How Identity Access Management (IAM) Supports Security in Investment Fund Management

• How IAM systems support risk management related to security and compliance in investment fund companies.
• Why you should get IAM
• Why the banking sector’s experience can serve as a model for investment fund firms.

Investment Fund Companies (TFIs) are facing growing challenges related to technological risks, especially when it comes to data protection, in the face of increasingly sophisticated cyberattacks. In 2024, Poland saw a significant rise in such incidents, particularly in the financial sector. According to the latest report from Check Point Research the number of cyberattacks this year is expected to exceed 100,000, up while in 2023 it was around 80,000

Identity Access Management (IAM) is a critical solution that can significantly enhance both security and regulatory compliance across this sector. Let’s take a closer look at how IAM can help TFIs protect client data and what advantages come with adopting it.

What Is Identity Access Management?

Identity Access Management (IAM) is a set of processes, technologies, and policies, that allow organizations to manage user identities and control access to information resources. IAM systems help manage user permissions, ensuring that only authorized individuals have access to specific data or applications.

In the context of investment fund companies (TFIs), this means not only protecting client data but also ensuring compliance with regulations regarding the storage and processing of personal information.

Challenges of Investment Fund Companies in Data Management

Investment fund companies face numerous challenges when it comes to data and access management. Unsecured information can lead to financial penalties and reputational damage, which decreases client trust. Any oversight in this area can have serious consequences for an institution’s market standing.

One of the key issues is manual permission granting, which increases the risk of errors and delays incident response. Automating access processes reduces human error and makes it easier to align permission levels with user needs. Traditional access management systems often lack flexibility, which makes audits and maintaining compliance with regulations difficult.

Investment Funds must adhere to regulations such as GDPR, PSD2, and AML, which require secure data storage and strong authentication mechanisms like Strong Customer Authentication (SCA). This drives the need for modern solutions that combine security with user convenience, for example, replacing passwords with biometric authentication.

Another pressing challenge is managing access in hybrid environments that combine legacy systems with cloud-based solutions. The variety of platforms and devices complicates consistent login and authorization processes, increasing exposure to threats such as phishing.

New technologies like blockchain, Self-Sovereign Identity (SSI), and AI tools offer valuable support for process automation and fraud detection. At the same time, clients expect an omnichannel experience with fast service across all channels. In this context, security policy must be a priority to meet the growing requirements and threats.

Are you concerned your business may be vulnerable to cyberattacks? Read our article on the most damaging types of attacks and how to defend against them.

Why You Should Get an IAM System

Implementing Identity and Access Management (IAM) systems in investment fund companies brings significant benefits across security, operational efficiency, and customer satisfaction: 

 Identity Management

IAM systems enable precise identity management for both employees and clients throughout their lifecycle with the Investment Fund. From onboarding and role-based updates to account deactivation upon termination, these processes are automated and adapted to the organization’s needs.

 Single Sign-On (SSO) Across Applications

With Single Sign-On functionality, users can access multiple applications using a single set of login credentials. This improves daily operations and reduces risks associated with forgotten passwords. Combined with multi-factor authentication (MFA), SSO adds a critical layer of protection, making unauthorized access to sensitive data far more difficult.

 Identity Verification

Using algorithms, IAM systems are able to analyze user behavior and identify any suspicious activities. This proactive approach allows for immediate responses to potential threats, significantly strengthening system-wide security.

 Risk-Based Authentication

Advanced algorithms evaluate user behavior and context in real time to assess risk. Based on this analysis, systems can block access or flag high-risk activities, enabling faster, automated responses to security incidents.

 Operational Cost Optimization

Automation of processes related to identity and access management translates into a significant reduction in operating costs. Less time spent on manual data management means greater team efficiency, which allows Investment Funds to focus on strategic business development.

 Regulatory Compliance

IAM systems help ensure compliance with data protection laws such as GDPR and anti-money laundering (AML) regulations. Automation also allows Investment Funds to quickly adapt to changing legal requirements with greater ease and accuracy.

 Improved User Experience

Modern IAM solutions support the creation of intuitive transactional platforms that enhance user experience. Clients gain easy, real-time access to their investment portfolios and can manage them easily, meeting the expectations of today’s digital investors.

 Stronger Competitive Positioning

Investing in modern technologies like IAM helps Investment Funds stand out in an increasingly digital market. Clients, and especially young investors, expect innovative, secure solutions, and firms that implement IAM effectively are better positioned to meet those expectations and attract new business.

Why you should have an IAM System

Lessons from the Banking Sector

Identity and Access Management implementations in the banking sector offer valuable insights for investment fund companies. Notable examples include:

BHF-BANK

By implementing an IAM system, BHF-BANK was able to centralize identity and access management. As a result, access provisioning time improved by 40%, and the bank saved 20 hours per week on identity-related administrative tasks. This optimization allowed resources to be reallocated toward core business activities.

European Central Bank

The European Central Bank implemented a unified IAM platform that enables delegated management of user identities and access across its affiliated institutions. This approach reduced administrative workload and improved data security, critical in light of increasing regulatory demands.

Investment Funds can draw inspiration from these experiences to better protect client data and streamline their operational processes.

Protecting Client Data Effectively

Implementing Identity and Access Management systems is a strategic investment for that delivers measurable benefits. Automating access control helps eliminate human error, while advanced authentication mechanisms significantly enhance the protection of sensitive client data. By using IAM, companies can build stronger trust with investors, contributing to long-term stability and greater market competitiveness.

Want to learn more about digital transformation in the investment funds?

Check out our e-book and our article on advanced AI chatbots to get a better understanding of modern tools shaping the financial industry