Identity theft is on the increase in financial services according to many experts, as is supported by a number of high profile occurrences recently reported in the media. The fact that more comprehensive data on the individual is being held within an increasing number of databases and is possibly used in any number of different business units, accelerates the risk of identity theft.

As the thieves are getting smarter the onus on the financial services firms is even greater to get ahead and stay there. The damage caused by identity theft is all encompassing for any enterprise, but for a financial services company, the loss of customer trust in their ability to securely hold their assets, rots away at the very essence of the business itself.

Financial service customers are under enormous pressure by commerce and now Government, through the identity card scheme, to take their data profile and security in hand, by entering data into any number of database types. This may have the laudable intent of increasing the security profile of the individual, but it equally provides a target for the entrepreneurial thief to aim at.

Thales was demonstrating their state of the art technical solution at a very timely SIBOS, considering the attention that identity theft is beginning to grab.  Thales is already extremely successful in other industries, where security measures are regarded as a paramount investment. They are now in the right place at the right time, to present their systems solutions to eager financial services companies willing to take up a resilient defence against identity theft. The Thales software when applied within the financial services industry, could quickly supply a real buffer against the profile thieves.

Thales is already a trusted long-term partner to many of the world's largest organisations; Thales e-Security offers a portfolio of products that together secure host systems, end-user terminals and the infrastructure in between. This is perfect for the financial services industry and the malaise of identity theft bombarding the industry daily if the statistics are to be believed. Their product, SafeSign, offers end-to-end multi-channel security for the e-business world, which will become valuable as new developments in mobile banking open up new client services. The risk of theft and compromised data within the client accounts increases as the easy access and use of technology becomes familiar to the customer. This was the case with web transactions ten years ago and since then loop holes have been plugged. This is an ongoing concern however, with the war never truly won.  

SafeSign is a single enterprise-wide architecture for identity management and authentication and surely hitting the hot spots within the banking industry boardrooms as you read this article.

SafeSign is an integrated solution for smart cards, tokens, PKI and EMV authentication that pretty well covers most of the immediate requirements in the retail and commercial banking world but also feasibly, high street stores as new comers to the finance industry.

Recent reports have highlighted the scandalous disregard that some banks have for their customers individual profile details. The instances of hard copy client information going out in the rubbish for the identity thief’s casual perusal are extremely bad for the overall reputation of financial services firms.

Nowadays the thief is highly competent with technology and will take up the challenge to break down the barriers presented, so the war is an ongoing worrying cause for concern and may never be won.

The ability of the criminal to hack into systems or expertly divert and extract key individual data is also on the increase. The thief’s cause can be enhanced by the modern trend of offshore, outsourced call and customer service centres to India and elsewhere. This outsourcing of call centres and customer servicing to foreign locations totally sends the risk of identity theft into the stratosphere. This is especially the case if the outsourced centre is in a poorer region where the temptation of easy money may be too attractive to turn down. Note the recent news of the new business in India of employees from outsourced call centres, selling client lists and the accompanying data.

The further away from the management of the business that client facing is, the greater the risk of security failure. It is not possible to provide a 100% insurance against a breakdown of security by any service supplier. Therefore breaches in security and the theft of a client’s identity must be counted as occasionally inevitable. The Thales system solution as one of the key weapons in the identity war might become a prerequisite of any decision to outsource. 

The financial services industry has never been as weak in its customer security as it is today and it is under constant attack. All suppliers of financial services need to undertake a comprehensive review as soon as possible of their own security environments and how they record and manage client information. This is required in both technology terms and in its processes, especially if that includes hard copies.

Thales is a software and hardware firm, which can also be classified as security experts. They produce technology that protects 90% of salary payments in the UK and with over 70% of the worlds banks are using their software and hardware in some way. As banks continue the war against the criminal the need will evolve from detection to prevention and the new regulations being implemented in Europe will assist firms in building a more secure business and technology environment. However, these should not be just a regulatory stick to beat the budget into genuine investment, but a ‘cause celebre’ to enhance the firm and the industry reputation in the eyes of the investor and client.

Thales is a company that has a real value to the financial services industry that transcends simply software implementation into front line identity prevention. Their knowledge of how to solve the problem may well be the most valuable aspect of their service.

Thales has a large global reseller network and many established partnerships with other vendors and it is via this method that the industry may get a fast track solution and an important weapon in the ongoing war against identity theft. If you are a software vendor with customers in financial services, a call to Thales might be the best call you make this year to assist your customers in getting the security that their clients need.  

It’s highly likely that the implementation of SEPA and the introduction of future European directives including MiFID will further increase the risk of identity theft.   For example, there is an underlying requirement within the MiFID directive that insists on the correct profiling of investing clients to ensure their business protection. Suitability and appropriateness tests and the requirements to hold more detailed client information will naturally increase the security risks of the investing clients.

The greater efficiency in client servicing and the reduction of costs and market risks created by straight through processing should not be a counter payment made by an increase in the risk of identity theft. Efficiency drives and improved client servicing are ongoing industry objectives, but we should now add greater protection of the client’s identity.  Thales is a front line ally in this war and already has many of the answers and technical solutions ready and waiting to be sent to the front.

By Gary Wright