed.

Moreover, traditional file transfer methods like FTP often require manual setup, management, and maintenance, resulting in delays and inefficiencies. And without proper audit trails and reporting capabilities, it can be harder to track file transfer activities and maintain compliance with regulatory requirements.

In contrast, managed file transfer (MFT) and automated file transfer solutions offer enhanced security features and streamline operations. MFT solutions provide encryption, authentication, and access control, ensuring the confidentiality and integrity of the data being transferred. Additionally, MFT solutions automate file transfers, eliminating the need for manual intervention and resulting in faster and more efficient transfer times.

MFT solutions also offer detailed audit trails and reporting capabilities, enabling organizations to track file transfer activities and demonstrate regulatory compliance with data privacy laws and standards. MFT also bolsters client trust by safeguarding sensitive information during file transfers.

Managed File Transfer: A Comprehensive Solution

Managed file transfer provides a comprehensive solution for secure file transfer in financial services. MFT solutions ensure data is securely transmitted between parties, monitored for compliance, and integrated with other systems and applications. MFT solutions offer encryption and authentication features, compliance and auditing capabilities, and automation and integration options.

Encryption and Authentication

One of the most significant advantages of managed file transfer (MFT) solutions is their ability to provide encryption and authentication features. Encryption algorithms such as Advanced Encryption Standard (AES) and Secure Sockets Layer/Transport Layer Security (SSL/TLS) provide robust security for data transfer over the internet, making it nearly impossible for hackers to intercept sensitive information.

MFT solutions also offer digital certificates and two-factor authentication to provide user authentication and access control. These authentication methods ensure that only authorized personnel can access the data being transferred, enhancing the overall security of the file transfer process.

Compliance and Auditing

In addition to the security features, managed file transfer (MFT) solutions offer comprehensive compliance and auditing capabilities, making them an essential tool for financial institutions that must meet industry regulations.

One of the primary compliance concerns for financial institutions is email compliance. Emails containing sensitive data are subject to regulatory requirements, and failing to comply with these regulations can result in costly fines and legal repercussions. MFT solutions provide email compliance features that ensure emails containing sensitive data are encrypted and sent only to authorized recipients.

Moreover, MFT solutions provide regulatory compliance capabilities that enable financial institutions to comply with industry regulations such as GDPR, the California Consumer Privacy Act (CCPA), and others. MFT solutions offer audit trails and reporting features that track file transfer activities, monitor user access, and ensure data retention policies are met, enabling financial institutions to comply with regulatory requirements.

Automation and Integration

Automation and integration are critical components of modern cybersecurity strategies, and managed file transfer solutions offer organizations a range of benefits in both regards. By automating and integrating file transfer processes, MFT solutions help organizations streamline operations, reduce manual intervention, and improve overall efficiency.

MFT solutions offer a range of automation features that enable organizations to schedule file transfers based on specific criteria, such as time, date, or file type. This helps to ensure that files are transferred promptly and efficiently without the need for manual intervention. Furthermore, MFT solutions offer notification features that alert administrators and users when file transfers are complete, enabling them to track the progress of transfers in real time.

In addition to automation, MFT solutions also offer robust integration capabilities. MFT solutions can integrate with existing systems, such as enterprise resource planning (ERP), customer resource management (CRM), electronic health record (EHR) and human resource information systems (HRIS), to enable seamless file transfers across an organization’s IT infrastructure. This helps to eliminate the need for manual workflows and reduces the risk of errors or omissions.

MFT solutions also offer advanced error handling features, which can help to ensure that file transfers are accurate and complete. If a transfer error or failure occurs, MFT solutions can automatically retry the transfer or notify administrators of the issue, enabling them to take corrective action quickly.

Automated File Transfer: Streamlined and Efficient

Automated file transfer solutions offer many streamlined and efficient file transfer options for financial services. These solutions utilize secure protocols, data encryption, and file integrity features to ensure safe and reliable file transfers. Let’s take a closer look at these and other automated file transfer capabilities.

Secure Protocols and Data Encryption

When transferring files over the internet, security should be a top priority for any organization. Automated file transfer solutions offer a range of security measures to ensure that files are transferred securely, and that sensitive data remains confidential.

One of the primary security features of automated file transfer solutions is using secure protocols. Secure File Transfer Protocol (SFTP), File Transfer Protocol Secure (FTPS), and Hypertext Transfer Protocol Secure (HTTPS) are all examples of specific protocols, or file transfer standards, that can be used to transfer files securely over the internet. These protocols use encryption to protect the transmitted data and provide authentication to ensure only authorized users can access the files.

