Operational Resilience in UK Finance: Why Private Secure Networks Matter

Author: Dan Kline | CEO

The way data is transmitted across financial service networks is a crucial consideration. Relying on the public internet comes with significant risks, particularly for UK-based SMEs. Instead, transmitting data over private secure networks is essential for maintaining operational resilience, helping businesses to meet regulatory requirements, and navigate an increasingly complex geopolitical landscape.

The Risks of Public Internet for Financial Data

Financial services companies handle highly sensitive information, from personal customer data to transaction records. Transmitting this data over the public internet exposes it to potential interception, cyberattacks, and regulatory non-compliance. The key risks include:

• Cybersecurity Threats – The public internet is a frequent target for hackers, who exploit vulnerabilities to launch attacks such as Distributed Denial of Service (DDoS), man-in-the-middle (MitM) attacks, and ransomware.

  
  

• Data Interception – Unsecured or even inadequately secured data transmissions over public networks can be intercepted, putting confidential financial data at risk of exposure or manipulation.

  
  

• Regulatory Non-Compliance – Financial regulators in the UK and Europe impose strict guidelines on data security and operational resilience. Using public internet services that may route data through jurisdictions with conflicting legal frameworks creates compliance risks.

  
  

• Latency and Reliability Issues – High-frequency trading, payment processing, and other financial operations require ultra-low latency and high reliability. The public internet cannot guarantee these performance levels, leading to potential financial losses and reputational damage.

  
  

• Harvest Now, Decrypt Later Attacks – With advancements in quantum computing, adversaries are increasingly adopting a "harvest now, decrypt later" approach. This means they intercept encrypted data today, with the expectation of decrypting it once more advanced computing capabilities become available. Financial institutions transmitting sensitive data over the public internet are at heightened risk of future exposure if their encryption methods become obsolete.

The Case for Private Secure Networks

For financial services firms, secure and reliable data transmission is essential. A fully managed Network-as-a-Service (NaaS) model bridges the gap between traditional NaaS and Managed Service Provider (MSP) offerings, providing businesses with end-to-end control, security, and flexibility, without the burden of managing network infrastructure in-house. Here’s why private secure networks are a smart choice:

• Enhanced Security – Keeping traffic off the public internet reduces exposure to cyber threats and unauthorised access.
  
  

• Improved Compliance – Data stays within controlled, compliant jurisdictions, helping financial institutions meet strict regulatory requirements.
  
  

• Greater reliability – A managed private network ensures consistent performance, low latency, and guaranteed bandwidth - backed by SLAs.

  
  

• Seamless Management & Support – Unlike standard NaaS solutions, a fully managed approach integrates proactive monitoring, security, and expert support.

  
  

• Better Control Over Data Sovereignty – Organisations can maintain full oversight of their data’s location and governance, ensuring compliance with UK and EU regulations while minimising exposure to laws like the USA’s CLOUD Act.

Considerations for UK Finance SMEs

SMEs in the UK’s financial services sector face a unique set of challenges. Unlike established financial institutions, they lack legacy infrastructure but also cannot afford to expose their sensitive data to the risks of public internet usage. Key considerations for SMEs include:

• Prioritising Security from Day One – Cybersecurity should be a core pillar of business strategy, rather than an afterthought. Investing in private network solutions early on helps prevent costly security incidents later.
  
  

• Regulatory Burdens and Compliance from the Start – SMEs must comply with UK-specific financial regulations such as the Financial Conduct Authority (FCA) guidelines on operational resilience and cybersecurity. Ensuring secure data transmission helps avoid compliance violations and reputational damage.
  
  

• Cost-Effective Private Network Solutions – While fully dedicated private networks may be expensive, hybrid models leveraging the internet for non-critical traffic, supported by private backbone routing can provide a cost-effective alternative.
  
  

• Investor and Customer Confidence – Investors and customers increasingly demand evidence of cybersecurity measures. Using secure private networks enhances trust and credibility.
  
  

• Scalability for Growth – As SMEs expand, their network infrastructure must scale accordingly. Investing in flexible private network solutions from the outset ensures a smooth transition to larger operations without compromising on security.

