Guide

Navigating the convergence of cybersecurity and regulatory compliance in the financial industry

Reduce risk with the right technology and managed services partner.

The financial services industry stands at the crossroads of two sizable forces: increasingly sophisticated cyberthreats and a complex web of regulatory obligations.

Cyberattacks spanning ransomware, phishing and distributed denial of service (DDoS) exploits are not only more frequent — they’re also smarter, often leveraging AI to outmaneuver traditional defenses. AI-generated phishing campaigns have grown more effective thanks to advancements in reconnaissance and video- and voice-generation tools. Among financial services professionals, 70% say an understaffed or underskilled team is their biggest cybersecurity challenge, which is substantially higher than the cross-industry average of 49%.¹

For financial institutions, these dual pressures pose a growing risk, not just to security but also to business continuity and the organization’s reputation. A data breach can result in devastating financial losses, while noncompliance can trigger massive fines, legal action and loss of public trust.

To meet these challenges head-on, financial institutions are turning to advanced cybersecurity technologies and experienced managed services providers that can deliver proactive protection and compliance support at scale.

68% of financial services professionals who said in 2025 that they expected financial crime risks to increase in the coming year identified cybersecurity as the biggest driver of that risk.²

The high-stakes reality for financial institutions

As digitization continues to transform financial services, organizations are becoming more reliant on complex IT ecosystems, including cloud platforms, third-party applications and remote access technologies. This expansion has significantly broadened the attack surface, making institutions and their customers more vulnerable. Simply consider that 76% of retail banking customers prefer to do their banking via digital channels, compared to 9% who still opt for visiting a branch and just 6% who favor ATMs.³

82% of financial services security professionals believe the regulatory environment is compelling senior security team members to be on call 24/7.⁴

46% of financial institutions experienced a data breach between 2022 and 2024.⁵

Key factors contributing to the elevated cybersecurity and finance risk include:

Digitization

The move to digital systems expands attack surfaces, enables complex threats and exposes sensitive data through interconnected platforms and services.

Remote work and hybrid environments

Employees operating outside the office can introduce security hazards if systems aren’t secured with proper identity and access controls. More than 80% of financial services companies offer work location flexibility.⁶

Third-party integrations

Vendors and partners can create indirect access points for bad actors, often exploited through supply chain attacks.

AI-powered threats

Cybercriminals are leveraging AI to automate attacks, craft convincing phishing campaigns and bypass security protocols.

43% of financial services professionals report that applying AI to security workflows is their top cybersecurity initiative.⁷

The stakes are especially high in finance due to the nature of the data involved. Financial institutions store and manage credit card and bank account information, personally identifiable information (PII) such as Social Security numbers, detailed transaction histories and account credentials.

This data is highly monetizable. In many cases, it can be used by attackers to achieve direct access to funds. Cybercriminals can utilize this stolen data to make unauthorized purchases and commit broader fraud, from identity theft to synthetic account creation, or they can sell this uniquely sensitive data on the dark web.

Top financial industry threat vectors:⁸

51% – Malicious attacks

25% – IT failures

24% – Human error

The financial costs can be staggering. A single breach can lead to losses in the tens or hundreds of millions of dollars. The average cost of a data breach in the financial industry has reached $5.56 million.⁹ This makes financial services the second most expensive industry for data breaches behind healthcare.¹⁰ Beyond fines, legal settlements and remediation expenses, financial organizations also face long-term reputational damage that can erode customer trust and market position.

Keeping up with an evolving regulatory landscape

Financial firms face some of the most stringent and complex regulations of any industry. The scope, depth and enforcement are often broader and more demanding due to the critical role these institutions play in the economy. Regulations address disclosure, fairness and transparency, prompted by the complexity and risk of modern financial products.

Today’s requirements are more comprehensive, prescriptive and punitive than ever before. Meanwhile, thanks to the growing sophistication of criminals, cybersecurity competence is now a core compliance responsibility. As a result, 88% of financial services organizations are ramping up compliance training for their security teams.¹¹

New rules are frequently introduced while established ones are amended to address emerging risks, requiring financial organizations to remain agile and proactive. To keep pace, many are embracing the growing number of regulatory technology solutions, including automated reporting systems, real-time transaction monitoring and AI-driven risk assessment tools.

