A need for change? Data breaches dominate headlines in 2014
Target, Home Depot, JP Morgan Chase - 2014 might as well be called the year of the data breach.
It was no secret that cybersecurity was a problem last year, as consumers began to see store after store grab headlines with a new hack. The threat is just as - if not more - concerning for financial institutions. JP Morgan Chase was the largest bank to fall victim to a data breach in 2014, and during the year more organizations began to pay close attention to their cybersecurity.
Breaches impact financial institutions
One of the biggest data breaches over the past year belonged to Target. The retailer reported that roughly 40 million debit and credit card numbers were stolen, and the announcement came right around the 2013 holidays.
"Widespread data breaches take a toll on banks."
Naturally, this attack had a significant impact on financial institutions. Soon, millions of customers were calling, asking questions about their cards' security measures. Millions more new cards were sent out, and the organizations themselves had to analyze how they protect their customers from fraudulent purchases.
Unfortunately, Target was just the tip of the iceberg in 2014. According to Bill Hardekopf, a contributor to Forbes, other breaches affected firms such as UPS, Staples and Sony, as well as the state of New York.
NY attorney general wants improved data breach reporting
After 2014 became the year of the data breach, it is no surprise that some states are looking for better consumer protection measures moving forward.
One such state is New York. There, attorney general Eric Schneiderman has proposed a new piece of legislation that would require companies to disclose information about a data breach. At the moment, an organization isn't required to share that news with consumers if it only affects email addresses and passwords.
"We are trying to find a way that businesses can pick up the phone and report an incident without feeling like law enforcement is breathing down their necks, while at the same time allowing us to do meaningful investigations and get to the root of why consumers weren't adequately protected," Schneiderman told the New York Times.
Under his bill, businesses could also be rewarded should they come forward about a data breach. This would further incentivize organizations for sharing information that will better protect consumers.
Work with customers to improve security
The issue of cybersecurity is extremely complicated, and important, for financial institutions. A viable solution won't be found by senior executives alone. Instead, a more holistic approach will be needed.
"Customers can prove to be an ally when improving cybersecurity."
In an article for Bank Systems & Technology, Doug Johnson, the vice president of risk management policy for the American Bankers Association, suggested including customers in that solution. At the end of the day, your clients should have some level of control over their own financial security. According to Johnson, this could be device authentication, text message alerts or more complex security questions when logging into online banking.
You can also streamline your security measures behind the scenes. For example, you can provide tellers with cash recyclers to do the majority of the cash handling. This will allow to better track your money, and dedicate employee time and resources to other forms of security.
With a more focused and dedicated approach to bank security and consumer safety, 2015 will ideally leave the data breaches of 2014 in the past.