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How financial services can fortify digital banking with identity security

Steve Bradford, Senior Vice President, EMEA at SailPoint

When many of us picture a ‘bank robbing’ swindler, often the first image that comes to mind is one of a masked man in stripey clothes accompanied by a bag of overflowing cash. However, the days of masked crooks stealing the limelight are long behind us.

In today’s digital era, modern criminals hide behind the masks of their computer screens and go undetected, often by duping or impersonating others. Money is still the prize possession but sensitive data is also seen as an opportunity for huge financial gain.

This comes as over 9 in 10 (93%) financial service firms have faced an identity-related breach in the last two years, according to our State of Identity Security report. Ransomware and malware attacks are the most common (at 43%), while breaches across the board are becoming more frequent – almost three quarters (72%) of all organisations surveyed highlighted that the number of breaches has increased in the same time frame.

With the Bank of England warning that cyber attacks pose the biggest risk to the UK’s financial system – which is estimated to be the target of over a quarter (28%) of all UK cyber attacks last year – it is crucial for financial institutions to focus on planning their response to spot suspicious behaviour, minimise disruption and contain fallout.

Why identity management matters

The financial sector is under constant scrutiny to ensure the highest standards of security and compliance, as breaches can lead to severe repercussions. Given the high stakes involved, banks and credit unions are inherently risk-averse and subject to strict regulatory frameworks. The rapid evolution of digital banking – where banking is no longer contained to the four walls of the building – is driven by mobile technology, blockchain, and Banking-as-a-Service (BaaS). This has increased cyber threats, compliance requirements, and the need to address security gaps.

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 look towards adopting a proactive approach in managing risks associated with handling sensitive data, while continuously monitoring and assessing their security posture, leveraging advanced cybersecurity solutions, and fostering a culture of security awareness among their employees.

Identity security as a frontline defence

With cyber criminals becoming smarter in their tactics, using the transition to the digital world to their advantage, the financial services sector needs to stay one step ahead – the key to doing this lies in a strong AI-based identity security strategy. Encouragingly, financial institutions understand the importance of this. According to our State of Identity Security report, 100% of all surveyed finance IT and IT security decision makers say that identity security is either a relatively important, critical, or the number one investment priority for their organisation, with over half (56%) having fully implemented a programme that has been in place for less than two years and less than a third (29%) having fully implemented a programme that has been in place for more than two years.

Despite many financial sector organisations being ahead of the game when it comes to AI-powered identity security, there is still progress to be made – with 91% of financial services businesses suggesting that they have experienced challenges when it comes to adopting identity security. Some of the most frequently cited difficulties include integration flexibility (38%), high configurability (35%), and complex implementation (32%).

AI-enabled identity security is vital in allowing organisations to see, manage, control, and secure all variations of identity – employee, non-employee, bot or machine. AI-enabled tools are also crucial in helping organisations to know who has access to what, and why across their entire network – detangling the sometimes-messy web of access management.

Financial organisations also need to be aware of the internal, insider threats that may not be at the hands of data seeking cyber criminals and could be due to an innocent employee mistake. In today’s modern enterprise, nearly half of workforces comprise a variety of non-employee, third party identities – meaning different individuals, all with different access requirements, are tapping in and out of networks, often unchecked. Without proper visibility and protection in place, organisations are leaving themselves vulnerable in the face of attack.

AI-based identity security provides organisations with clear oversight into who is entering their internal systems, helping them to spot unusual patterns or behaviours well ahead of a breach occurring. This oversight helps organisations to detect and remediate risky identity access and respond to potential threats in real-time.

Laying the groundwork for the future protection

As banks and other financial services continue to ramp up their digitisation efforts, they must in turn invest in their cyber defences to keep up with the evolving threat landscape, ensuring they are ready to adapt to changing market demands and maintain the highest levels of security and compliance.

The growing complexity of digital banking and the increasing volume of cyber threats require skilled professionals who can manage and protect sensitive data effectively. 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 enable existing staff to focus on more strategic initiatives. This, in turn, can help financial organisations to efficiently allocate resources and maintain a strong security framework.

