Identity management in banking: how to protect critical access points in the financial sector

In banking, poorly managed access isn’t just a security issue. It’s a regulatory, operational, and reputational issue all at once. And the cost of learning the hard way can reach an average of $6.29 million per incident—26% higher than in other sectors, according to IBM. That’s why identity management in banking cannot be reactive: it must be continuous, centralized, and verifiable to any auditor at any time.

In response, identity management in banking provides policies and technologies capable of curbing these risks. The goal? To ensure that only those who need access to resources can have it, while also guaranteeing regulatory compliance.

 

Below, we address the main challenges in identity management in banking and provide a practical checklist of essential elements for a well-designed IAM platform for banking and financial services.

What challenges does identity management in banking face, and what are the solutions?

Challenge 1: Blind spots across different types of identities

Identity management in banking must protect an ecosystem that is complex by nature, where employees, third parties, vendors, privileged accounts, technical identities, and critical access to sensitive systems all coexist.

In this environment, blind spots can easily arise: access with excessive privileges by default, active accounts that are no longer in use, permissions inherited after a role change, or third-party access that remains open longer than necessary. Each of these cases can become an entry point for attackers and facilitate tactics such as privilege escalation.

• Soffid Solution: Soffid IGA centralizes visibility and governance over all types of identities from a single platform. This enables:
  • Identifying excessive access rights, inactive accounts, accumulated permissions, and privileges that no longer serve a real need.
  • Apply least-privilege policies and Role-Based Access Control (RBAC) so that each identity accesses only the resources it needs.
  • Automate review and recertification processes to eliminate obsolete access or unnecessary privileges.
  • Control third-party and vendor access with limited, traceable, and revocable permissions.
  • Maintain a centralized view of who accesses what, why, and for how long.

 

Challenge 2: Managing privileged accounts

Protecting privileged accounts poses a particularly critical challenge in identity management within the banking sector. These accounts carry a high level of risk: they can access large volumes of sensitive data, modify security configurations, intervene in critical systems, or perform actions that directly impact financial operations.

When these accounts are not properly governed, the risk lies not only in who has access, but also in what they can do, for how long, and with what level of traceability. A poorly managed privileged account can become a fast track to security incidents, regulatory noncompliance, or escalation within the banking environment.

 

• Soffid Solution: Soffid PAM protects privileged accounts by integrating them into a unified identity and access management strategy. This enables:
  • Monitor who accesses critical systems, sensitive data, and security configurations, as well as when and with what permissions.
  • Manage the lifecycle of privileged accounts following account deactivation, role changes, or modifications to user responsibilities.
  • Log privileged activity for audits, regulatory compliance, and incident investigations.
  • Reduce unnecessary permanent access by implementing controls that are better tailored to the context and the actual need for each access.
  • Prevent PAM from operating as a silo by integrating privileged account management with the rest of the IAM platform.

 

Challenge 3: Regulatory compliance

Given the highly sensitive nature of the data and systems it manages, identity management in banking must comply with regulations such as DORA, PCI DSS, ISO 27001, EBA Guidelines, and other local and international regulations.

In the European context, DORA, the Digital Operational Resilience Act is particularly relevant because it requires financial institutions to strengthen their digital resilience, manage IT risks, and exercise stricter control over third parties and technology providers. This directly impacts identity and access management: who accesses systems, from where, with what privileges, for how long, and under what auditable conditions.

 

• Soffid Solution: Soffid centralizes and logs decisions related to identities, access, and privileges so that every action is traceable and can be demonstrated to auditors, regulators, or compliance teams. This enables:
  • Generate auditable evidence of who accesses what, when, from where, and with what permissions.
  • Enforce consistent policies across the entire IAM ecosystem, including employees, third parties, vendors, and privileged accounts.
  • Control access by third parties and vendors, a particularly critical issue under the DORA framework.
  • Facilitate audits and compliance reviews through complete traceability and reporting on identities, access, and privileges.
  • Demonstrate continuous control, not just document security policies on paper.

 

Identity Management in hybrid or “legacy” environments

Hybrid environments and the persistence of legacy systems are a widespread reality in identity management within the banking sector. Many financial institutions operate alongside legacy applications, on-premises infrastructure, cloud services, critical internal systems, and tools that do not always share the same identity or access model.

This fragmentation hinders visibility, multiplies control points, and can lead to inconsistencies in policy enforcement. When each environment is governed separately, duplicate accesses, permissions that are difficult to audit, and manual processes increase, all of which slow down operations and elevate risk.

 

• Soffid Solution: Soffid unifies identity and access management across hybrid, cloud, and legacy environments through a converged IAM architecture. This enables:

• • Centralized control over identities, applications, internal systems, privileged accounts, and critical access.
  • Integration with fragmented environments and legacy systems without relying on isolated tools for each environment.
  • Enforcement of consistent access policies across legacy infrastructure, modern applications, and cloud services.
  • Reduction of operational fragmentation and improved visibility into identities, permissions, and roles.
  • Maintenance of traceability, control, and auditability in complex banking architectures.

 

What to look for in a banking identity management solution that can address these challenges?

An essential checklist for selecting a banking identity management platform should include:

 

• Real-time visibility.
• Unified management even in fragmented environments.
• Full traceability and audit-ready reports.
• Active least-privilege policies and phishing-resistant authentication.
• Implementation of RBAC, just-in-time permissions, and service account rotation.
• Automation of identity lifecycle management (onboarding and offboarding) and recertification campaigns.
• PAM governance for privileged accounts.

Soffid’s identity management solutions protect banking and financial services ecosystems through a converged IAM platform that integrates IGA, AM, PAM, and IRC capabilities. Soffid centralizes visibility, governs critical access, protects privileged accounts, and maintains complete traceability of identities, permissions, and decisions.

 

You can see how it works in practice in our identity management success story in the financial sector, which demonstrates how to strengthen control over critical access in a real-world financial environment.

 

Want to know how Soffid protects critical access in banking environments? Tell us about your architecture, and we’ll show you how it works in practice. Contact our team.