Digital Finance: Transforming Financial Services in the Digital Age 

Digital Finance: Transforming Financial Services in the Digital Age 

11 September

Jordan Reader

In accordance with the digital transformation that has taken place across the finance industry, businesses have been empowered to streamline their financial processes and reap the benefits of implementing cloud accounting software.  4pointzero are a team of accounting consultants who have implemented cloud accounting solutions for a plethora of businesses and only work with software providers with the most secure cloud financial management proposition.  We find our clients take joy in integrating these solutions for the flexibility, scalability and accessibility they offer their businesses. However, as an increased amount of financial information is migrated across to cloud-based platforms, it becomes even more essential to make sure that robust security measures are employed to protect their sensitive financial records.   Ensuring data security in the cloud is the equal responsibility of cloud software providers and business owners and robust measures must be employed if they are to successfully combat the threat posed by cyber-attacks, data breaches and unauthorised access.  As the volume of valuable financial information increases, the size of the prize for fraudsters does too, which in turn makes them intent on finding new ways to obtain the information they so desperately seek.  Today, we will explore how cloud-based accounting security rises to this challenge by focusing on the measures and strategies employed to ensure the protection and privacy of financial data stored and processed in the cloud.  

The practice of ensuring that sensitive financial data is kept confidential is referred to as ‘data privacy and confidentiality’.  This is commonly spoken about in business terms with regards to making sure that the information is kept private and only authorised individuals can access and update the data.  Cloud-based financial data protection includes data privacy and confidentiality measures taken to ensure the safeguarding of all information stored in the cloud.  To not have these measures and processes in place can cost untold financial penalties, not to mention legal action and reputational damage.  They are a necessity for any business, but with financial information being a prime target, it is even more so in the financial industry and one businesses simply can not afford to get wrong.  It has to be the top priority when it comes to transitioning to cloud accounting software and it is most definitely a priority 4pointzero will help you address.  To give you peace of mind, cloud-based accounting software providers are equally aware of the importance and make investing in top security protocols their primary objective.   

There are numerous industry standards and regulations that businesses must comply with to meet their data privacy and confidentiality obligations.  These include the General Data Protection Regulation (GDPR) in the European Union and the Data Protection Act (DPA) in the UK.  If you operate internationally you will also need to comply with international security standards, such as ISO/27001.  Cloud accounting software is built with these regulations in mind and can be updated if they are tightened or altered for any reason.         

As a method of deterring hackers from deciphering financial information, cloud accounting cybersecurity adopts advanced data encryption methods.  There are set standards, known as Advanced Encryption Standards (AES) which must be implemented as a minimum to meet the required levels.  This involves converting data into a coded form, which can only be deciphered using a specific key.  It adds an extra layer of protection, both during data transit and once in storage.  This intelligent method containing strong encryption algorithms means that even if data is intercepted by unauthorised individuals, it remains unreadable and therefore of no use to them.    

Cloud accounting software security comprises of business continuity and disaster recovery practices, which serve to promote it as a more favourable option for many businesses.  As they have the functionality to store data in the cloud, they are at less risk of losing data due to hardware failure, natural disasters or other unforeseen circumstances.  To lose data can be severely detrimental to any organisation, but even more so when it is financial information, so to have measures in place that protect your business against this using disaster recovery mechanisms is particularly appealing to customers.  To supplement this cloud accounting platforms also complete regular data backups.  This means that in the unfortunate event of a successful cyber-attack, financial records can be easily restored and business continuity can be maintained.  Additionally, the backed-up data is stored in diverse geographical locations, so that in the event of one site being attacked it remains accessible from others and can be easily recovered.  To be able to continue business as normal helps mitigate further financial losses.    

Cloud financial data privacy is also at risk more when companies have weak access management protocols in place.  Ensuring data security in the cloud can be achieved by implementing multi-factor authentication (MFA) for all users, so that a 2 step identification process is set up, rather than simply relying on single passwords which may be easily decipherable.  Additionally, role-based access control measures can be adopted, so that only employees who need access to specific data and functions relevant to their roles are given permission.  As employees roles and responsibilities change, these permissions need to be monitored and altered accordingly, otherwise you will leave yourself open to potential breaches.    

Today, there are even intrusion detection systems (IDS) and intrusion prevention systems ((IPS) which can identify suspicious activities.  These intelligent systems identify breaches in real-time, so that swift action can be taken against any security incidents.  They work continuously and with the support of AI detection algorithms can speedily detect any abnormal patterns of behaviour, so that you can respond promptly and prevent any further damage.     

Businesses that are acutely aware of the importance of cloud accounting security complete regular security audits and security penetration testing to check the effectiveness of their cloud accounting cybersecurity.  Incredibly, external security experts can simulate real-life cyber-attacks, so that you can identify any weaknesses in your cloud infrastructure and determine how you would respond to various scenarios.  Often these will throw up the need for patches for software components, so that any vulnerabilities can be patched quickly to minimise the risk of future exploitation.  Completing these audits as a regular security cycle is prudent if you wish to stay ahead of the cyber security threat that could cause devastation to your business in so many ways.  

Undoubtedly, employees play a crucial role in maintaining cloud accounting security.  On the one hand they are vital to driving the adoption of safe security practices, but on the other they are frequently attributed to being the main causers of security breaches whether inadvertently or sometimes sadly intentionally.  Creating a regular cycle for education and training employees in line with legislation on the potential security risks, best practices and how to handle data is essential.  This may include deepening their knowledge and awareness on types of fraud attempts, including phishing, vishing and smishing attempts, as well as avoiding downloading suspicious attachments and reporting any security breaches or concerns promptly.  This regular training helps create a culture of security conscious employees in the workforce, which sends a message to the outside world that you are vigilant.         

In conclusion, the significance of cloud accounting security cannot be overstated. As businesses increasingly adopt cloud-based accounting platforms, the protection and privacy of financial data becomes paramount. Implementing robust security measures, such as data encryption, regular backups, intrusion detection, and compliance with industry standards, enhances the overall security posture of cloud accounting systems. Secure network architecture, periodic security audits, and employee training complete the comprehensive approach needed to fortify financial data. Emphasising security as an integral aspect of cloud accounting ensures that businesses can reap the benefits of streamlined financial processes while safeguarding sensitive financial information from potential threats in the digital landscape. 

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