When it comes to data protection, most organizations today face an extraordinary amount of pressure. On the one hand, the sheer quantity of raw data has exploded: organizations are responsible for safeguarding more sensitive information than ever before. At the same time—and not without relation—federal and state rules around data protection have grown ever more stringent.
A quick rundown of just the most significant regulations includes the GDPR, the Payment Card Industry Data Security Standard (PCI DSS), HIPAA, the California Consumer Privacy Act (CCPA)—the list goes on. And new regulations are being introduced on a regular basis, with consumers increasingly concerned about the risks their data is being exposed to.
Failure to comply with these regulations can lead to significant penalties. In fact, a single HIPAA violation can cost an organization $50,000. The GDPR, meanwhile, can fine businesses up to 20 million euros or 4% of annual global turnover (whichever is highest) for compliance failures. Most of the costliest security breaches have taken place in the last three years, which just goes to show that the stakes have never been higher.
Organizations are working to align their operations with regulatory best practices, and over the years, one key contributor for compliance has emerged: managed file transfer (MFT). Transferring data is essential to enterprise operations and that data needs to be transferred securely for organizations to maintain compliance.
The Perils of Traditional File Transfer Protocols
While many businesses have migrated to SaaS solutions over the last 15 years, files still form the backbone of many major institutions—and this isn’t likely to change anytime soon. The Automated Clearing House (ACH) network, which facilitates financial transactions in the U.S., was responsible for 34 billion transactions totaling $86 trillion last year—and to a very large extent, those transactions were file-dependent.
Traditional file transfer protocols (FTP) have their uses, but they are unequipped for the needs of the modern enterprise, which must constantly work to prevent potential disaster. With FTP, user credentials are sent as plain text and files are unencrypted during the transfer process. This fails to meet most regulatory requirements, even before you factor in persistent connectivity and functionality issues. If the goal of the modern enterprise is to minimize vulnerability as much as possible, FTP falls short.
And that goal is, again, non-negotiable because ultimately, regulatory consequences are just the tip of the iceberg. A data breach of sufficient severity can slash market valuation, permanently damage consumer trust and halt business operations as IT personnel work to get systems up and running again.
Why Managed File Transfer (MFT) Is the Answer
The risk factors in FTP have led to the emergence of several solutions. But the openness of certain solutions comes with steep costs for businesses concerned with file protection. What businesses want is the simplicity combined with the reliability —without having to build out an impossible-to-navigate range of solutions. In this search, managed file transfer (MFT) has emerged as the clear winner.
MFT has three key benefits that distinguish it from other solutions and promote regulatory compliance:
1. Authentication and Encryption
At the heart of any compliance program is the concept that only authorized users can access and manage files. Through a series of authentication protocols, ex: multi-factor authentication (MFA) —MFT helps keep data out of the wrong hands.
Of course, even the most robust authentication protocols can’t deliver a 100% success rate, which is why encryption is so important. Encryption, another central aspect of MFT solutions, protects information from potential bad actors. This security measure means that the data is only accessible by those it is intended for.
2. Secure Automation
Self-sufficient workflows are a primary ambition for many organizations in 2025. MFT solutions have been at the forefront of automation efforts for years, enabling complex file transfer orchestration without active human intervention. Through advanced, logic-based workflows, MFT solutions can automate transfer activity without putting sensitive information at risk.
3. Auditability
Even when an organization is operating without incidents, the compliance paperwork that regulations require can still drain resources. MFT solutions can provide precise data on compliance, allowing organizations to present regulators with detailed records of data movement—who accessed what, when they accessed it and more. In a world of constantly expanding regulations, organizations need to be able to track the movement of their files with extreme precision.
New data privacy laws are proliferating at a rapid rate. At the same time, enforcement of those laws is intensifying dramatically as slow-moving bureaucracies catch up with new technological developments. Organizations that minimize the importance of data protection are exposing themselves to significant risks, both in the short and long term. In this respect, MFT might be one of the best preventative measures available.
