As of May 2024, business email-compromised attacks within financial services have increased by 21%[1]. Cybercriminals use social engineering and malware to access legitimate business email accounts. With digital banking operations taking the forefront and sophisticated financial threats rising, the need for strong security measures is more vital than ever.
Identity and access management (IAM) plays a crucial role in the above context by protecting customers’ critical financial and personal data and ensuring secure and compliant access for employees.
This blog explores the importance of IAM for the BFSI industry, its key features, and best practices for implementing effective IAM strategies.
Why is Identity and Access Management Important for Financial Services?
In the BFSI industry, where trust and security are paramount, identity and access management (IAM) is critical for managing access and maintaining data security. Banks, financial institutions, and insurance companies handle large amounts of varied sensitive data—from customer’s credit card information to important financial and payment records.
To secure such sensitive data, organizations that are a part of the BFSI industry need to adhere to certain industry regulations such as the European Union’s PSD 2 (Payment Services Directive) and Payment Card Industry Security Standards Council’s PCI DSS (Payment Card Industry Data Security Standard) which focus on the protection of sensitive payment information. Moreover, banks must adhere to GDPR principles such as lawfulness, fairness, transparency, and data minimization and uphold customers’ rights, including access to, rectification, and erasure of personal data.
Organizations that fail to comply with industry regulations are subject to paying hefty fines and face criminal proceedings and reputational damage, affecting credibility and performance. According to 2023 data, a US-based cryptocurrency exchange firm, Binance, had to pay $4.3 billion for violating bank secrecy regulations[2].
IAM is essential for banks to secure customer and financial data, prevent fraud, and comply with regulatory requirements. It fortifies financial institutions’ security posture, ensuring the integrity and confidentiality of critical financial systems.
Key Features of IAM for BFSI
1. Centralized User Management
IAM solutions simplify user management in the BFSI industry by creating a centralized directory. They often leverage proprietary or third-party software tailored for financial institutions. By consolidating user identities, IAM streamlines monitoring and ensures consistent policy enforcement across all employees.
The administration of user accounts is streamlined as IAM provides a single point of controlling access, which is critical for compliance with stringent financial regulations and safeguarding sensitive financial data.
2. Identity Management
Banking identity management includes onboarding new employees, provisioning appropriate access to financial systems based on their roles, regularly reviewing and updating access rights to sensitive customer databases, and de-provisioning the access when an employee leaves the organization, all from a single console. These processes ensure compliance with internal BFSI policies and regulatory requirements while maintaining optimal security protocols to safeguard financial assets and customer information.
3. Access Control
Granular access controls enforced by IAM solutions ensure that only authorized individuals can access specific banking resources and perform designated financial operations. This guarantees that correct permissions are set for each BFSI employee, device, and application.
4. User Authentication
IAM solutions provide various authentication methods to verify the identity of users accessing banking services, such as multi-factor authentication (MFA), which ensures that only authorized users can access financial data.
Alternately, single sign-on (SSO) capabilities allow users to access multiple banking software and applications with a single set of credentials, improving user experience and reducing the risk of password fatigue. SSO enhances security by centralizing authentication processes and minimizing attacks by malicious vectors.
Benefits of IAM for BFSI
1. Improves Security Posture
IAM ensures that only authenticated and authorized personnel access sensitive banking systems and data by following zero-trust security principles. This principle significantly mitigates the risk of data breaches and fraud, enhancing the organization’s overall security posture.
2. Scalability
As financial institutions grow and evolve, IAM solutions can scale to accommodate increasing users, transactions, and third-party integrations. Only authenticated users with an authorized domain can access banking applications and devices used for work with authentication methods like SSO.
Scalability ensures access management remains secure and efficient, even as the organization’s operations expand. It allows banks to adapt quickly to changing business needs and regulatory requirements without compromising security.
3. Ensures Compliance
IAM solutions facilitate compliance by providing robust access control, user authentication, and activity monitoring. This ensures adherence to regulations such as GDPR, CCPA, and PCI-DSS.
Governing bodies like the Financial Industry Regulatory Authority (FINRA), the Financial Crimes Enforcement Network (FinCEN), and the Securities and Exchange Commission (SEC) mandate the systematic implementation of IAM practices to protect customer information and maintain the integrity of financial systems.
4. Drives Efficiency
IAM solutions automate many aspects of the access management process specific to the BFSI industry, including user provisioning and de-provisioning. With a single authorized domain or work email, employees in BFSI firms avoid repeated password entries.
Features like access control enable IT admins to predefined access levels based on roles and responsibilities, significantly reducing their workload. This capability eliminates the recurrent need for manually providing permissions, a crucial benefit in ensuring compliance with stringent regulatory requirements such as PCI-DSS or GDPR. By streamlining these administrative duties, IAM improves operational efficiency and minimizes the potential for human error, which can otherwise lead to significant security vulnerabilities in BFSI environments.
