The financial services market, including the banking sector, is monitored at Federal and State levels, and is subjected to various regulations. There are four main regulatory bodies at Federal level, namely – the Federal Reserve Board, Federal Deposit Insurance Corporation, the Office of Thrift Supervision, and the Office of the Comptroller of the Currency. In addition, the state legislatures and state banking authorities also have a vital role in regulation of state chartered institutions.
The list of regulations for financial and banking sector is too long and managing these is an uphill task for a financial organization.
Governance, Risks and Compliance (GRC) is quite important for financial organizations from regulatory standpoint.
Recently, changes in regulations have taken place. The amended regulations include Sarbanes-Oxley Act (SOx), OMB A-123, Basel II, Consumer Privacy, Data Privacy, SAS 70, Check 21, BSA, Anti-Money Laundering (AML), MiFID, PATRIOT Act, and Reg NMS. With the introduction of these regulations, each banking and financial services organizations is seen to develop or purchase IT Solutions that are focused at meeting the needs of regulation. This results in lack of integrated view of compliance and risks, leading to investing huge amount of money in ineffective and deficient system across the organization. The aim of such amendments is to compel companies to look at regulations as strategic tools and plan GRC while considering long term strategies and align business goals accordingly.
IAM Technology and Managing GRC
Complexities in business, with increased regulatory as well as market scrutiny, has lead to organizations adopting a structured approach in managing GRC. In this backdrop, IAM has been seen as a vital enabler for fulfilling governance requirements such as policy enforcement, assessing risks, auditing compliance and reducing frauds.
Here’s How IAM Technology is Helping in Managing GRC:
Assigning and controlling user access rights: To comply with regulatory requirements environment, financial services companies are required to securely manage the task of assigning user access rights. In a hugely networked and distributed environment, it becomes a challenge to monitor this process. With automated IAM provisioning, firms are provided with a greater level of control at the time of provisioning access, ensuring compliance to regulations and lowering policy violation risks. Further, IAM helps in verifying access rights on a regular basis, allowing companies to audit whether the access rights are complying with policies or not.
Creating Segregation Of Duties (SoD): It is essential to enforce SoD to prevent errors and fraud in financial services. The implementation of IAM is helpful in not only detecting, but also preventing and resolving access related conflicts. This in turn ensures minimizing negligent or fraudulent access and user behavior.
Providing access rights as per changes in job role: Flexible access rights are required to align with the changes in job role or termination of duties. Failing to remove a user’s access could lead to policy violations. IAM’s provisioning/de-provisioning capabilities help in eliminating such risks, as the system automatically revoke access rights once an employee leaves the organization.
Establishing secure access guidelines: In compliance with policies, IAM can implement various user access strategies. These strategies are in effect from the time a user accesses an account or application. It brings security in the IT system in addition with support capabilities such as single sign-on, web services security, and enterprise single sign-on, among others.
Generating automated reports: With IAM one may schedule or receive ad hoc compliance reports, including violation notifications triggered just in time. It also generates a comprehensive audit and process report, across applications, users, devices and multiple IT systems across an enterprise.
In comparison to any other industry, risk in the financial and banking sector is high and intrinsic. Given the structure of the industry, high number of data breaches, security threats and frauds in the sector, keeps it vulnerable. And if IT Sytems in financial services are poorly managed, the risk runs even higher. Along with this, in case of reported breach organizations come under heavy regulatory and public scrutiny.
With IAM technology many companies are able to identify risks which are associated with user access – such agility and proactive mechanism has become critical in the current business environment. It provides control and wide visibility, which can help reduce risks and effectively comply with industry and government regulations.