67% of financial services leaders are hesitant to adopt new technology due to regulatory uncertainties.¹²

In parallel, many are revising their governance structures and internal policies, prioritizing a compliance culture that spans all levels of the organization. This includes increased board oversight, updated training programs and tighter collaboration between security, compliance and risk functions. Among industry leaders, 91% say their staff make compliance part of their daily work.¹³

35% of financial services organizations consistently pass regular security audits.¹⁴

The convergence of cybersecurity and compliance

Cybersecurity and regulatory compliance were once treated as separate initiatives, but that’s no longer recommended or sustainable. Compliance frameworks now demand technical security controls as part of baseline regulatory adherence. These can include everything from multi-factor authentication (MFA) and the encryption of sensitive data to timely cyber incident reporting and defined incident response plans.

The state of financial services data security:¹⁵

90% of financial services leaders say data security is their top IT priority.

48% of financial services leaders are highly confident they have the right security measures in place.

As regulators emphasize cybersecurity as a regulatory priority, financial institutions must treat the risk as another regulatory focus and embed cybersecurity into their broader risk management frameworks. Controls are now necessary to ensure meeting both risk and regulatory requirements. This shift calls for an integrated approach that avoids duplication of effort and wasted resources. The unified strategy brings together cybersecurity risk management, regulatory tracking and reporting, internal controls and audit readiness, as well as incident detection and response.

Governance is another key, combining leaders from cybersecurity, compliance, legal and enterprise risk — all working together to define, implement and monitor the organization’s cyber-compliance strategy. Technology plays a vital role as well by making possible real-time visibility into threats and controls, automation of compliance reporting, integration of disparate systems and data sources, and centralized dashboards for audit readiness.

Ultimately, cybersecurity isn’t about checking boxes. It must deliver real, measurable protection while ensuring compliance in today’s high-stakes regulatory environment.

Easing the burden with the right cybersecurity technologies

To meet both security and compliance objectives, financial institutions must deploy a modern technology stack that integrates intelligence, automation and control.

To further enhance protection, financial organizations must ensure their networking solutions incorporate:

Enhanced firewalls and SSL inspection
Web filtering and application control
Intrusion prevention systems (IPS)
Advanced malware and phishing protection
DDoS mitigation services

Centralized dashboards and unified platforms simplify compliance by providing end-to-end visibility. Some tools, like EDR and SIEM, serve dual purposes, supporting both real-time threat mitigation and compliance audits.

Leaders who say cybersecurity investments have positively impacted profitability:¹⁶

92% – Financial services companies

58% – Average across industries

Unlock opportunity with managed cybersecurity services

While building internal cybersecurity and compliance capabilities is ideal, the reality is that many financial institutions lack the time, experience and budget to do it effectively at scale. That’s why many are turning to managed services to gain consistent coverage, expertise and cost predictability. Partnering with the right provider offers financial institutions a powerful combination of advanced cybersecurity support and operational efficiency.

With around-the-clock monitoring, proactive threat hunting and expert incident response, managed services can deliver capabilities that often exceed those of internal teams. Continuous protection minimizes downtime and data loss while helping organizations meet strict incident reporting requirements. Outsourcing these critical cybersecurity functions also reduces the need for large in-house teams and costly infrastructure, enabling predictable and scalable cost structures.

$173,400: The average increase in the cost of a data breach due to a security skills shortage.¹⁷

In addition to security, a managed services partner helps firms stay aligned with evolving regulations, emerging technologies and industry best practices — without overwhelming internal resources. This allows IT teams to shift their focus to strategic, growth-oriented initiatives such as AI integration and customer experience innovation. By offloading complex, resource-intensive tasks, financial institutions can operate more efficiently, remain compliant and stay ahead in an increasingly competitive digital environment.

Spectrum Business® is your cybersecurity and compliance partner

As financial institutions contend with an increasingly hostile cyber environment and complex regulatory requirements, the convergence of security and compliance becomes unavoidable — and essential. Navigating this new reality requires the right blend of technology, expertise and strategic partnership. Organizations with an integrated strategy supported by the right technologies and a trusted managed services partner will reduce risk and enhance operational efficiency, regulatory agility and long-term trust.

Spectrum Business meets these needs by offering a broad portfolio of enterprise solutions, managed network services, enterprise cloud services and connectivity services, helping financial institutions stay secure, compliant and resilient. Backed by a 100% uptime SLA all the way to the handoff point* and 100% US-based support, available 24/7, Spectrum Business provides the peace of mind financial services organizations require in today’s high-risk, high-regulation world.

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*100% uptime SLA guarantee applies only to Dedicated Fiber Internet, Secure Dedicated Fiber Internet, Ethernet Services, Cloud Connect and Enterprise Trunking.