Application security and risk management in financial organizations

Financial services companies (finservs) are under pressure to deliver secure software faster like never before. Customer expectations are at an all-time high and consumers are hungry for new capabilities and experiences. In many cases, startups are outpacing large financial institutions in this area due to their ability to innovate rapidly using cutting-edge technologies.

Additionally, the challenge of keeping up with security and compliance is intensifying. The regulatory landscape is ever-evolving, with new requirements popping up constantly; compliance costs are rising; and many finservs are bogged down by outdated, legacy systems.

In order to stay both competitive and compliant, finservs need to take a hard look at their current processes and technologies, especially when it comes to the software development lifecycle (SDLC). Many financial institutions are still relying on manual processes to ensure security and compliance across software design, development, and delivery to the cloud, hybrid, and on-premises environments. This not only inhibits innovation by slowing finservs down — it puts them at an increased risk for noncompliance. 

While this manual approach might have worked in years past, agile development and the emergence of generative AI-powered technologies like coding assistants have pushed financial institutions to the brink. Finservs are contending with exponentially more code changes than just a few years ago, and they simply cannot keep up with manual security reviews to ensure compliance. 

Finservs need a scalable and reliable way to track material changes to their code and automate security controls across the SDLC. This article will take a closer look at why these capabilities are critical, and how finservs can use them to support innovation and uphold security.

Tracking material code changes

Finservs’ software architectures are changing by the minute as they race to build and deliver new features and capabilities to keep customers happy. Naturally, this translates to a massive amount of code changes with varying security implications. Material code changes can be defined as any update to an organization’s code that could potentially introduce a vulnerability into its applications, infrastructure, or open source code.

Finservs need continuous visibility into material code changes across the entire SDLC in order to have a solid understanding of their risk posture — the saying “you can’t protect what you can’t see” applies here. This requires tools that automatically detect and analyze code changes to determine whether they’re material so that finservs can focus their security efforts where they’re needed most (more on this shortly).

For example, an automated material code change detection tool might alert a finserv to a code change that touches customers’ personally identifiable information (PII). With this knowledge, the organization can then enact appropriate security measures to ensure PII stays safe. 

Tracking material code changes is also critical for meeting the Securities and Exchange Commission’s (SEC) disclosure rules and other compliance requirements. By automatically keeping an ongoing record of material code changes, finservs can produce reliable and consistent evidence of change management to regulators and auditors should they need to. 

Automating security controls

Once a finserv has visibility into all the material code changes occurring across its software architecture at any given point in time, it can apply automated security controls. These controls must be applied across the entire SDLC to maintain a strong security posture without sacrificing agility.

This can include automated security scanning tools that are integrated into continuous integration and continuous delivery (CI/CD) pipelines to detect code design flaws and potential application programming interface (API) vulnerabilities. Finservs should also consider implementing tools that automatically scan third-party code libraries and dependencies for vulnerabilities.

With automated security controls, finservs can efficiently pinpoint and remediate vulnerabilities since they’re not drowning in a sea of security alerts. This empowers finserv developers to address security issues proactively so they can spend more time coding and less time manually fixing bugs. Automated security controls also reduce overall development costs by identifying risks before they go into production.

In a highly regulated industry like financial services, it can be challenging to strike a balance between maintaining developmental velocity and staying compliant. By tracking material code changes and automating security controls, finservs can improve application security and reduce risk while simultaneously delivering innovative new experiences to stay competitive.