MFT solutions bring compliance gold to high-stakes industries

Managing compliance is high-stakes in any industry, especially in healthcare, finance, government and other regulated industries. Regulatory frameworks like HIPAA, PCI DSS and GDPR impose strict requirements on how sensitive data is stored, transferred and accessed.

Yet, many organizations still rely on outdated systems or file transfer protocols, like FTP — a risky approach considering the significant penalties you could face by violating the above or other regional or industry regulations:

• GDPR fines can reach up to €20 million or 4% of an organization’s global revenue, whichever is greater.
• HIPAA violations may result in penalties exceeding $2 million per incident.
• PCI DSS non-compliance may lead to fines of up to $500,000 per security incident, plus potential bans from processing credit card transactions.

Managed file transfer (MFT) solutions have emerged as the gold standard because they have built-in data security controls, automation capabilities and compliance-ready features. If you’re still using simple FTP or piecemeal file transfer methods, it’s time to reevaluate.

The risks of using a near-obsolete file transfer solution

Legacy file transfer systems were not designed for today’s regulatory complexities. They often lack encryption, access controls, audit trails and other key security features necessary to meet modern regulatory requirements. 

Using basic FTP, for example, in a regulated industry is like locking the front door while leaving the windows wide open. It creates an illusion of security without addressing underlying vulnerabilities.

• Data breaches and non-compliance: Sensitive information like electronic health records (EHRs) or cardholder details is particularly attractive to cybercriminals. If you transfer data in plain text, you make it easy for attackers to intercept and exploit.
• Inadequate monitoring and visibility: Many file transfer solutions fail to provide the necessary visibility into user access and file activity that’s required for compliance. Without detailed audit logs and real-time monitoring of user access, you could struggle to produce adequate documentation. Especially if you’re subject to regulations like SOX, this can lead to costly penalties or operational shutdowns.
• Operational inefficiencies: Standard file transfer systems are labor-intensive and error-prone and can be even more so when managing large volumes of data or complex workflows. For example, imagine your financial institution needs to transfer daily reports to hundreds of branch offices. Manually managing these transfers via FTP would be incredibly time-consuming and prone to errors. Your operations are bound to slow down — and your likelihood of mistakes will increase — if you rely on them.

B2B and API solutions also aren’t the answer. While B2B and API solutions offer some file transfer capabilities, they often lack the comprehensive security, granular control and robust audit trails that MFT solutions provide. APIs, for example, primarily focus on application-to-application communication and might not offer the same level of file-centric security features, especially for large file transfers or complex workflows. B2B solutions facilitate business partner communication, but they may not offer the fine-grained access controls or detailed audit logging necessary for full regulatory compliance. MFT solutions are designed specifically to address these challenges.

MFT solutions: Positioned for risk mitigation

MFT platforms were purpose-built to address the limitations of outdated file transfer software. Adopting an MFT is a true compliance and risk management strategy, not just a technical upgrade.

End-to-end security

From upload to transfer, MFT solutions protect your sensitive data, encrypting it both in transit and at rest using industry-standard protocols like AES-256. Even if data is intercepted during transfer, it can’t be read or exploited.

Granular access controls

One of the most critical components of regulatory compliance is ensuring that only authorized personnel can access sensitive information. MFT platforms allow your IT team to fine-tune access controls, including multi-factor authentication (MFA), role-based permissions and IP whitelisting.

Audit-ready reporting

Regulated industries are frequently subject to audits, whether by government agencies or industry-specific oversight bodies. MFT solutions can automatically generate detailed logs of all file transfer activities, including timestamps, user information and file details. When you have these logs available during an audit, you can provide clear evidence of compliance. As a cost-saving bonus, you’ll spend less time and resources on manual reporting.

Real-world perspectives: MFT as a must-have

If you have yet to switch to MFT, it can be helpful to consider how it’s making a difference in various use cases for regulated industries. Following are some examples of the high-impact potential of the right MFT solution.

Healthcare: Ensuring patient data privacy and HIPAA compliance

• EMR transfers between clinics and hospitals: Imagine a hospital group regularly transfers EMR data between its facilities and third-party specialists. Using FTP, these transfers are unsecured and leave the group at risk of violating HIPAA. With MFT, they could encrypt all EMR data and restrict access to authorized team members only.
• Lab results sent to patients and providers: Say a diagnostic lab processes thousands of patient test results daily. They used to share results via email, which posed a risk of unauthorized access. By transitioning to MFT, the lab can securely transfer results to patients and healthcare providers through encrypted channels.

Finance: Safeguarding payment data and PCI DSS compliance

• Payment data transfers to processors: Consider a financial institution that transfers cardholder data to a third-party payment processor daily. An MFT solution with built-in High Availability and Active-Active architecture ensures these high-volume transfers are secure and reliable, eliminating lag and downtime even during peak processing periods. The institution can scale seamlessly as transaction volumes grow.
• Cross-border financial transactions: Multinational banks must comply with data localization laws while transferring financial data across jurisdictions. MFT enables these institutions to route data transfers through compliant servers, track access to meet audit guidelines and adhere to regional regulations like GDPR without having to sacrifice efficiency.

Retail: Protecting consumer data and meeting GDPR requirements

• Customer data shared with marketing partners: With GDPR, all data needs a paper trail or fines will follow. Let’s say a large e-commerce retailer shares customer names, addresses and purchase history with marketing agencies for targeted campaigns. Using email for these transfers creates significant risks of GDPR non-compliance. Implementing MFT automates and secures these transfers by encrypting customer data and locking down access to authorized marketing personnel only.
• Fraud protection: Appriss Retail protects retailers from fraud and abuse, so the company heavily depends on secure file transfers. They were using a legacy solution that could not be upgraded easily and lacked high availability, which limited scalability and increased the risk of non-compliance with regulations for protecting personally identifiable information (PII). By adopting JSCAPE by Redwood, which offers DMZ streaming, multiple protocol support, and workflow automation in a high-availability environment, Appriss has achieved consistent uptime and the confidence to protect its clients from loss and breaches. Read the full story.

The cost of doing nothing

Failing to replace outdated file transfer systems with an MFT solution exposes your organization to risks and costs — obvious and hidden. Beyond the financial costs of a disastrous breach, operational inefficiencies pile up as tech debt that slowly increases costs by delaying critical workflows, growing labor costs and missed business opportunities.

Upgrading isn’t just about avoiding penalties or breaches; it’s about building operational resilience in a compliance-driven world. File transfer technology is evolving, and MFT is a required investment for both security and efficiency. With new regulatory standards coming into effect in 2025 for OT and IT organizations, the need for reliable and secure file transfer solutions is becoming even more critical.

Don’t wait for a crisis to act! Evaluate whether it’s time for a new, more secure file transfer provider using JSCAPE’s free guide.