How Banks are Working to Keep Your Data Safe

Accessing financial services online has been the norm for years now, with an overwhelming majority of the population using digital channels for most banking transactions. The infrastructure that makes this possible, routinely processes massive amounts of data, constantly evolving to ensure it all remains secure.

To gain a better understanding of how banks protect themselves and their customers, I spoke with Ali Farouk Shaikh, a Unified Communications Solutions Architect at Cisco Systems Inc. who works with major international financial institutions. Ali is a specialist in Software Defined Networking (SDN), with a focus on routing, encryption, and security for large financial services, retail, and manufacturing enterprises.

Where we were – How Banks are Working to Keep Your Data Safe

How was customer and banking data handled by banks in the past?

In the classic model, all software applications and data for a bank would reside on a central data centre. Branches communicated with this centre through physical infrastructure separate from (and unconnected to) what is used at home accessing the internet.

Because of this, security parameters were well-defined. Data and locations were well-defined. It was cumbersome for external threats to access a bank’s network; conversely, it was difficult for users within the network to access the internet.

What prompted a change from that model?

What really started to drive transformative change was a combination of mobile devices and the cloud. The first iPhone pretty much broke the old model. Users could now access data from anywhere, along with demand for additional services to be delivered in a mobile-friendly way.

Simultaneously, modern applications were increasingly based in the cloud, leveraging external services such as Google, Microsoft and Amazon. This changing model meant that bank data was now moving in ways that it hadn’t before, and needed new modes of security and building modern infrastructure. In the industry, this is called the digitization of services—essentially moving from classic networks to networks for digitization.

So, the way customers wanted to access banking changed how banks operated?

Pretty much. The end-user experience has changed. Customers can’t be expected to come to the branch for banking anymore—both customers and bank employees use remote devices to access and provide service (whether this is smartphones or mobile devices on the customer side, or employees with iPads and a VPN on the bank’s side).

As a result, the applications (e.g. mobile banking apps) that provide this changed end-user experience had to move away from the traditional model. Banks were slow to introduce their own apps, but this was always the direction they had to head in. However, they also had to account for privacy and security concerns while meeting strict regulations—more importantly, they had to adapt and meet the requirements of a new digital world.

Now, these applications don’t reside with banks, they reside on the cloud and have to interact with various services that external companies like Google, Amazon, Salesforce, etc. provide. They rely on them for analytics, telemetry, auditing data, marketing data, etc. Because of this, the centers of data were no longer data centres. What I mean is, data now lived everywhere, from mobile devices to cloud services like Amazon Web Services (AWS). This new model required stronger safeguards, security, and encryption, because data now had to be transmitted over the internet.

Where we are – How Banks are Working to Keep Your Data Safe

In light of this new model, how do banks ensure their data and their customers’ data is protected?

As I mentioned before, banks and financial institutions already had privacy, security, and regulatory compliance in mind when modernizing their operations. Now, there are three principles that are fundamental to maintaining a secure banking environment that satisfies both pre-existing and new regulations imposed by the government: confidentiality, integrity, and application security.

Could you elaborate on those principles? What does satisfying the “confidentiality” principle entail?

In this context, “confidentiality” just means making sure no one except you and your bank can see your data. Naturally, when using your banking application, you want to be assured that no one can access your data. Banks go to great lengths to make certain that their systems use the highest encryption standards to protect their data. This means that when using a properly developed banking app, no one will be able to see anything you’re doing on the app. Confidentiality is achieved using the latest encryption—Transport Layer Security (TLS) with Advanced Encryption Standard 256 (AES256).

Side note:if you’re wondering how secure AES256 encryption is—it would reportedly take 77,000,000,000,000,000,000,000,000 years and the dedication of the entirety of earth’s population to crack one encryption key. Not to mention, all of those people would need 10 computers each, capable of processing 1 billion key combinations per second. So, it’s safe to assume it’s pretty secure!

What about the “integrity” principle?

Integrity means ensuring data isn’t tampered with in any shape or form. The desire for this is pretty self-explanatory: you’d naturally want your data to be safeguarded from being tampered with. This is achieved in a number of ways. There are mechanisms to enforce data-integrity checks at the machine-level. This makes sure data isn’t corrupted or altered in any way while in transit or when stored.

The “security” principle seems straightforward enough, but what exactly goes into achieving that?

So, “security” is the aspect that actually protects users from malicious threats from both “state” and “non-state” actors. From a security standpoint, “state” actors are individuals or groups sponsored by foreign governments that carry out malicious attacks. Banks are critical pieces of a country’s infrastructure and are thus natural targets. “Non-state” actors operate in a similar manner, but without the support or direction of a foreign government.

Financial institutions safeguard against these threats by using firewalls to ensure only authorized applications can access data. This is where Intrusion Prevention Systems are applied, both to only grant access to authorized users and to protect against malware. Also, measures taken to prevent Denial of Service (DoS) attacks so that a customer’s access to banking services isn’t interrupted.

Security is taken very seriously, to say the least.

Where we’re headed – How Banks are Working to Keep Your Data Safe

What do you think the future holds for the banking industry? Does that future come with its own set of challenges?

There’s an increasing evolution of machine-learning, the data it provides, as well the services that can be built on it. Not to mention the 5G revolution that will further accelerate the digitization of the world. We’ll begin to see new banking experiences including packages tailored for individuals, as well as new modes of banking. This is all predicated on next-gen technology that has started to enter the marketplace.

The protection of individual data is of paramount importance. Things will have to be secure, untampered with and protected from malicious entities.

Innovation is always a challenge, but the industry will adapt. It always does!

