How Financial Institutions Can Combat Identity-Based Threats and Strengthen Cybersecurity

By Jason Morano, CCSP, Security Engineer at Quest Software

In the face of escalating cyber threats, financial institutions are under increasing pressure to protect sensitive data and safeguard against identity-based attacks. Microsoft reports[1] that credential misuse is a factor in 99% of the 600 million daily identity attacks against Entra ID. At the same time, according to Gartner, Microsoft Active Directory and Entra ID are used by over 90% of organizations[2] globally. It’s clear that protecting identity infrastructure is becoming a top priority.

Financial institutions are increasingly becoming prime targets for cybercriminals due to the large volumes of sensitive data and, obviously, access to customers’ assets they handle. As cyberattacks are getting more sophisticated, fragmented identity security solutions are no longer sufficient. In this context, adopting an Identity Threat Detection and Response (ITDR) strategy is critical to improving the cybersecurity of financial institutions.

Understanding ITDR: A Necessity for the Finance Industry

Inherently, ITDR is a cohesive security approach rooted in the concept of in-depth defence. It combines continuous monitoring and response mechanisms with proactive measures to establish a resilient and adaptable security posture. Establishing core ITDR strategies involves mitigating vulnerabilities, reducing the attack surface, continuously monitoring for unusual activity, detecting potential threats in real-time, and providing mechanisms for swift responses to security incidents.

Jason Morano

Research by Quest Software reveals that 84% of organizations adopting ITDR measures have reaped benefits, with 36% reporting that their expectations have been fully met or exceeded. This effectiveness highlights the value of ITDR in addressing identity-based threats.

By leveraging machine learning algorithms, ITDR solutions can automatically identify anomalies in user behaviour, pinpoint compromised credentials, and flag suspicious activities before they escalate into major security incidents.

Practical Steps for Implementing ITDR in Financial Institutions

The effectiveness of ITDR strategies in finance enterprises hinges on their alignment with the organization’s unique risk profile and business objectives. Tailoring these strategies to address vulnerabilities and threats specific to the financial sector helps ensure the security of sensitive financial data and the continuity of critical operations. Here are 3 essential steps to start building a robust ITDR strategy:

  • Assess and Prioritize Identity Risks

Financial institutions should begin by conducting a comprehensive risk assessment of their identity infrastructure, including Active Directory (AD), Entra ID and other identity systems. This involves identifying vulnerabilities, such as stale credentials, misconfigurations, or excessive privileges, which are common entry points for cyberattacks. Organizations should Prioritize risks based on their potential impact on critical operations, compliance requirements, and customer data security.

Above-mentioned Quest’s research indicates that only half of companies currently use an identity infrastructure security solution, and just 31% test their identity disaster recovery plans. This gap highlights the need for financial institutions to take a more proactive approach to risk assessment and mitigation.

  • Integrate Advanced Monitoring and Detection Tools

Deploy ITDR tools equipped with real-time monitoring, machine learning, and anomaly detection capabilities. These tools should focus on identifying unusual behaviour, such as unauthorized access attempts or credential misuse, and provide actionable insights to mitigate threats. Integration with existing systems, such as Security Information and Event Management (SIEM) solutions, creates a seamless approach to monitoring and response.

  • Establish a Cross-Functional ITDR Strategy

Beyond technical measures, the success in ITDR implementation requires collaboration across departments and the institution’s dedication to fostering a robust cybersecurity culture. Develop clear protocols for threat detection, response, and recovery, ensuring they align with the institution’s broader security strategy. Regular training and simulations should be conducted to equip employees with the skills to respond effectively to identity-related threats.

In general, promoting an environment of continuous learning, vigilance, and adherence to best practices is essential. Every stakeholder within the organization, from frontline employees to executive leadership, must understand their role in safeguarding financial assets and be empowered to act effectively within the cybersecurity ecosystem.

Conclusion

By adopting ITDR as a strategic priority, financial institutions can strengthen their cybersecurity posture, improve compliance, and build resilience against evolving threats. A well-informed understanding of identity-based attacks enables precise implementation of preventive controls, effectively countering threats from password spraying to lateral movement and privileged escalation. This ensures the long-term security of the financial ecosystem.

By taking proactive steps to implement ITDR, financial organizations can stay ahead of cybercriminals and safeguard critical assets, reinforce cybersecurity excellence, and fortify the organization’s overall defence against identity-based threats.


[1] Microsoft Digital Defense Report 2024.

[2] Gartner, Inc., “Implement IAM Best Practices for Your Active Directory,” 2024.

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