Financial Crime World

Challenges in Cybersecurity and Identity Management in Financial Services

The financial services (FS) sector faces numerous challenges in terms of cybersecurity and identity management. In this article, we will explore these challenges and discuss strategies for addressing them.

Key Challenges in FS Sector

Regulatory Compliance

  • Know Your Customer (KYC): Financial institutions must ensure that they have adequate controls in place to verify the identities of their customers.
  • Anti-Money Laundering (AML): Institutions must implement measures to detect and prevent money laundering activities.
  • Privacy Laws: The General Data Protection Regulation (GDPR) and California Consumer Privacy Act (CCPA) impose strict requirements on the handling of customer data.

Identity-Focused Attack Surface Management

  • Entitlement Sprawl: Complex access rights management poses security vulnerabilities due to entitlement sprawl.
  • Lack of Standardized Authentication Approaches: Different financial institutions have different authentication protocols, which can complicate user experience and security protocols.

Rise of Deepfakes

  • Threat to Businesses: Deepfakes require appropriate computing power, forensic algorithms, audit processes, and talent to combat.

Strategies for Addressing Challenges

Improving Security and Experience

  • Biometric Authentication: Implement biometric authentication to enhance security and user experience.
  • Single Sign-On (SSO): Implement SSO to reduce the number of login credentials required by users.
  • Multi-Factor Authentication (MFA): Implement MFA to provide an additional layer of security.

Identity Management Technology Solutions

  • Automate Compliance Processes: Implement effective identity management technology solutions that automate compliance processes and reduce regulatory risks.
  • Streamline Entitlement Management: Streamline and automate entitlement management to enhance operational efficiency and mitigate insider threats.

Industry-Wide Standards for Authentication

  • Adopt Broad-Ranging IM Tech Solutions: Adopt broad-ranging IM tech solutions and collaborate on industry-wide standards for authentication to strengthen cybersecurity.

Recent Cyber Event in FS Sector

A recent cyber event in the financial services sector highlights the need for robust cybersecurity measures and proactive risk management strategies. Attackers exploited vulnerabilities in a key financial network to create fraudulent money transfer requests, resulting in significant financial losses.

Priorities for FS Security Professionals

Develop Advanced Regulatory Compliance Framework

  • Implement a Sophisticated Framework: Develop and implement a sophisticated framework for regulatory compliance.
  • Align Investments with Local Infrastructure: Align investments with local infrastructure and cloud technologies that meet data sovereignty requirements.

Establish Rigorous Vetting Processes

  • Rigorous Vetting and Monitoring Processes: Establish rigorous vetting and monitoring processes for supply chain security.

Leverage Innovative Technologies

  • Leverage AI and Blockchain: Leverage innovative technologies like AI and blockchain to automate tedious compliance tasks.
  • Implement Automation for Vulnerability Management: Implement automation for effective vulnerability management and proactive incident response.

Conclusion

The financial services sector faces numerous challenges in terms of cybersecurity and identity management. By developing and implementing advanced regulatory compliance frameworks, aligning investments with local infrastructure, establishing rigorous vetting processes, leveraging innovative technologies, and prioritizing cybersecurity measures, FS organizations can strengthen their security posture and protect against cyber threats. KPMG professionals can assist financial services organizations develop advanced digital solutions, advise on the implementation and monitoring of ongoing risks, and design appropriate responses to cyber incidents.