Data tokenisation: The key to protecting cloud-based data

How to protect customer data

The two most prevalent methods used to protect customer data are encryption and tokenisation:

• Encryption is when algorithms turn data into non-readable information. Parties with permission to access the data can make it readable again using an encryption key. Encryption has the benefit of being both fast and data-agnostic, so entire datasets can be encrypted with ease. However, if the key is nefariously obtained by a malicious party, the whole dataset is compromised.
• Tokenisation is a process whereby pieces of data are replaced with random tokens. The link between a token and its associated data is stored in a separate, secure database. When it comes to cloud-based solutions, this separate database is generally located on a company’s physical servers. This means that if hackers breach the cloud, they only find useless tokens. The customer data being stored separately remains safe and sound. Tokenisation is not data-agnostic; it substitutes data from specific fields.

With tokenisation, financial service providers can safely put aside sensitive elements of their customers’ data while still tapping into larger datasets that power analytics, AI-supported initiatives, containerisation, and other applications that drive business.

However, it’s important to understand that this is not an either/or situation. There’s no need to choose between encryption and tokenisation; you can have your cake and eat it too. Adding tokenisation on top of encryption is the most effective way to ensure that data is kept safe.

Two reasons to tokenise data

1. Tokenisation reduces risk in case of data breaches

Criminals target financial services industries because payment information is rich with details that can be used to exploit unsuspecting victims. They tend to attack systems that have the potential to contain valuable data and appear to be insecure, with the goal of either selling the stolen data, or using it for other fraudulent purposes.

When a financial service provider implements tokenisation, it shields itself from the negative impacts of data theft—both the direct financial impacts and the ongoing impact of a damaged reputation. Tokenisation might not be able to prevent data breaches from occurring, but it can significantly reduce how much trouble they cause. If a data breach occurs, tokenisation ensures the information the hacker obtains holds no value for them.

2. Tokenisation helps to build trust

The reputation of a financial institution is built entirely on trust. Financial service providers handle more sensitive customer data than almost any other type of service provider, and their customers trust them to keep it safe. In a world of increasing security threats, it’s more important than ever for these companies to provide safe and reliable services. Failure to keep customer’s sensitive information secure can severely damage a company’s reputation. According to a study by Okta and YouGov (The State of Digital Trust), 88% of consumers won’t choose a company they don’t trust. So, the stakes are sky-high.

By investing in strong data-protection methods like tokenisation, a financial service provider lets its customers and partners know that it takes data privacy very seriously. Consequently, customers are more likely to choose these providers over their competitors.

A tokenisation solution is a must-have

Tokenisation, combined with encryption, allows financial institutions to make full use of cloud-based platforms while ensuring that customer data is not compromised. Whilst creating a tokenisation solution in-house is certainly an option, there’s no need for every financial institutions to develop their own. Ready-made and customisable solutions are already out there just waiting to be implemented.

Discai’s cloud-based Know Your Transactions Anti-money Laundering (KYT AML) solution, for example, is secured using both data encryption and a tokenisation solution provided by Protegrity. Through this partnership, Discai keeps sensitive data out of the hands of hackers and gives customers the peace of mind that comes with knowing their data is safe and secure.

This blog post is a co-creation between Discai and Protegrity.