Identity-related security breaches have become an inescapable reality for the financial sector. According to the State of Identity Security 2023: A Spotlight on Financial Services – a global survey released by SailPoint – 93% of all surveyed financial institutions have faced a breach in the last two years, with ransomware and malware attacks being the most common, accounting for 43% of incidents. Attacks have also become more frequent, with almost three-quarters of all organisations (72%) highlighting an increase in the number of breaches during the same period.
The significance of whether an organisation has experienced a breach diminishes in comparison to its preparedness in handling such attacks. The financial and banking industry is a prime target due to its possession of sensitive data and the potential profitability of a successful intrusion or breach. For instance, Singapore recently experienced a phishing scam resulting in approximately SG$8.5 million in losses. Hence, it is crucial for financial institutions to prioritise planning their response to minimise disruption and contain any fallout.
The importance of identity management
Given the high stakes involved, banks and credit unions are inherently risk-averse and subject to strict regulatory frameworks. The financial sector is under constant scrutiny to ensure the highest standards of security and compliance, as breaches can lead to severe repercussions. Furthermore, the rapid evolution of digital banking, driven by mobile technology, blockchain, and banking as a service (BaaS), has led to increased cyberthreats, compliance requirements, and the need to address security gaps. Banking is no longer confined within the four walls of a building. To complicate matters, the financial sector faces challenges such as high rates of insider data breaches, complex corporate structures, and reliance on manual processes for tracking data access and user identities, making it vulnerable to inaccuracies and inconsistencies.
Financial institutions must adopt a proactive approach to manage risks associated with handling sensitive data. They should continuously monitor and assess their security posture while leveraging advanced cybersecurity solutions and fostering a culture of security awareness among their employees. By utilising artificial intelligence (AI) and machine learning (ML) technologies, financial institutions can uphold identity security, mitigate the risk of devastating breaches, and ensure compliance with regulatory requirements.
The current state of identity management in banking
Encouragingly, financial institutions understand the importance of leveraging AI and ML technology to enhance their identity security posture. All surveyed finance IT and IT security decision makers (100%) state that identity security is either a relatively important, critical, or the number one investment priority for their organisation. Over half (56%) have fully implemented a program that has been in place for less than two years, while less than a third (29%) have fully implemented a program that has been in place for more than two years.
Furthermore, all survey respondents indicated various advantages gained from implementing identity security solutions, encompassing a range of aspects. These benefits include the ability to connect the identity program to horizontal applications (49%) to create a more comprehensive and efficient security infrastructure that enables better management of users and permissions across platforms. Additionally, there are increased cost and time savings within IT and security teams (45%) by automating complex tasks related to user access. Moreover, there is enhanced control and visibility into users (44%) to identify potential threats and effectively mitigate the risk of unauthorised access or data breaches.
The challenges of identity security in financial services
Implementing a robust identity security strategy is essential, and although many financial institutions are beginning to invest in identity security solutions, 91% acknowledge the challenges they face. The most frequently cited difficulties include integration flexibility (38%), high configurability (35%), and complex implementation (32%). Given the wide variety of applications used in financial environments, both internally and externally, these challenges are not unexpected. Other prevalent challenges include regulatory compliance issues (31%) and a shortage of appropriate skills to modify or introduce new systems (27%).
Furthermore, financial institutions need to be aware of other identity-related challenges. For instance, insider threats involve individuals with authorised access to sensitive data, systems, or facilities, whether intentional or unintentional, including employees, contractors, or third-party vendors. The privileges granted during role or responsibility changes, referred to as “movers’ privileges,” can also introduce unnecessary risks and potential security breaches if the user’s access is not adjusted accordingly. Traditional banks and financial institutions that have been slow to adopt digital technologies and still rely on legacy systems further complicate the implementation of new security measures to address these issues.
The future of identity management in digital banking
As financial institutions look toward the rapidly evolving digital landscape, embracing an effective identity management solution can help address the issues mentioned above and ensure they are ready to adapt to changing market demands while maintaining the highest levels of security and compliance. These include:
- Integration flexibility: Identity management solutions can provide the necessary flexibility for organisations adopting new technologies, ensuring seamless integration with their existing systems and applications. As such, banks and credit unions can incorporate new digital services and platforms without compromising security.
- Skilled resources: The growing complexity of digital banking and the increasing volume of cyberthreats require skilled professionals who can effectively manage and protect sensitive data. However, financial institutions often struggle to find and retain qualified cybersecurity and identity management experts. By implementing comprehensive identity security solutions, banks and credit unions can automate complex tasks, reducing the need for specialised personnel and enabling existing staff to focus on more strategic initiatives. This, in turn, helps financial organisations efficiently allocate resources and maintain a strong security framework.
- Complex separation-of-duties policies: Ensuring proper separation of duties is critical for preventing fraud and maintaining compliance with regulatory requirements. However, managing separation-of-duties (SoD) policies can be challenging due to the complexity of financial institutions’ organisational structures and the need to coordinate access controls across multiple systems. Identity management solutions can streamline the management of SoD policies by automating access controls, monitoring user activities, and providing real-time visibility into potential conflicts. This allows financial institutions to effectively enforce SoD policies, reduce the risk of unauthorised access or fraud, and eliminate compliance gaps.
- Outlier detection: For financial institutions, implementing an identity security solution capable of identifying unusual patterns or behaviours deviating from the norm can help spot potential risks or anomalies. By analysing vast amounts of data and leveraging advanced analytics, machine learning, and artificial intelligence, outlier detection can provide valuable insights to help organisations detect and remediate risky identity access and respond to potential threats in real-time.
The importance of identity security solutions for financial institutions cannot be overstated. As the sector continues to embrace digital banking, ensuring the protection of sensitive data and maintaining regulatory compliance through robust identity management practices will be critical to the industry’s ongoing success and resilience.