The finance sector is a massive industry--with a net value of over $20490.46 billion in 2020 alone. This includes personal finance, consumer finance, and corporate finance--all of which individual companies operate, and in turn, manage data for. And it’s a high stakes game. Cyber threats and risks aren’t just dangerous in terms of data loss, they can also be catastrophically expensive events in terms of lost reputation, and incurred compliance fees.
By investing in a cloud-based backup service, like Backupify, these dangers can be mitigated and your data stays protected.
Risks and Hazards Banks Need to Watch Out For
Given the sensitive nature of the data within the financial sector, banks and financial companies are prime targets and vulnerable to a number of threats:
- Cybercrime: Around 70 percent of all data breaches are financially motivated, and in 2020 alone, the average cost of a data breach for the finance sector cost around $18 million per company. That’s why banks need to protect their data against hackers, malware, and ransomware. Otherwise, your data could end up encrypted, leaked, or destroyed entirely.
- Human error: Another risk banks need to be on alert for is data loss from human error. Human error is actually the leading cause of data loss, and can be a result of IT staff or employees unknowingly deleting data from company systems and servers, or simply not understanding how to use system interfaces. While SaaS platforms like Microsoft 365 and Google Workspaces provide some protection, they operate on the shared responsibility model, which is not comprehensive coverage - meaning there are gaps in data coverage that businesses must be accountable for. Without a backup system in place, there is no guarantee that you’ll be able to restore your data.
- Provider outages: Unfortunately, provider outages are hard to predict and anticipate. Unexpected power outages can lead to data loss, even if you’re in the middle of working on a file. Provider outages from companies like Microsoft and Google do happen, and often leave its users digitally stranded for hours at a time. Not only do you face the risk of losing data, but the cost of outages are high: data data loss from center outages cost U.S. businesses an average of $7,900 per minute. Investing in a backup solution can ensure you don’t lose any data and have the capacity to restore your data easily, even if Google or Microsoft are down.
- Inability to access data: Downtime for banks that can’t access their data adds up to a high cost. Depending on the company’s size, downtime costs can range from $10,000 per hour to more than $5 million per hour. Whatever the reason you’re unable to access your data, it deeply affects company productivity and adds exorbitant costs to an organization’s bottom line.
- Natural disasters: Although most natural disasters can be predicted ahead of time, events like earthquakes, hurricanes, and tornadoes can put your data in danger. Banks that are located in an area vulnerable to natural disasters should have a backup plan in place. Natural disasters can not only damage property and put lives at risk, it can also lead to power outages and data loss. If this happens, financial companies may be unable to access their data for days at a time. Not to mention, disaster recovery plans are also costly, and plans range based on cost and size--but can exceed $10,000. Implementing a backup solution can help mitigate some of these costs (and data loss) in the event of a natural disaster.
Now that you know what risks and hazards banks need to consider, read on to learn how these risks can damage your company--financially and beyond.
The Reality of Data Loss--and it’s Costs
No matter the risk or hazard, failing to backup your data comes at a cost. Although we’ve covered some of the financial costs that result from data loss, you should know there’s more to consider. Data loss doesn’t hit banks just financially, there is a hidden ripple effect that can harm business as well:
- Downtime is expensive: Downtime refers to the time banks spend “offline,” and can be a result of the risks mentioned above. Unfortunately, the more time banks spend offline, the more money and overall productivity they can lose. In some cases, downtime is caused by provider outages. During 2020, Microsoft 365 and Google experienced several outages that left their users unable to access their email and other data. In fact, downtime can cost small companies more than $8,500 per hour--along with losing data too.
- Damaged reputation: Losing client confidence can be very damaging to a bank's reputation and credibility. Having a damaged reputation is hard to come back from, which can also cause banks to see a drop in clients and overall profit, per consumer’s changed perception.
- Reduced productivity: Anytime a bank experiences data loss, their productivity suffers. Data loss becomes a huge barrier for company employees and users when trying to access files and complete their tasks and duties.
- Revenue disruptions: When systems go offline or if there’s a provider outage, banks can’t process invoices, credit card payments, or even transfer funds, which can lead to a delay in profits. Additionally, if a cyberattack causes data loss, it could also leave your data encrypted and completely unavailable to employees.
- Regulatory fines: The finance sector operates off strict regulations and must be followed. Not complying with industry regulations can result in expensive fines. Since 2008, banks have been fined a total of $243 billion for non-compliance. It’s important to know that regulatory fines can also be caused by data loss if important financial documents are not retained for at least 7 years. If your bank doesn’t have a backup system in place, it would be virtually impossible to restore required data to stay compliant.
The financial and non-financial consequences of data loss are significant, and banks need to ensure this doesn’t happen. But, there are ways to prevent data loss, such as investing in a backup system, like Backupify.
Save Costs and Your Data With Backupify
Choosing an automated SaaS backup system, like Backupify, can help prevent data loss and avoid banks from, well, breaking their own banks. In doing so, businesses save an average of $3.58 million by having an automated and incident response preparedness.
Backupify can help banks save, and more. Backupify offers backup, and data protection and management. Financial companies can leverage Backupify to better manage their data and centralize their backup and retention needs. With strong security measures like our private cloud and multi-factor authentication, Backupify ensures your data remains protected, secure, and backed up.
Want more savings? Try Backupify today with a free demo.