IT Compliance 101 For Banks and Financial Companies

IT Compliance 101 For Banks and Financial Companies

IT compliance for banks is becoming more complicated and challenging each year. Twenty years ago, IT compliance largely focused on meeting standards. Since then, expectations have only increased further as regulators and hackers both demand increased technology controls.

IT Compliance For Banks: Key Drivers You Need To Know About

Several factors in the environment are making IT compliance for banks a critical priority. Start with the increasingly digital nature of modern banking. With millions of customers and transactions to handle each day, banks can only operate through complex technology. Each part of the machine has to work correctly. If there is a failure at any point, the bank may lose revenue or anger a customer. Banking customers have a very low tolerance for bank errors. After all, they assume that banks know how to protect and safeguard money. Meeting high customer expectations for bank security and service is only the first reason to invest in bank IT compliance.

Government regulators in the United States, Europe, Canada, Australia and other jurisdictions are also pressuring banks to improve their IT controls. For example, many U.S. banks are required to follow GLBA security controls. In addition, the Office of the Comptroller of the Currency, the U.S. bank supervisor, regularly conducts bank examinations to verify that banks are compliant with GLBA controls and other regulations. Beyond bank-specific regulations and laws, financial companies generally have to follow privacy laws, which ultimately require IT support.

The final reason IT compliance for banks matters lies in today’s cybersecurity threats. Hackers frequently target banks. Since banks have complex, detailed customer records, stealing personal information from a bank can be a lucrative way to commit fraud. One way to reduce the chance of a successful attack lies in improving IT controls.

IT Compliance For Banks: A 7-Item Checklist

Use this IT compliance for banks checklist to evaluate whether your IT compliance controls and program are operating successfully. This self-assessment cannot replace a full review performed by a competent professional. However, it will help you to discover some of the most significant control gaps.

1. IT Controls Catalog

Does your company have a comprehensive catalog of IT controls? In larger companies, there are sometimes IT controls embedded in multiple departments and systems. If these controls are not cataloged in one place, it will be challenging to detect gaps in your compliance program.

2. IT Controls Documentation

Once you have an IT controls catalog, the next level of performance is to create full documentation for each IT controls. Documentation means describing the IT control, when it was implemented, who is responsible for it, and details on its limitations. For instance, you may have an old IT control that only works on networked printers. In that case, you might need to develop another type of IT control to cover non-network connected printers.

3. IT Controls Testing 

With regular testing, you will have no way of knowing whether your IT controls are operating effectively. To evaluate your testing effectiveness, consider the following points:

  • Frequency of testing. Some highly sensitive controls should be tested daily or monthly. Less significant controls may be tested with less frequency. Avoid applying a blanket rule to test all IT controls at the same time.
  • Testing Automation. Evaluate how much your IT controls testing process is manual vs. automated. Manual testing processes are sometimes needed, but they carry the risk of being easy to forget when staff is concerned with other matters.

4. IT Controls Software

IT compliance for banks may involve checking dozens or hundreds of apps. Thoroughly testing that many different systems are going to be all but impossible without software. Therefore, we suggest checking what software your IT compliance staff have available to do their work. If they rely on general-purpose business software like email and spreadsheets, you have an opportunity to upgrade.

Before you choose an IT compliance software solution, build a list of options that includes Compliance Auditor. With Compliance Auditor, you can create private flags and notes about compliance issues. That means annual reviews and other validation processes will be much easier.

5. IT Controls Refresh Process

Your IT controls are only useful if they keep up with your company’s scale and changing technology. For instance, if you implemented multiple new cloud software applications last year, your IT controls may be out of date. To make sure your IT controls remain current, set a schedule reminder to perform updates. As a starting point, update IT controls annually.

6. IT Controls Training

At first, IT compliance for banks tended to be managed by a small number of specialists. In terms of initial implementation, relying on a small group is acceptable. However, it is important to recognize that staff will eventually move on to other roles or leave the company. Therefore, a sustainable IT controls program must have a training component. At a bare minimum, set up a job shadowing program so your experienced IT controls staff can share their knowledge with another employee.

7. IT Controls Reporting

Managers and executives cannot be expected to review IT controls one by one. Instead, they need to have summary reports to evaluate. Start by producing IT controls reporting quarterly. Focus on the most significant IT controls that pack the greatest punch to prevent losses and fraud. These reports should be organized in terms of risk and be accessible to a non-technical business user.

Not Enough Time To Run Your IT Compliance Program At this point, you might start to feel overwhelmed by all of the elements that go into a successful IT compliance program. There is good news, fortunately. You don’t need to expand your IT workforce to get more IT compliance work done. Instead, consider using a software tool like Apollo to handle routine tasks like password resets. Once Apollo has your password resets dealt with, your staff will have more capacity to take on tasks like IT control testing and creating user-friendly reports for management.

Written by Nelson Cicchitto