Ensuring proper separation of duties (SoD) is critical for preventing fraud and maintaining compliance with regulatory requirements. However, managing 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 help 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.

The importance of identity security in the financial sector cannot be overlooked. As we move further into the digital age, identity security will be the key to futureproofing and protecting banking organisations from cybercrime. By leveraging AI-enabled identity security, organisations can have complete visibility over who is entering their internal systems, managing access to those systems whilst ensuring the protection of sensitive data. This is a necessity if businesses wish to fully protect themselves from the malicious cyber criminals of the digital age.

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Business

Enhancing sustainable commitments in retail banking

Source: Finance Derivative

Mikko Kähkönen, Head of Payment Cards Portfolio at Giesecke+Devrient

Today, more consumers are keeping environmental pledges from banks at the forefront of their financial decisions, and those banks that fall behind their competitors on sustainable action are risking the loss of customers, particularly among the younger generation. This shift highlights a growing expectation from consumers for their banks to make and uphold sustainable commitments, signalling a change in consumer priorities where environmental responsibility is increasingly seen as essential, not just an optional extra. Giesecke+Devrient research shows that as many as 64% of Gen Z consumers would be happy to switch banks if their current provider didn’t meet their expectations.

However, sustainable commitments must be authentic to avoid any accusations of greenwashing. Unfortunately for the banking sector, consumer trust is being strained as greenwashing incidents have risen by 70% around the world. Banks can’t simply make claims that can’t be backed up; pledges must be supported by evidence. There’s a number of practical steps they can take to prove their credentials.

Banking on the evolution of cards

The bank card has increasingly become a physical symbol of the relationship between consumer and bank. As such, banks have taken steps to ensure that it is designed with sustainability in mind. Many are now created with recycled PVC material, commonly up to 100%, with a lower carbon footprint.

Some banks are elevating their sustainable credentials by utilising cards that are made from plastic collected in oceans and coastal regions, helping to clear up the world’s beaches. Alongside this, others are issuing cards made of polylactic acid sourced from (inedible) corn starch. This is a fully renewable biomass that could be industrially composted.

Sustainable cards can then encourage further sustainable initiatives. We’re more often seeing issuers now actively taking part in local conservation, community development and educational projects around the world to help benefit the planet. Communicating these efforts to customers can help reinforce sustainable credentials and leave tangible evidence that proactive action is taking place.

Contributing to the circular economy

Powering the sustainable credentials of issued cards is one aspect, but it’s also vital that banks encourage their customers to do the right thing with them once they expire and they need to be discarded of. We’re already seeing prominent banks making progress in this area. UK retail bank, Santander, has launched a pilot scheme in branches and ATMs that encourages customers to return their outdated credit and debit cards for recycling, for example.

The collected cards are then turned into plastic pellets to be used elsewhere, for instance to make outdoor furniture, sponsored by Santander, for local communities. As more banks opt for card recycling, consumers will be empowered to dispose of their old or expired cards in a green way and help to reduce ecological footprint.

Into the digital world

Outside of card innovations, retail banks can add to their credible green claims with digital solutions. As an example, the card issuance process has typically involved paper letters, with additional PIN letter, that are posted out to customers to activate their payment cards. Instead, an ePIN service can enable customers to instantly access their PIN via their choice of a mobile app or SMS message, reducing paper waste and waiting times.

There are also innovations taking place in terms of QR codes and augmented reality (AR) solutions to enable digital marketing offerings. This means that printed collateral doesn’t need to physically sent out in the post. The more that these types of communications are sent out digitally, the more that consumers see a tangible commitment to sustainable practices.

Banks can even take an additional step by deploying third-party partners to track the CO2 footprint involved with every purchase or payment. By opting for organisations that have a solid track record in green practices, such as supporting product certifications and information on eco-products and their claims, they can make steps to compensate for each transaction carbon footprint.

Contributing to the green story

To ensure they don’t come under any criticism regarding their environmental claims, banks and financial institutions have the opportunity to adopt sustainable practices that align with their customers’ expectations for eco-friendly commitments in both their physical and digital services. They can introduce banking cards made from recycled or entirely compostable materials, eliminating plastic waste.