Data encryption is another critical component of file transfer security. Automated file transfer solutions typically use encryption algorithms such as Advanced Encryption Standard (AES) and Secure Sockets Layer/Transport Layer Security (SSL/TLS) to ensure data confidentiality and integrity. AES is a widely used encryption algorithm using a symmetric key to encrypt data. SSL/TLS, on the other hand, is a protocol that provides secure communication over the internet by encrypting data in transit and giving authentication to ensure that data is not tampered with during transmission.

File Integrity and Error Handling

File integrity is maintained by using file verification features, which verify the contents of files before and after transfer to ensure they have not been corrupted or altered. This helps to ensure that the transferred files are accurate and that their contents remain consistent throughout the transfer process.

In addition to file verification, automated file transfer solutions also offer robust error-handling features. These features help to ensure that any failed transfers are promptly identified and addressed, minimizing the risk of data loss or corruption. Automated file transfer solutions can be configured to retry failed transfers automatically or to notify users of any issues that arise, enabling them to take corrective action quickly and effectively.

Scheduling and Notifications

Scheduling and notifications are critical components of any file transfer process. Automated file transfer solutions offer advanced scheduling features that allow users to schedule transfers at specific times or regularly, helping to streamline file transfer processes and minimize manual intervention.

Additionally, notifications are provided to keep users informed of the status of their transfers, whether they have been completed successfully, or if any issues have occurred. These features help to improve operational efficiency and reduce the risk of errors or data loss by ensuring that users are promptly notified of any problems that may arise during the transfer process.

Best Practices for Secure File Transfer

Financial services organizations must follow best practices to ensure secure file transfer and minimize the risk of data breaches and compliance violations. These best practices include:

Use a Multilayered Security Approach

Financial services organizations must use a multilayered security approach to protect sensitive data from external threats. This approach includes using encryption and authentication features, implementing firewalls and intrusion detection systems and regularly updating security measures.

Implement Role-based Access Control

Financial services organizations must implement role-based access control (RBAC) to ensure that only authorized users can access sensitive data. RBAC assigns users to specific roles and permissions based on their job functions, reducing the risk of data breaches caused by human error.

Monitor File Transfer Activity

Financial services organizations must monitor file transfer activity to ensure compliance with industry regulations and detect potential security incidents. This includes monitoring user activity, tracking file transfer events, and regularly reviewing audit logs.

Regularly Test and Update Security Measures

Financial services organizations must regularly test and update security measures to ensure they are practical and up to date. This includes conducting regular security audits, performing vulnerability scans, and implementing software patches and updates.

Ensure Compliance With Industry Regulations

Financial services organizations must ensure compliance with industry regulations such as PCI compliance, HIPAA, and GDPR. Compliance requirements include implementing security controls, regularly auditing security measures, and reporting security incidents to regulatory authorities.

Kiteworks Helps Financial Services Businesses With Secure File Transfer

Kiteworks’ secure file transfer capability is an essential feature of the Kiteworks Private Content Network, providing organizations with secure MFT, SFTP, and other channels like email, file sharing, web forms, and others. The Kiteworks Private Content Network ensures that enterprise users can securely share large and bulk files from any device, with protocols that enable secure transmission between different systems and locations.

The Kiteworks Private Content Network is a scalable, highly secure platform that meets regulatory standards for confidential document sharing, collaboration, and remote file transfers. With Kiteworks, organizations can transfer files between systems or users quickly and securely while maintaining complete control over the content accessed and transferred.

Kiteworks offers enterprise-grade protection for file transfer through its unique double encryption protocol. This protocol encrypts files twice before sharing, first with a unique, strong key at the file level and then with a different strong key at the disk-level volume. File keys, volume keys, and other intermediate keys are encrypted when stored.

The Kiteworks platform runs as a hardened virtual appliance that is self-contained, preconfigured, and optimized for security. The platform is regularly audited and tested to ensure the encryption process is reliable and secure. Lastly, the Kiteworks Private Content Network integrates with your organization’s security infrastructure, including SSO, LDAP, AV, ATP, and DLP, so you can centrally protect every exchange of sensitive information entering and leaving the firm.

To learn how the Kiteworks Private Content Network can meet your secure file transfer needs, book a custom demo today.

Additional Resources

• Blog Post Secure File Sharing in Banking Amid Industry Disruption: New Model, New Challenges
• Blog Post Secure File Sharing for Insurance Companies: Protecting Consumer Privacy
• Blog Post Secure File Transfer for Government: A Comprehensive Guide
• Video Kiteworks Snackable Bytes: Secure MFT
• Blog Post SWIFT Security Vulnerabilities: Bank Data Breaches Are the Future of Bank Robberies