Some 69% of financial services companies across Europe are not able to secure consumer data effectively, despite incoming regulation potentially hitting these firms for hundreds of millions of pounds.
That is according to a new survey of 740 IT decision-makers, finding that 45% had encountered challenges around securing data when trying to improve their digital user experience for customers.
All firms that do business in the EU will be subject to General Data Protection Regulation (GDPR) from 25 May 2018, with those that fail to comply risking fines of up to 4% of their previous year’s annual revenue and criminal penalties.
“There can be little doubt that data security is the most pressing issue facing financial businesses today,” said Michel Robert, managing director at internet service provider Claranet, which commissioned the research.
“GDPR is on our doorstep, but it is clear that many organisations have their work cut out if they are to comply. The fact that almost seven in ten organisations can’t guarantee the security of their customer data is particularly concerning.”
The survey findings were published today in a research report, which reveals that security is the biggest challenge facing IT departments, with 57% of respondents citing it as their top threat.
It was also found that 63% believe security procedures and requirements hold back their ability to innovate.
To address these shortcomings, around 55% of businesses in financial services expect to increase their IT budget across their entire organisation by at least 5% next year.
“However, it’s important to recognise that much still needs be done in terms of increasing cyber security capabilities at a pace rapid enough to ensure GDPR readiness and overall preparedness,” Robert continued.
“By working with expert third parties, businesses can rapidly gain an extra layer of cyber security expertise, identify vulnerabilities and define priorities for improvement.”
This comes after a report last year forecast European financial institutions to face fines totaling €4.7bn (£4.14bn) in the first three years under the incoming GDPR.
It predicts 384 data breaches by 2021, each incurring fines as high as €260m, with many firms at risk of further costs associated with compensation claims, damaged reputations and resignations.
“History tells us that companies that have dealt with data breaches poorly have seen loss of customers, reduced earnings and board level resignations,” AllClear ID CEO, Bo Holland, said. “GDPR raises the stakes even higher.”
Financial services companies are looking to digital transformation at a greater rate than most vertical market businesses, and are facing an “acute shortage” of skills as a consequence.
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