Private Secure Network considerations in Large Financial Institutions

For large financial institutions, private secure networks are already a standard, but evolving regulatory and geopolitical concerns require continuous reassessment:

• Regulatory Compliance with DORA – The EU’s Digital Operational Resilience Act (Exploring DORA: The Digital Operational Resilience Act) imposes stringent rules upon financial firms regarding ICT risk management. Although the UK is not directly bound by DORA, many of its requirements align with ISO standards, and financial firms operating across borders should align with its principles.
  
  

• Geopolitical Risks and the CLOUD Act – The USA’s CLOUD Act allows US authorities to access data stored by US-based providers, even if located abroad. UK firms using US cloud providers must consider encryption strategies and contractual safeguards to mitigate exposure.

  
  

• Hybrid and Multi-Cloud Strategies – As large financial institutions adopt hybrid and multi-cloud strategies, how they connect to the cloud is critical. Relying on the public internet exposes sensitive data to security risks, performance issues, and unpredictable costs. Instead, private network solutions like AWS Direct Connect and Azure ExpressRoute provide secure, low-latency, and compliant connectivity.
  
  

• Resilience and Disaster Recovery – Large institutions must ensure that their private networks are not just secure, but also resilient to disruptions. This includes redundancy planning, failover infrastructure, and geographically distributed data centres.

UK-Specific Regulations: How Private Networks Help Compliance

Beyond general cybersecurity concerns, financial institutions in the UK must adhere to several key regulatory frameworks related to data security and privacy. Private secure networks play a critical role in ensuring compliance with these regulations by providing enhanced security, control, and resilience:

• The Financial Conduct Authority (FCA) Guidelines – The FCA mandates that financial services firms implement robust security controls to protect customer data and ensure operational resilience. Private networks help meet these requirements by reducing exposure to cyber threats, offering dedicated secure connectivity, and enabling firms to maintain stringent security posture.
  
  

• UK General Data Protection Regulation (UK GDPR) – GDPR requires financial institutions to protect personal data from unauthorised access and breaches. Private networks facilitate compliance by ensuring that data remains within controlled environments, reducing the risk of interception and exposure associated with the public internet.
  
  

• The Data Protection Act 2018 – This law supplements UK GDPR and mandates that organisations take appropriate security measures to safeguard personal data. Private networks help financial firms achieve this by offering encrypted and controlled pathways for data transmission, preventing unauthorised interception or leakage.
  
  

• The Network and Information Systems (NIS) Regulations – Updated in 2023, these regulations impose strict cybersecurity obligations on financial services operators. Private networks enhance compliance by offering dedicated infrastructure that is less susceptible to cyber threats, while also supporting improved incident response and monitoring capabilities.
  
  

• The Payment Services Regulations (PSR) 2017 – These regulations govern payment service providers and impose stringent security requirements related to data transmission and fraud prevention. Private networks ensure secure, real-time communication between financial systems, reducing the risks of fraud, data manipulation, and transaction interception.

By leveraging private secure networks, UK financial institutions can proactively address the regulatory landscape, mitigate security risks, and ensure that their data transmission strategies align with compliance requirements. This not only strengthens cybersecurity postures but also enhances trust with customers, investors, and regulators alike.

For financial services companies in the UK, transmitting data over private secure networks is no longer optional - it is a fundamental requirement for operational resilience, regulatory compliance, and cybersecurity. SMEs must carefully evaluate cost-effective options to secure their data transmissions, while large enterprises must continuously reassess their strategies in light of new regulations such as DORA and geopolitical shifts impacting data sovereignty. With the added risk of "harvest now, decrypt later" attacks, financial institutions must adopt the highest levels of encryption and secure data transmission methods to future-proof their security posture.

By prioritising private network solutions, UK financial firms can safeguard their data, protect their customers, and build resilient digital infrastructure in an increasingly complex global landscape.

Cloud Gateway: Your Partner for Secure Financial Networks

SMEs in the UK financial services sector no longer have to compromise between cost, security, and compliance. Cloud Gateway’s fully managed, UK-based private network infrastructure ensures complete UK data sovereignty, eliminating the risks of public internet transmission while maintaining full regulatory alignment. Our industry-leading platform provides advanced data observability, empowering financial institutions with deep visibility into their network security - enabling in-house teams to proactively manage risks and make strategic, data-driven decisions.