Digitally, banks can minimise unnecessary paper use by employing online applications to simplify the process of delivering PINs. By innovating in these domains, they can fulfil their environmental responsibilities and establish that essential trust with consumers, contributing positively to the planet’s wellbeing.

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Business

Successfully dealing with the unintended consequences of change

by Daniel Norman, Change Management Consultant at Symatrix

Most people dislike change. We are drawn to stability and established routines and feel unsettled when anything happens to disrupt the ‘status quo’. It’s bad enough when the local supermarket moves the bread section – but when the company we work for introduces a new digital system that completely changes how we work, it feels like ‘the sky is falling in’.

When change happens within businesses, there may initially be some resistance from employees: whether it be in the form of avoiding new systems, skipping training, clinging to old methods, or even quitting altogether. Change in business is a constant, however, and it is usually driven by a desire for improvement, and typically over time, becomes the new normal.

Good change management is all about smoothing this process of transition and that means engaging with people and helping them to seamlessly switch to a new model or ways of working.  Change management is not just concerned with implementing new systems or processes; it is just as much about listening intently to colleagues, customers, and stakeholders.

It’s working with people to get things right, building a deep understanding of the challenges we and our colleagues face, and shaping the vision for a future that resonates with people. Change is most successful when everyone feels they have a part to play in moving things forward. And that’s true of all change initiatives, large and small.

Finding a way forward

When it comes to managing change, it’s important to recognise that everyone will have their own journey; they’ll work through things at their own pace, and that’s more sustainable than pretending we’ll all arrive at the same point at the same time.

 It’s also important to focus on creating a supportive environment, or the right conditions for people to adapt, with as little friction as possible. The goal is to establish conditions that minimise friction and foster a collective sense of purpose. This philosophy is crucial in creating a environment conducive to individual and organisational growth.

Getting the planning process right

When planning for change, it’s essential to consider both the intended and unintended consequences. Just as technological advancements like social media have transformed communication but also introduced challenges such as misinformation and mental health concerns, organisational changes can have extensive, unforeseen impacts. A thorough exploration of current operational practices, beyond process maps or managerial assertions, is therefore, always a vital feature of any effective change management approach.

For that reason, it can often be a mistake to pull out those process maps the team updated 12 months ago or rely on the word of line managers that will tell you ‘this is how we operate’ without taking into consideration the work-arounds or simplifications that employees have developed over time.

Teams will naturally evolve, and patterns of work; ways of doing things that aren’t written down, will always be there. A good change manager must always be cognisant of that. Even small changes, like when a key person in the team changes roles, can have a big impact.

To manage change well, it’s important to talk to the people who will be most affected by it. This helps change managers to plan and effectively execute the change journey. By ignoring these key considerations, organisations risk their change strategy stalling from the outset and the opportunity for operational efficiencies may therefore never be fully realised.

Throughout the process, it is crucial to continuously monitor and measure the impact of change on all key stakeholders. One effective way of doing that is by embracing the principle of change curves: a popular model organisations can use to understand the different stages people and the organisation go through when a change occurs.

An effective strategy involves mapping stakeholders against this curve, whether as individuals or groups, during project check-ins. This approach can help project leaders gauge the current position of every team member on the curve, the impact of the project’s upcoming phase on them, or their colleagues, and additional support measures that could be implemented. Such an assessment facilitates a more tailored and effective change management strategy, ensuring stakeholders are adequately supported throughout the transition.

Not everything will run like clockwork, of course, no matter the change management approach that is put in place. Challenges, setbacks, and opportunities for improvement are inherent to any process, but proactive anticipation and planning for potential worst-case scenarios and unintended consequences significantly enhance our ability to support our colleagues and teams effectively. This strategic foresight is crucial in managing transitions smoothly and realising the intended benefits of initiatives.

A positive route ahead

Change, especially in business, are inevitable and often aimed at fostering improvement and growth. However, the journey through change is deeply personal and varies from one individual to another. By acknowledging this, creating a supportive environment, and engaging with all stakeholders, organisations can navigate the complexities of change with minimal resistance and maximum efficiency.