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Aging Population and Real Estate

Canada’s Aging Population and Real Estate, I’ve got good news and bad news. The bad news is: we’re not getting any younger. The good news is: we’re not going away anytime soon, either, as life expectancy for Canadians is higher than ever before! At least, I think that’s good news—check back with me in 2050 and let’s see how we all feel about it.

Globally, we’ve hit astoundingly high population numbers for people aged 65+, exceeding a threshold of 672 million people (about 8.9% of the total population) in 2019. That’s an increase of more than 500 million compared to 1960 when there were about 150 million people above 65+ globally (roughly 5% of the global population). Oh yes, that’s a whole lot of people.

In fact, it’s only going to get more crowded as the years go by, with the UN estimating that the number of older persons (above 60) is projected to reach 2.1 billion by 2050. And we think it’s crowded now!

This brings us to Canada’s aging population and Real Estate: according to Statistics Canada, “seniors are expected to comprise around 23% to 25% of the population by 2036, and around 24% to 28% in 2061”. With a shrinking working population supporting that ~25% segment, the precise economic implications are too varied to be certain of any firm outcome. What is certain is that the older members of our population will need a place to live, which will have a significant effect on Canada’s real estate landscape.

EFFECTS ON THE SUPPLY OF REAL ESTATE

Our aging population affects the supply of property in the real estate market in several interesting ways. The expectation was that baby boomers would find themselves living in large homes with more space than they needed once they’d retired and their children moved out. At that point, they were supposed to sell their property and downsize to smaller (or less expensive) homes. This influx of property into the market (projected to be half a million homes) would help meet rental or purchase demand, in some cases allowing developers to re-purpose the property into larger, higher density structures (especially in cities).

However, changes to the real estate market may significantly affect how that scenario plays out in reality.

  • Small condos and detached or semi-detached townhouses used to be prime candidates for someone looking to downsize. Now, rising real estate prices (especially in cities like Toronto and Vancouver) can make this an incredibly difficult endeavor.
  • Millennials (and soon Gen Zs) have begun to move back in with their parents, as they struggle to contend with exorbitant rent prices, lack of steady work, and extremely high property prices. It’s proven economical for them to live at home rent-free (or at least, with a much lower rent) and save their money to put towards buying homes of their own later.

With more reasons to remain in their current homes (such as their kids moving back in with them), as well as high property prices and a lack of suitable options to downsize to, older homeowners are increasingly choosing to hang on to their property. This, of course, delays the timeframe in which their (usually larger) homes will be released into the housing market, which in turn will further exacerbate property shortages.

EFFECTS ON THE DEMAND FOR REAL ESTATE for Canada’s Aging Population

Our aging population has implications for the demand side of the real estate market as well. Accessible property, for example, will increasingly grow in demand as people get older. Fierce competition in the housing market has made it difficult for older people to acquire suitable apartments or houses that cater to their needs (such as, ground floor units or accessibility-friendly rental housing).

Affordable, smaller housing with room for live-in or part-time caregivers, especially in close proximity to essential services and infrastructure (health services, public transit, malls/grocery stores, etc.) will become much more desirable as our population ages.

Some of this demand will likely be met by the government, as it works to fund the construction of homes for senior citizens through the Canada Mortgage and Housing Corporation (CMHC). This will prove vital in the years to come, as increasing numbers of modest to middle-income Canadians retire and start being priced out of the normal rental market. However, with Canada’s population projected to increase at a sharp rate until the middle of the century, we’ll need more than just government intervention to address the issue.

FINAL THOUGHTS

The effects of an aging population on Canada’s own future will be far-reaching, but impossible to predict definitively. That’s not to say we don’t have a good idea of what the likely outcomes are—we’ll need more housing, and we’ll need to be able to support older Canadians, to name two—but nothing about the upcoming decades is written in stone. The manner in which our government addresses social security issues, housing crises, and indeed, which government we even have in power will all play a role in securing stability or uncertainty.

Any speculation on the effects of projected population growth figures should be tempered with the understanding that they’re precisely that: projections. Not everyone agrees with the UN’s assessment of rampant increases, arguing that we might see a return to “normal” population levels towards the end of the century instead of endlessly spiraling into overpopulation. But whatever the outcome, it’s important that we’re paying attention.

Market Smarts: Buying Guide

Market Smarts: Buying Guide from (CMHC) is one of Canada’s three mortgage insurers. CMHC also offers consumer guidance in the form of a unique step-by-step guide for home buying Canada. CMHC has dubbed this guide the “roadmap” to home ownership.

The 27-page, Buying Guide is available on CMHC’s website via the imbedded link. This guide is a manual for homeownership, breaking down the phases potential buyers will need to consider when looking to get into the housing market.

What Homebuyers Should Know – Market Smarts: Home Buying Guide

This guide focuses on preparation being the key to homeownership success, and touches on many things for homeowners to keep in mind. A few good guidelines when considering purchasing a home, including debt management, necessary documents, pre-approval, and more!
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The market smarts: Buying Guide CMHC recommends that you get a pre-approval before you begin looking for a home. Getting pre-approved can prevent future roadblocks when you find your dream home, and ensures that subject-to-financing clauses won’t be an issue. It also guarantees the rate for up to 120 days, so that you can access the best mortgage once you’ve found the right home.

The underlying theme of the guide is to prevent Canadians from getting in over their heads. This guide also shows just how far mortgage brokers have come in Canada, with them mentioned alongside banks throughout. Our experienced brokers will gladly take you through the home buying process from a mortgage application side of the equation.  With our team by your side, you’ll experience what over 250 google reviews have told us already. Prime mortgage works is your best mortgage broker option when it comes to arranging your mortgage financing. We work with self Employed, New to Canada, First Time Homebuyers and all walks when arranging the best mortgage rate.