Capital One suffered a breach exposing the personal information of over a hundred million customers. Another example is a cyberattack on JP Morgan Chase. It compromised around 83 million accounts. Finally, the Canadian financial cooperative Desjardins Group faced a breach that affected nearly 9.7 million individuals and businesses.
What is behind these numbers?
Each breach reveals the vulnerabilities that even the most established financial institutions face. Whether it is misconfigured firewalls, weak access controls, or insider threats, these incidents highlight the crucial need for multi-layered security practices to protect sensitive data.
Learn from others’ mistakes—read our post to discover and implement the best security solution!
What do financial transactions need for security?
Here are the key data protection aspects needed for securing financial transactions:
1. Encryption
This security method that scrambles data ensures all sensitive information remains unreadable to unauthorized individuals. Thus, hackers can’t intercept or manipulate the data during transmission.
2. Authentication
Transaction parties have to prevent unauthorized access to financial systems and accounts. One of the most effective methods is multi-factor authentication. It requires users to prove their identity using two or more forms of identification.
4. Digital signature
This is a cryptographic mechanism that ensures the transaction has not been altered since it was signed. Also, it confirms that the operation originates from the person or organization who claims to have initiated it. Thus, it prevents issues like fraud or tampering with the transaction details after authorization.
5. Audit trails
A chronological record of all activities related to a financial transaction is necessary for dealmakers since it includes details such as who initiated the transaction, what actions were taken, when they occurred, and what changes were made. Thus, audit trails enable financial institutions to track and investigate suspicious activities.
6. Compliance
Various regulations safeguard the security of customer data. Adherence to these standards protects financial institutions and their customers and eliminates the risk of penalties.
Next, we invite you to explore a virtual data room—a secure solution designed for data-intensive transactions. Its robust security features make it especially popular in the finance industry.
How do data rooms secure financial transactions?
The software secures financial transactions through complex mechanisms and data security practices. Thus, business leaders can focus on growth and strategy instead of worrying about breaches.
As Gilbert Waters, co-founder, and marketing specialist, highlights, “With robust digital safeguards, companies can allocate resources to innovation rather than damage control,” emphasizing the value of secure systems in boosting business resilience and agility.
Additional insights: What are the features and benefits of an investment banking data room?
Now, explore dataroom functionality for the security of financial transactions. To highlight its advantage, we have compared VDR with other commonly used business tools:
| Feature | Virtual data rooms | Generic file-sharing tools |
| Advanced encryption | Robust encryption protocols, typically AES-256 for data at rest and TLS for data in transit, secure sensitive information | Basic encryption is often limited to data in transit only |
| Multi-factor authentication | Users need to provide a one-time code sent to their device or authenticate through a biometric scan, such as a fingerprint | Often rely solely on passwords, which are more susceptible to phishing |
| Granular permission controls | Highly detailed, document-level permissions, including view-only, edit, and download restrictions | Typically limited to broad sharing and editing rights without fine control |
| Watermarking and DRM | Dynamic watermarking and Digital Rights Management prevent unauthorized printing, copying, and screenshots | Lack of watermarking and DRM, offering little to no protection against unauthorized sharing |
| Real-time monitoring | VDR real-time activity monitoring and alerts detect and respond to suspicious behavior quickly | Limited or delayed reporting, making it harder to respond immediately to security concerns |
| E-signature | Enable legally binding e-signatures within the platform | Typically require external e-signature tools, adding steps and potentially reducing security |
| Compliance | Comply with regulations like GDPR, HIPAA, and SOC 2, reducing regulatory risks for financial data | Often lack specific compliance features |
Financial institutions increasingly rely on virtual data rooms for secure data management, so this sector is projected to lead the market. The growth is driven by the robust security VDR providers offer.
Virtual Data Room Market Size to Reach USD 16.9 Billion By
Security and beyond. What other benefits does a virtual data room have for financial transactions?
In addition to strong data protection, the software offers the following advantages:
1. Artificial intelligence and automation
Advanced virtual data rooms now integrate AI tools to save you time and minimize human error. In particular, these solutions can automate repetitive tasks, such as document sorting, due diligence, and redaction.
2. Streamlined communication
Built-in Q&A and messaging features enable secure, real-time communication within the platform, reducing the need for external emails or messaging apps.
3. Remote accessibility with mobile access
VDRs offer secure data access across devices, including mobile. It allows authorized users to work remotely, ensuring productivity without compromising document protection.
4. Enhanced decision-making tools
Data room analytics provide profound insights into document engagement. This way, transaction leaders can assess areas of interest and urgency for faster and more informed decision-making.
5. Integration with other tools
Some providers integrate with other essential financial software, creating a more cohesive and efficient technology ecosystem for financial teams. This can include accounting systems, CRM platforms, and compliance software.
What world-known financial companies use virtual data rooms?
We have researched the clients of the top virtual data room providers to show you who already benefits from their secure solutions.
1. ideals
Clients:
- BNP Paribas
- Deloitte
- Ernst & Young
- KPMG
ideals is one of the most trusted solutions for high-stakes financial transactions. Business leaders choose this platform for its industry-leading security features, user-friendly interface, and robust compliance.
https://offers.idealsvdr.com/#full-product
2. Ansarada
Clients:
- Deutsche Bank
- Credit Suisse
- Houlihan Lokey
Ansarada is known for its AI-driven insights and intuitive data management capabilities. The provider’s focus on improving collaboration and streamlining workflows makes it a go-to choice for complex multi-party financial transactions.
https://www.ansarada.com/features/ai
3. Datasite
Clients:
- E*Trade Financial Corporation,
- Silicon Valley Bank
- Nexi
With advanced security features, customizable deal rooms, and real-time reporting, Datasite enables clients to manage large-scale transactions efficiently.
https://www.datasite.com/en/resources/new-features
Explore what top virtual data room providers offer and start using the software to protect your next deal from start to finish!
