Why Do Financial Service Providers Need Managed IT Services?

In 2003, the FTC recognized the escalating threats to customer information and introduced the Safeguards Rule.

Fast forward to 2021, the rule underwent amendments to ensure financial institutions keep up with the ever-evolving landscape of technology.

Financial services providers are responsible for the private customer data in their care. The simplest way to protect sensitive data is with the support of Managed IT Services.

Let’s unpack why every financial service provider needs Managed IT Services.

Regulatory compliance

For financial service providers, adhering to key regulations like the FTC Safeguard Rule is vital for ensuring customer information safety. This rule doesn’t just provide general advice; it mandates specific steps.

The FTC Safeguard Rule states financial institutions need a solid plan to protect customer information. It “requires financial institutions under FTC jurisdiction to have measures in place to keep customer information secure.”

This means having an active system to monitor, adapt, and respond to any potential risks or threats to that data. This rule signifies the undeniable importance of robust measures to protect customer data.

Managed IT Services come into play here. While they might not help create this protective plan from scratch, they are crucial for ensuring it’s followed diligently. They help institutions anticipate system changes and tackle data security issues, aligning with the ‘Enhanced data security’ expectations of the rule.

While the FTC Safeguard Rule lays out the foundation for data protection in the financial sector, Managed IT Services is the support system, ensuring the rule’s standards are consistently met.

This isn’t the only IT concern financial service providers must consider. They’re under the scrutiny of other regulations, too. Experienced Managed IT partners understand the technical challenges of each rule and help ensure compliance where it matters most.

Enhanced data security

Financial services hold sensitive customer data, making enhanced data security indispensable. But it’s not just about holding data; it’s about actively protecting it from ever-evolving threats.

There are 2,200 cyber attacks happening per day. That equates to more than 800,000 people being hacked every year. The Harvard Business Review reported, “In 2022, the global average cost of a data breach is $4.35 million, while the number is more than double in the U.S., averaging $9.44 million.” Data breaches are expensive and abundant.

The FTC Safeguard Rule actively recognizes these threats, which is why it requires Multi-Factor Authentication (MFA) in addition to regularly monitoring and testing the effectiveness of your safeguards.

This is where Managed IT Services help the most. They don’t just passively recommend security protocols; they actively manage tools like MFA. They also actively monitor and test defenses, keeping in line with the FTC Safeguard Rule’s guidelines. In doing so, they provide a shield against potential cyber threats.

While financial services shoulder the responsibility of safeguarding customer data, Managed IT Services provide the active team, tools, and expertise to ensure that this responsibility is consistently met.

Business continuity

Despite your best efforts, IT-related issues will happen every now and then. Some Italian banks were taken offline in August 2023 with distributed denial of service (DDoS) attacks.

Italy’s National Cybersecurity Agency (ACN) had to intervene to help bring them back online. A Managed IT Services provider can provide your business with peace of mind.

The banks could have avoided this incident by using Managed IT Services. A provider’s first step in getting through those issues is developing an action plan. With a plan in place, your organization can function in a crisis with as little disruption as possible.

A dedicated team of experts monitors your IT infrastructure around the clock. That way, you are more likely to identify and resolve issues before they impact your business.

Fewer disruptions free up your time and resources for revenue generation and marketing activities. An uninterrupted focus helps you drive your business forward.

Scalability and efficiency

Financial services often experience growth fluctuations, seasonal transaction surges, or periodic regulatory changes.

Handling these without flexible infrastructure can lead to inefficiencies, downtime, or non-compliance. For instance, a sudden increase in online banking users or the launch of a new financial product can strain existing systems.

Managed IT Services are inherently scalable, adapting to the changing needs of financial service providers. Instead of investing in hardware or software licenses every time there’s a need for expansion, Managed IT Services can dynamically allocate resources based on demand.

For a financial provider transitioning from local to national operations, Managed IT Services can ensure seamless integration across regions, adhering to important regulatory standards.

Here are a few examples of how Managed IT Services improve operational efficiency for financial service providers:

Enhanced security protocols: With the rise in financial cybercrimes, a Managed IT Service can integrate advanced security tools like AI-driven threat detection and MFA, ensuring the integrity of financial transactions.

Automated updates: Managed IT automates software updates, ensuring financial applications always run the latest, most secure versions without manual interventions.

Centralized data management: Centralizing data across branches ensures quick access and uniform customer experiences. Managed IT optimizes centralization, reducing latency and ensuring real-time data accuracy.

Disaster recovery: In case of data breaches or unexpected downtimes, Managed IT Services can quickly restore services, minimizing financial losses and reputational damage.

Even more valuable, you offset employment churn based on your business fluctuations.

Cost savings

Financial services providers need top-tier talent to handle their sensitive data. Hiring the right people in-house costs a lot of money.

While hiring top-tier talent is crucial for handling sensitive financial data, managing IT in-house comes with substantial costs related to salaries, benefits, and taxes.

Consider the expenses a mid-sized financial service provider incurs in recruitment, training, and retaining an in-house IT team versus the fixed fee they’d pay to a specialized IT partner. Especially when their in-house IT person inevitably moves on, and they’re always in the process of hiring.

Outsourcing reduces these overhead costs and ensures that the business stays updated with critical technology advancements relevant to the finance industry.

By leveraging the expertise of IT partners, service providers can cut costs substantially.

Gain access to top-tier expertise with Chortek

In the landscape of financial services, time is money. So, immediate access to IT experts is not just beneficial—it’s crucial.

For financial service providers, a Managed IT partner ensures rapid response to issues, maintains systemwide updates, finds proactive solutions to tech challenges, and guarantees the most advanced cyber-security protection is in place.

As expressed by Aaron Kowal, CFP, Kowal Investment Group, regarding their collaboration with Chortek:

“We found Chortek to be an exemplary business partner, matching our passion for outstanding client service. We look forward to working with them for years to come.”

Success stories like Kowal’s underline the strategic advantages financial service providers gain from IT expertise—be it in client servicing, managing intricate data systems, or safeguarding financial assets.

By tapping into specialized IT expertise, financial service providers elevate operational standards, protect data, and optimize operations.

Explore Chortek’s testimonials to learn more about the positive experiences other professionals have had working with Chortek.

Conclusion

Financial services must protect customer data diligently. The FTC Safeguard Rule drives this point home, requiring robust measures like Multi-Factor Authentication and regular monitoring.

Managed IT Services empower financial providers to meet these standards and face evolving threats head-on. If you aim to bolster your company’s cybersecurity, explore the solutions Managed IT offers.

Contact Chortek to discuss Managed IT services for ensuring compliance and safeguarding your data today.

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