Effective change management, therefore, is not just about the technical implementation of new systems but about genuinely listening to and working with people to adapt and thrive in new circumstances. It’s about understanding the nuanced ways teams operate, the unofficial shortcuts and workarounds they’ve developed, and considering the broader implications of change beyond immediate operational efficiencies. Through a thoughtful approach that anticipates challenges and values stakeholder input, organisations can not only manage change but turn it into a catalyst for positive transformation and growth.

It is clear then that while people may inherently dislike change, with the right conditions, support, and leadership, the transition can become a journey of collective progress and innovation. Change, managed well, can transform the initial discomfort into an opportunity for development, making the once feared ‘sky falling in’ scenario a launchpad for reaching new heights.

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Embedded finance: What consulting firms need to know

By Michael Pierce, VP of Sales at Toqio

Consulting firms are the architects of change in the business world, offering insights and solutions that guide companies toward growth and success. They navigate the intricate landscape of markets and industries, providing invaluable advice to their clients. In this evolving milieu, an opportunity is arising as embedded finance enters the scene, creating a unique and prospectively vital synergy between consultants and platform providers.

Embedded finance, especially within the scope of B2B enterprises, is a hot topic right now among consultancies and the outlook seems to be quite positive.

To date, much of the initial traction in embedded finance has been in the consumer sector, with products such as no- or low-interest financing, buy-now-pay-later (BNP), and others. On the B2B side, there is an increasing amount of mobilization. In recent months we’ve seen incumbent banks either entering the banking-as-a-service (BaaS) market or enabling their services through open banking partnerships, while strategy firms are busy advising corporate entities on the potential routes they can take. Early adopters have already made embedded finance a cornerstone of their digital or financial transformation programs: MVPs and proofs of concept have been on the rise.

As we all peer forward, the market is starting to look for scalable use cases to take advantage of these massive, predicted opportunities. Companies are searching for solutions that go beyond the hype.

For consulting firms, the messaging remains positive. The fundamentals of embedded finance drive strong service revenue. Even more importantly, the business cases for their clients stack up as well. Numerous opportunities are on the table when consultants incorporate embedded finance platforms into their projects, including increased revenue, improved retention rates, access to a wider range of data for better decision-making, and many more.

Adaptability delivers excellent results

Embedded finance helps to break down barriers faced by many companies when trying to access affordable financial services. By integrating financial services directly into the supply chain, companies can enjoy many benefits, such as liquidity management, credit accessibility, risk mitigation, and many others. That’s one of the reasons why embedded finance platforms are proving to be the latest addition to the consultant’s toolkit. They offer a wide array of solutions that enable businesses to integrate financial services into their products and services. What makes embedded finance platforms especially appealing to consultants is their adaptability and scalability.

Consulting firms understand the need for versatile solutions capable of addressing various business requirements. Versatility and adaptability are key, giving consultants the flexible tools they need to deliver on time and within budget.

Embedded finance platforms are a natural extension of consulting firms’ capabilities as they offer a comprehensive range of financial solutions that integrate perfectly into existing business processes. This alignment provides consulting firms with several advantages, such as  enhanced client services, data-driven insights, streamlined processes, scalability, and versatility.

A match made in finance

The compatibility between consulting firms and embedded finance platforms is readily apparent. Consultants excel at diagnosing business issues and embedded finance platforms provide a precise prescription for financial enhancements.

There is an extensive list of benefits that consulting firms can get from platforms like this. Diversifying their business is just one of them as embedded finance platforms augment the services that consultants offer. They allow consultants to present clients with solutions for intricate business ecosystem operations, such as payment processing, receivables management, and liquidity optimization.

Partnering with an embedded finance platform can also open up new revenue streams as well as being able to scale the solutions built with more agility. Consultants can use them to address the unique needs of projects of any size, whether working with an SME or a multinational enterprise.

The relationship between consulting firms and embedded finance platforms isn’t just about expanding services, it’s about offering integrated financial solutions that improve efficiency, profitability, and competitiveness. This partnership drives results. In a world where businesses seek comprehensive solutions, embedded finance platforms empower consulting firms to address complex financial challenges effectively.

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