Forge borrower relationships and build trust with data management
Banks, small and large, store thousands of financial statements, tax returns, rent rolls, appraisals, credit reports and supporting documents annually. Ensuring that these documents are stored safely has increasingly become a concern, as data scandals, such as Facebook’s Cambridge Analytica scandal, and mega data breaches, such as Under Armour’s breach of 150 million records, gain the public eye. In fact, a recent study by IBM reported that the average cost of data breaches globally rose to $3.86 million per year at an average of $148 per lost record.
Trust is difficult to gain yet easy to lose, especially in the financial industry, and banks are taking notice. According to IBM, U.S. organizations lost an average of $4.2 million last year due to “lost business costs”, costs associated with loss of trust by consumers. Large financial institutions, such as Wells Fargo, have begun utilizing “cyber ranges”, which are virtual environments replicating current systems where cyberattacks are launched to test cyber security teams’ alertness. Institutions hire a “red team” to challenge the organization and play the role as hacker. However, for local credit unions and community banks, it’s difficult to replicate such measures. Despite the priority small financial institutions place on cybersecurity, they often lack the staffing and bandwidth to test security measures against cyberattacks in an efficient manner.
Chris Thompson, senior managing director and head of financial services cybersecurity and resilience at Accenture Security said, “It’s expensive to build a cyber range or to have a sophisticated red team, and the skills needed to build those ranges are scarce. The people who run those exercises are demanding high salaries and are hard to get hold of. So there’s a danger the mid-tier banks can get left out,” in an American Banker article.
Security is an important factor to consider as most banks expand to an online branch. While security is a consideration for accountholders of all ages, tech-driven millennials spend the most time using online banking and are most likely to choose financial institutions with a professional, easy-to-use online presence. As millennials’ share of the U.S. workforce – and therefore financial impact – grows, it’s important to evaluate their online security habits. Here are a few statistics to keep in mind:
• Following a breach, millennials are more likely to stop using an application or service and move to a competitor’s service
• On average, only 42 percent of millennials use passwords that meet recommended complexity standards
• Millennials are generally more aware of potential data security risks, but are more likely to trust businesses to keep their data
Millennials have been characterized as ideologically independent and often mistrusting of larger institutions. However, a Gallup report states 67 percent of millennials say they have a lot of trust in primary bank institutions, which is also the highest trust percentage among other industries. The report went on to say, “…millennials seem to rise above [data breaches], remaining trusting – and perhaps idealistic – in the face of an abundance of evidence that their online data might not be very secure.” While millennials share a high degree of trust in banks, this also means the backlash on financial institutions can be significant if that trust is broken.
In order to maintain trust from accountholders or borrowers and decrease risk of file overwrites and data breaches, banks must implement a safe storage system to manage all documentation securely.
Learn how to secure important documentation in Document Library.
Document libraries, such as the product provided on Sageworks Banking Platform, offers a method for banks and credit unions to securely store key documents and centralize financial data for easy access by designated users. Document libraries allow teams to collaborate in real time online and organize document collections that can sync with a financial institutions’ existing filing system. Among its many security benefits, document library also provides risk justification for regulators. Deloitte says that a majority of consumers are aware of the security regulations tied to banking actions, such as account opening processes, and they view it as a necessary and beneficial process to ensure consumers enjoy a hacker-free banking experience. Document libraries improve efficiency by keeping documents in one central location and satisfies account holders’ desire to join a well-regulated bank.
Storing documents within a secure system is vital to a financial institution’s success and allows for a consistent and high quality customer experience. How you manage your data becomes a key approach to both your institution’s customer relationship and growth strategy as well as your ability to mitigate risk.
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