Data security is the top concern in the world of financial services. Between strict data regulations and evolving cyber threats, the financial industry has no room for error when securing customer and company data.
The consumer-centric industry faces constant challenges in securing and managing identities while providing convenient, seamless, and real-time access that consumers demand. Banking and Financial Institutes (BFIs) often face increasing threats, from targeted attacks to Distributed Denial-of-Service (DDoS) and phishing to point-of-sale and ATM security issues. The stakes are significant for these institutes.
The average loss per incident for a consumer customer suffering from financial fraud is USD 1,446, rising to USD 10,312 for business customers. And 59% of banks expect financial fraud losses to increase over the next three years. At this juncture, Identity and Access Management (IAM) has emerged as the need of the hour. The IAM industry is the secure choice for financial institutions to provide access to financial bank information anytime, anywhere, for employees, business partners, and customers.
The financial industry is a primary target for cyberattacks, mainly driven by financial accessibility gain. It’s estimated that 92% of all attacks are financially motivated, with the remaining 8% attributed to espionage, personal vendettas, amusement, and ideological reasons.
Despite being a prime target for cybercriminals seeking substantial profits and aiming to disrupt some of the world’s most reputable and lucrative businesses, the threat of cyberattacks is not insurmountable. Financial institutions can mitigate these risks by implementing adequate protection measures.
Why is Identity and Access Management Important for Financial Services?
The imperative for robust Identity and Access Management (IAM) within the financial services sector has been amplified by the accelerated digitalization prompted by the COVID-19 pandemic. This digitization wave has rendered businesses susceptible to myriad threats, and the financial services industry has been no exception. At the onset of the pandemic, the industry witnessed a staggering 238% surge in cyberattacks, notably ransomware incidents escalating ninefold. Subsequent months have seen a relentless onslaught of attacks.
1) Escalation of Sophisticated Cyberattacks
- Increasing prevalence of advanced tactics such as social engineering, ransomware, BEC, and DDoS attacks.
- Evolution of cybercriminal methodologies and technologies.
- Adoption of business-like approaches by cybercriminal syndicates.
2) Credential Compromise
- Persistence of password-related vulnerabilities.
- Widespread password reuse and usage of weak, easily guessable passwords.
- Significance of compromised credentials in financial services attacks.
3) Challenges in Multi-channel Environments
- Complexity introduced by the shift to remote work.
- Struggles in securing identity and access to financial services across diverse environments.
- Impact of remote work on organizational security postures.
4) Regulatory Compliance Obligations
- Mandates for adherence to stringent compliance standards.
- Requirements of regulations like Sarbanes-Oxley (SOX) and the Gramm-Leach-Bliley Act (GLBA).
- The implications of not meeting data protection standards such as GDPR.
5) The Need for a Zero Trust Approach
- The emergence of Zero Trust philosophy as a critical approach.
- Continuous identity verification and user authentication.
- Restriction of access based on users’ roles and responsibilities.
Effective Identity and Access Management is imperative for financial services organizations to mitigate evolving cyber threats and safeguard critical assets against malicious actors.
Here, we bring you some key reasons why ‘Identity and Access Management’ is essential for banking and financial institutes:
5 Reasons Why the Financial Services Sector Needs IAM
1) Improves Security Posture
IAM solutions ensure that the right people have the proper access to the correct information. BFIs can protect and manage access to privileged accounts with enterprise-grade password security and privileged access financial management. Banks can provide seamless and secure user authentication to their native, web, mobile, and cloud applications with IAM solutions.
IAM finance capabilities such as Single Sign-on (SSO), Multi-factor Authentication (MFA), and biometric identification ensure that customers are authentic and entitled to the identity management services they claim. Customers can be instantly recognized and authenticated before a transaction is processed.
2) Enhances End-user Experience
SSO capabilities provide users with one identity for authentication across all connected online banking services. Thus, users can access financial management and all applications linked to their bank with one secure identity rather than requiring separate credentials for each service.
Moreover, self-service account management allows customers to easily manage their identity details, such as password resets and communication preferences. This, in turn, helps improve customer relationships, gain trust, and enhance user experience.
3) Ensures Compliance
Due to their structure and charter, banks and financial institutes are subject to various regulatory compliances, such as PCI, DSS, SOX, and GDPR. By implementing IAM services, BFIs are assured of achieving governance requirements such as assessing risks, enforcing policies, reducing fraud, and auditing compliance. Relying on IAM services ensures compliance and helps develop and maintain more secure systems and applications.
4) Drives Efficiency
The modern IAM speeds identity recognition and automates processes requiring human supervision, thereby driving efficiency improvements.
For instance, the banks can speed up customer onboarding by capturing biometric identity in the branch when initiating customer contact. These biometrics can authenticate the customer without requiring subsequent branch interactions.
Moreover, user self-service options reduce the help-desk burden while improving productivity and engagement.
5) Promotes Agility
Banking and financial institutes increasingly recognize the cloud as a destination for storing data and applications and accessing advanced software applications. Modern identity management services help integrate new applications and quickly deploy them to the cloud.
With the hybrid IAM model, one can rapidly connect SaaS applications and legacy and enterprise web applications.
Moreover, with digitization, the financial sector is also seen to evolve its digital capabilities, especially harnessing app-based mobile activities. The IAM industry capabilities can facilitate secure, seamless online banking services.
In Conclusion
Implementing IAM solutions in the financial services sector imparts adequate control to organizations to streamline provisioning and de-provisioning users’ access and seamlessly undertake identity change management processes. Further, it facilitates standard approval workflows and enables access to financial services to the review platform.
An effective IAM system promotes greater visibility into user access, policy compliance, role management, and risk assessment.
Need Support? Veritis is Here to Help!
Based in the US, Veritis, the Stevie and Globee Business Awards winner, is an early adopter of identity and access financial management services. With over a decade-long industry presence, we have been strategic partners to the financial, government, healthcare, manufacturing, retail, and telecom industries. Our offerings under IAM Solutions include Identity and Access Management, Compliance and Identity Management Readiness (CIMR), and Privileged Access Management (PAM).
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