4 compliance concerns to address with your technology integrations
The Financial Modernization Act of 1999 obligates financial organizations to protect the privacy of their consumers. When choosing technology providers, lenders must ensure compliance with all applicable privacy regulations. Importantly, lenders need to consider how the platform provider protects consumer data as it moves between integrated systems.
Technology providers with dozens of integrations may miss something important and expose lenders to risk. When choosing a digital lending platform (DLP) provider, ask these compliance questions:
1. How is data transmitted between systems?
Even if technology providers have state-of-the-art security within their existing systems, it means nothing if they integrate with unsecured vendors. For instance, if user data transmits over an unencrypted connection, there is a risk of data exposure online. When selecting technology, you should ensure that each integration has regular privacy audits, including obtaining SOC 1 and SOC 2 reports. Trustworthy vendors will work with you to ensure that your user data is only accessible by authorized personnel.
2. Who controls the collected data?
Any entity that owns user data must protect it. Therefore, you must understand who controls the data at every point, even as data transfer between systems. For example, some vendors may presume ownership of the data when it enters their system. It is essential to outline restrictions on using data so that the vendor, or any fourth party, only process the data necessary to perform contract requirements. If your organization is required to comply with the EU’s General Data Protection Regulation (GDPR), there may be unique compliance requirements for data owners, data storers, and data processors.
3. What’s the process for monitoring for vulnerabilities?
The International Data Corporation’s 2019 Data Threat Report revealed that 65% of businesses have experienced a data breach, with 36% happening in the previous year. While the ultimate goal is to work with technology providers to prevent violations before they happen, it’s impossible to reduce risk to zero. Therefore, providers must have processes to respond to security threats immediately to mitigate any potential damage.
4. How do they vet fourth-party partners?
When engaging technology providers, lenders also need to properly vet any of fourth-party partners that touch the lender’s data. Partnering with dozens of applications without scrutinizing them could lead to privacy and security issues that might not be uncovered until the damage is already done. Fourth party partners may or may not hold themselves to the same robust security practices as the technology provider. Even if the fourth party, in this case, an integration partner, has robust security measures, data used by fourth-party partners could become the target of cybercriminals, such as when one of Facebook’s data partners did not properly secure its servers in 2019. Consider creating a list of vendor requirements early on in the requisition process.
When it comes to integrations, quality matters more than quantity. Considering the steep costs of noncompliance, lenders should only work with technology providers that carefully think through the privacy implications of each integration. To learn more, sign up for a free demo of the Roostify platform today.