In today’s rapidly evolving digital landscape, financial institutions face a growing threat from an often-overlooked source: shadow IT. Shadow IT is when employees use applications, devices, and cloud services that their company’s IT department has not sanctioned. This can create security vulnerabilities and compliance concerns. Crackdown on Unauthorized Applications While these applications may seem like a win for employees, they aren’t authorized by employer. Yet, they pose grave security risks that leave sensitive financial information open to cyber attackers. Calloutcoin.com provides them with the complete and comprehensive breakdown on NFT standards, metaverse technologies, digital identity solutions, and emerging DeFi trends. In this piece, we take a closer look at the dangers of shadow IT in our connected financial services ecosystem. We’ll take Cerby as a case study and provide insights into how companies large and small can find and protect their shadow IT landscapes.

Understanding the Shadow IT Threat

Shadow IT is a major concern in every industry, but it presents an especially looming threat to financial services. These organizations are stewards of terabytes of sensitive information, including customer PII, financial data, transaction information, and proprietary business intelligence. The programmatic use of unsanctioned applications creates multiple security holes that can be used by bad actors to disrupt operations. Risks of shadow IT can lead to data breaches, compliance violations, and reputational harm.

Overview of Current Failures in Banks' Identity Verification

One of the key ways shadow IT opens security gaps is with weak or absent identity management controls. When employees resort to shadow IT, they circumvent the rigorous security measures that the IT department has been directed to implement. This all can lead to the use of easily compromised passwords. This can further result in failure to deploy multi-factor authentication or adhere to data encryption protocols. In fact, recent statistics show incidents are on the rise 63%, with exposure from shadow IT assets increasing 40% just in 2021. This recent development demonstrates the increasing threat that such undocumented applications still continue to pose.

Implications for Consumers and Financial Institutions

The risks and consequences of shadow IT for consumers and financial institutions are extensive. For consumers, a data breach resulting from shadow IT can lead to identity theft, financial loss, and a loss of trust in the institution. For financial institutions, the sting can be regulatory penalties, legal exposure, and reputational harm. Not to mention that the price of attempting to repair a security breach can be daunting. This can include the costs of incident response, customer notification, and system recovery. Today, nearly four in five employees freely confess to turning to shadow IT to get their jobs done. This illustrates just how pervasive the epidemic has spread.

The Pervasive Nature of Shadow IT

Compared to every other year, Shadow IT has become extremely popular. It’s employee-driven. Employees want greater ability to access and use cloud-based applications, which is fuelling this trend. The reason so many employees resort to shadow IT is because it’s easy. They feel it’s more tailored to their needs than the applications that the IT department is providing. Unfortunately, this convenience comes with a heavy security price tag.

Why Shadow IT Thrives

As we all know, the shadow IT issue is massive. Research by Netskope found that a staggering 97% of cloud applications used within the average enterprise are considered shadow IT—not approved by the central IT department. This statistic alone depicts just how far shadow IT has seeped its way into organizations. It uncovers the extreme challenges that IT departments face just trying to corral it. In addition, a staggering 60% of office workers use shadow IT. They say they find it easier to use than working together with their own company’s IT staff. Together, this demonstrates that IT departments need to be agile and reactive to the needs of employees. They need to provide practical, easy to use tools that fulfill those needs.

  • Ease of Access: Cloud-based applications are readily available and easy to deploy, allowing employees to quickly find and use solutions that meet their immediate needs.
  • Perceived Efficiency: Employees often believe that shadow IT applications can help them be more productive, especially if they find the sanctioned applications cumbersome or inadequate.
  • Lack of Awareness: Many employees are unaware of the security risks associated with using unauthorized applications and do not realize that they are potentially exposing sensitive data.

The Scale of the Problem

It’s no secret the expansive use of shadow IT represents some of the most serious cybersecurity risks facing financial institutions. These threats encompass data breaches, data leaks, insider threats, and the risk of data exfiltration. Shadow IT applications are those that aren’t controlled or configured by the corporate IT department. This leads them to insufficiently cover key security controls and monitoring capabilities available within approved applications. This uneven reality creates a cyberattack-friendly environment for our nation’s businesses.

The Security Risks of Shadow IT

Some of the specific security concerns associated with shadow IT include:

Specific Security Concerns

With the expansion of remote work, the shadow IT crisis has only gotten worse. With a permanent increase of employees working remotely, they are at an ever-growing risk for using unsanctioned applications to get their job done. Data shows that 65% of employees already working remotely before the pandemic are currently using some form of shadow IT, compared to only 31% working remotely after the pandemic. Maintaining enterprise security organizations need to prioritize offering secure and authenticated remote access solutions. Beyond that, organizations must increase awareness among employees of the risks that come with shadow IT.