5. Enhances User Experience
IAM improves the user experience for employees working in the BFSI industry by simplifying logins and reducing the need for multiple passwords. Features like SSO enable users to access multiple applications with a single set of credentials, reducing password fatigue and improving productivity.
Best Practices to Implement IAM for BFSI
1. Adopt a Zero-Trust Approach to Security
Zero-trust principles—never trust, always verify, assume breach, and apply for least-privileged access—ensure robust security by continuously authenticating users before granting access to banking resources. This model integrates seamlessly with IAM tools, enforcing strict access policies and simplifying authentication without disrupting business operations.
Identifying and securing high-value assets (HVAs), such as confidential trade secrets and customer PII, is essential. It is crucial to decide where these HAVs will be stored and what and who will have access to them.
By leveraging least-privilege principles, financial institutions can limit permissions, regularly audit access, and reduce unnecessary standing privileges to customer data and financial systems. This approach minimizes the risk of unauthorized access and potential breaches.
2. Enforce a Strong Password Policy
IAM technologies rely on effective password practices. Administrators should enforce a robust password policy, configure password complexity and reusability, and set a period for updating passwords. By prioritizing strong password practices, banking institutions significantly reduce the risk of unauthorized access and data breaches, ensuring better protection for critical financial information.
3. Use Multi-Factor Authentication (MFA)
Multi-factor authentication simplifies the authentication process by requiring two or more forms of validation to confirm a user’s identity. MFA includes the use of passwords, four or six-digit personal identification numbers (PINs), biometrics (such as fingerprint and facial recognition), one-time-password (OTPs), and security questions.
4. Enforce Just-in-Time Access
Just-in-time access means temporary access to the system, software, data, or applications for a fixed duration on an as-needed basis. For example, when a compliance officer needs to review financial records stored in a secure database, IT administrators can grant temporary access for the audit period and revoke it once the audit is complete. This ensures work continues smoothly without compromising security, reducing the risk of prolonged exposure to sensitive data.
5. Leverage Access Control Policies
Access control policies should be enforced for assigning, managing, and revoking access to data.
IT admins at banking and financial institutions can use various access controls:
- Role-Based Access Control (RBAC): Grants permissions based on user roles and responsibilities to minimize unauthorized access and streamline operations.
- Attribute-Based Access Control (ABAC): Uses attributes like user profile, resource type, and environment to provide fine-grained, real-time access control.
- Mandatory Access Control (MAC): Restricts access based on predefined sensitivity labels and user clearance levels for high-level data protection.
- Discretionary Access Control (DAC): Allows resource owners to configure access permissions, offering flexibility and autonomy in access management.
- Policy-Based Access Control (PBAC): Combines business policies with access control, providing dynamic, real-time permissions based on multiple factors such as location and role.
6. Regularly Audit Access to Resources
Auditing is crucial in the BFSI industry to ensure access controls adhere strictly to the principle of least privilege, granting users only the essential permissions required for their specific roles. This practice is paramount in mitigating the risk of over-provisioning, where employees may accrue unnecessary access rights over time.
Furthermore, as BFSI organizations integrate new financial tools and regulatory applications into their systems, auditing becomes indispensable for identifying and rectifying orphaned accounts or unused access privileges. By regularly scrutinizing usage logs and access permissions, IT teams can promptly revoke unnecessary access, minimizing the attack surface and fortifying the overall security posture of the institution.
7. Adopt a UEM Solution with IAM Capabilities
Adopting a UEM solution integrated with IAM capabilities enhances security in the BFSI industry by enabling IT administrators to centrally manage and secure devices accessing banking networks and sensitive financial data. This includes enforcing encryption, implementing stringent password policies, and remotely wiping data in case of device loss or theft.
In tandem with IAM, which governs user identities and access privileges, UEM complements by ensuring these accesses occur through secure and compliant mobile devices and endpoints used within financial institutions.
This integration of UEM and IAM fortifies overall security and streamlines administration by providing a unified platform for managing user identities and device security policies specific to the regulatory requirements of the BFSI industry.
Foolproofing the BFSI Industry with IAM
IAM integration is crucial for safeguarding the future of the BFSI industry. It helps build customer trust and maintains the integrity of sensitive financial data. Financial service providers must take proactive steps to make IAM a fundamental component of their security strategy.
Implementing robust identity and access management solutions is essential as financial data breaches continue to rise. Financial institutions must prioritize advanced IAM systems to protect customer privacy, improve operational efficiency, and ensure secure access to critical information.
To learn more about IAM for BFSI sector, explore OneIdp, a UEM-integrated IAM solution from Scalefusion. Get in touch with our experts to book a live demo today!
References:
1. Forbes
2. Enzuzo
