Safeguarding Client Data: How Financial Services Firms Can Stay Ahead of Evolving Cyber Threats

March 12, 2025

When cybercriminals successfully breach a financial services firm, they don’t just steal data—they gain the keys to commit devastating fraud, drain accounts, and potentially cripple your business.

“It won’t happen to us” is a luxury businesses like yours can no longer afford. Here’s what you need to know about the threats specifically targeting your sector, why traditional defenses are falling short, and the practical steps that actually work to protect your most sensitive client data.

The Four Biggest Reasons You're at Risk

1. The Value of Your Data

Financial services firms handle some of the most valuable data imaginable—from Social Security numbers and account credentials to investment portfolios and transaction histories. This treasure trove of information makes you an appealing target for cybercriminals looking to commit fraud, identity theft, or financial manipulation.

2. Rising Regulatory Consequences

The financial sector is among the most heavily regulated industries, and for good reason. It does, however, mean that when data breaches occur, you don’t just face reputational damage. You risk substantial penalties, litigation, and possible license revocation, too.

From SEC requirements to state-specific regulations, financial services firms must navigate a complex compliance landscape. Many organizations struggle with this balancing act, creating vulnerability gaps that cybercriminals are eager to exploit.

3. The Risk Assessment Mismatch

We often see a critical disconnect between risk appetite and risk tolerance in financial institutions. Your board might believe your systems can handle significant risk exposure, while your actual infrastructure tells a different story.

This mismatch leads to:

Underfunding critical cybersecurity initiatives
Difficulty convincing leadership to implement essential safeguards
Overconfidence in existing security measures

As IT consultants in St. Louis (that serve clients across the United States), we regularly help firms align their risk assessments with reality, creating more accurate security frameworks that reflect true capabilities.

4. The Path of Least Resistance

While major financial institutions invest millions in cybersecurity, smaller firms often represent the path of least resistance for attackers. Many small to mid-sized financial businesses operate with limited IT services, making them incredibly attractive targets.

Cybercriminals follow a simple equation: maximum reward for minimum effort. When they discover financial organizations with valuable data protected by inadequate security measures, they’ve found their jackpot.

The Top Three Threats Facing Financial Services

1. AI-Enhanced Phishing Attacks

In a previous post on deepfakes, we discussed a case where a financial employee agreed to transfer the equivalent of $25.6 million to their company’s CFO—who turned out to be a cybercriminal in disguise. That deepfake scam perfectly demonstrates how phishing has evolved far beyond obvious email scams.

Today’s financial sector phishing attacks include:

Spear Phishing: Highly targeted attacks. Using personal details gleaned from social media and public records, criminals create convincing impersonations of colleagues, regulators, or partners.
Whaling: Executive-focused attacks. These target those with financial approval authority, often using sophisticated social engineering.
AI-Enhanced Deception: Deepfakes and AI-generated content. As this technology advances, identity verification becomes increasingly difficult.

For financial services firms, the stakes couldn’t be higher. A single successful phishing attack can compromise client accounts, drain funds, or provide criminals access to your entire network. Safeguarding client data requires understanding these evolving threats and implementing countermeasures.

2. Relentless Ransomware

Sophos’ 2024 survey revealed alarming statistics for the financial industry:

65% of financial institutions were hit by ransomware in 2024
Financial services had the highest rate of success in stopping attacks before data encryption occurred—but at only 51%, it’s not as encouraging an outcome as you’d expect.
Despite preventive measures, 51% also paid the ransom to recover their compromised data

These numbers tell an important story: while financial services firms are improving at preventing complete encryption by cybercriminals, there’s still a long, long way to go. Talking to IT experts experienced with financial services firms about ransomware-specific protection is a must if you want to avoid becoming part of next year’s statistics.

3. Insidious Insider Threats

Not all threats come from outside your organization. Insider threats—whether malicious, negligent, or compromised—represent one of the most difficult security challenges in financial services.

These threats typically fall into three categories:

Malicious Insiders: Employees or contractors deliberately misusing access for personal gain or revenge
Negligent Insiders: Staff who unintentionally expose systems through carelessness or policy violations
Compromised Insiders: Legitimate users whose credentials have been stolen or who are being manipulated

Financial services firms are particularly vulnerable to insider threats due to the high number of employees with access to sensitive client information. In order to safeguard client data effectively, this internal vulnerability has to be addressed alongside external threats.

What to Do About It: Seven Steps to Safeguarding Client Data

Modern financial cybersecurity requires multiple layers of protection throughout your systems. Aim for several walls rather than one supposedly impenetrable barrier. That way, when one security measure fails, the others remain to protect critical assets.

1. Authentication Beyond Passwords

Multi-factor authentication (MFA) should be your minimum security standard. Implementing the Principle of Least Privilege (PoLP) means giving everyone with access to data access to the absolute minimum amount they need to do their job effectively.

2. Building an Accountability Culture

Create a culture where security is everyone’s responsibility. You can do this by providing specialized training for financial-sector threats, conducting phishing simulations to test this awareness, and making reporting suspicious activity straightforward (and even rewarded).

3. Vendor Security Verification

For comprehensive data protection, your standards must extend to everyone who touches your information. Verify that all partners (including your IT team) follow recognized security frameworks like NIST SP 800-171 or ISO 27001.

4. Proactive Security Auditing

Regularly conduct vulnerability scanning, penetration testing, and cybersecurity audits—and act on the findings. Many financial services firms conduct audits but fail to implement recommended changes.

5. Advanced Encryption Implementation

Financial data should be encrypted at every stage: in transit, at rest, and in use. That means end-to-end encryption for client communications, field-level encryption for sensitive database elements, and secure key management systems.

Quality IT consulting in St. Louis and across the United States can ensure you install the right encryption tools for your needs.

6. Preventing Fraudulent Transfers

Implement a rotating code word system for verbal verification: a dynamic, pre-agreed code word that changes periodically. Only share this verbally over a secure phone line—never via email, text, or chat.

For large or unusual transfers, enforce a two-person verification process. This involves one person calling the client on a pre-registered secure phone line to confirm the transfer using the rotating code, and a second person verifying the authenticity of the response before executing the transaction.

7. Incident Response Planning

Have a tested incident response plan with clear roles, communication protocols, and regulatory reporting procedures. Businesses with effective plans typically contain breaches faster and with lower costs than those that underprepare.

Taking the Next Step

Financial services face cybersecurity challenges that require specialized expertise. At Anderson Technologies, we provide tailored IT services for financial services firms designed to protect your most sensitive assets while meeting regulatory requirements.

Our approach combines technical solutions with strategic consulting to ensure your cybersecurity investments align with your actual risk profile. Whether you’re concerned about ransomware, insider threats, or sophisticated phishing attempts, our team has the financial sector experience to help.

Anderson Technologies: Real People Creating Business-Changing IT Solutions

For over 30 years, Anderson Technologies has leveraged our expertise for the benefit of our clients, supplying them with suitable, secure IT and strategic guidance for their technological future.

We’re a dynamic team of IT professionals with over 200 years of combined experience and specialist certifications to back up our knowledge. As a trusted advisor, we don’t just focus on today. We strive to take your technology light-years ahead of your competition and scale with your business’s success.

Want to talk about safeguarding client data in your business? Contact us today.