  • Weak Authentication: Shadow IT applications may not enforce strong password policies or multi-factor authentication, making them vulnerable to password-based attacks.
  • Lack of Encryption: Data stored in shadow IT applications may not be encrypted, making it easier for attackers to access sensitive information.
  • Unpatched Vulnerabilities: Shadow IT applications may not be regularly patched for security vulnerabilities, leaving them exposed to known exploits.
  • Data Loss Prevention (DLP) Gaps: Shadow IT applications may not be integrated with the organization's DLP tools, making it difficult to prevent sensitive data from being exfiltrated.

The Impact of Remote Work

To solve the shadow IT challenge, you need to start by discovering unsanctioned applications. Then, evaluate the security risks to that data and apply appropriate security controls to mitigate those risks. Financial institutions should take action to carefully monitor their enterprise shadow IT. They’re under pressure to deliver more personal, sensitive, and private data.

Identifying and Securing Shadow IT Environments

The first step to protecting shadow IT environments is finding out which unapproved apps are in use. This can be done through a variety of methods, including:

Discovery and Assessment

Once shadow IT applications have been detected, they must be evaluated for risk. Step 1 Identify the security controls for each application. Next, think about the sensitivity of the data it holds and what a security breach would mean.

  1. Network Monitoring: Analyzing network traffic to identify applications that are not on the approved list.
  2. Endpoint Scanning: Scanning employee devices to identify installed applications.
  3. Cloud Access Security Broker (CASB) Solutions: Using CASB solutions to monitor cloud application usage and identify shadow IT applications.
  4. Employee Surveys: Conducting surveys to ask employees about the applications they use for work purposes.

Once an organization has evaluated the risk profile of shadow IT applications, they should apply relevant security controls to minimize the potential risks. These controls may include:

Implementing Security Controls

Cerby is a cybersecurity company dedicated to empowering organizations to find, understand, and protect their shadow IT landscapes. Cerby’s innovative platform provides unprecedented visibility into the shadow applications your employees use. It also assesses the threat posed to those applications and guides organizations in implementing security measures to mitigate those risks. Cerby’s approach plays directly into the needs of financial institutions. These organizations require a very high detail and level of security and compliance. The average enterprise has over 1,000 cloud apps in use. This deluge has created a vacuum in which IT teams can’t keep track of all the approved and unapproved applications. Cerby enables organizations to take on this challenge with a holistic understanding of their application landscape.

  • Blocking Unauthorized Applications: Using firewalls and other network security devices to block access to high-risk shadow IT applications.
  • Implementing Data Loss Prevention (DLP) Policies: Configuring DLP policies to prevent sensitive data from being stored in shadow IT applications.
  • Enforcing Multi-Factor Authentication: Requiring employees to use multi-factor authentication for all applications, including shadow IT applications.
  • Providing Security Awareness Training: Educating employees about the risks of shadow IT and how to avoid using unauthorized applications.

Cerby's Approach to Shadow IT

Shadow IT continues to be an enormous security threat to financial institutions. By actively discovering and protecting their shadow IT landscape, these organizations can greatly reduce those risks. Follow the practical steps listed in this post to better protect your sensitive data. By effectively implementing solutions such as Cerby, financial institutions can further protect customers’ trust and confidence. More than half of all cyber attacks today come from shadow IT, highlighting the need to confront this problem head on. It’s imperative for financial institutions to put shadow IT security first to protect their financial and intellectual capital. When employees opt for shadow IT solutions, established software usually gets underutilized. This overloaded preference helps drive the estimated $30 billion wasted annually. This demonstrates the growing need to deliver user-friendly, engaging, and impactful sanctioned applications to compete in the needs of your employee’s workforce.

Key Features of Cerby's Platform

Some of the key features of Cerby's platform include:

  • Application Discovery: Automatically discovers and identifies shadow IT applications being used by employees.
  • Risk Assessment: Assesses the risk of each application based on factors such as security controls, data sensitivity, and compliance requirements.
  • Security Control Implementation: Helps organizations implement security controls such as multi-factor authentication, data encryption, and DLP policies.
  • Compliance Reporting: Provides reports that demonstrate compliance with industry regulations and standards.

Benefits of Using Cerby

By using Cerby, financial institutions can gain numerous benefits, including:

  • Improved Security Posture: Reduces the risk of data breaches and other security incidents by securing shadow IT environments.
  • Enhanced Compliance: Helps organizations comply with industry regulations and standards.
  • Reduced IT Costs: Lowers IT costs by automating the discovery, assessment, and remediation of shadow IT risks.

Conclusion

Shadow IT poses a significant security threat to financial institutions, but by taking proactive steps to identify and secure their shadow IT environments, these organizations can mitigate the risks. By implementing the strategies outlined in this article and leveraging solutions like Cerby, financial institutions can protect their sensitive data and maintain the trust of their customers. More than half of all cyber attacks now stem from shadow IT, underscoring the urgency of addressing this issue. It's crucial for financial institutions to prioritize shadow IT security to safeguard their assets and reputation. Existing software can also go unused if employees prefer shadow IT solutions, contributing to the $30 billion wasted each year. This highlights the importance of providing user-friendly and effective sanctioned applications to meet the needs of employees.