From authentication to data protection: a Must-have journey of every financial institution

Today, as most transactions have shifted to digital channels, authentication has become the first step in safeguarding the entire system. Financial institutions are under dual pressure: on one side, ensuring a seamless customer experience; on the other, protecting personal data against increasingly sophisticated threats. This article provides a strategic perspective, from digital authentication to data protection frameworks, to help leadership make informed decisions on technology investment and governance.

Authentication as the First Step

Authentication is the process of verifying the identity of an entity before granting access or enabling transactions. If organizations stop at the stage of simply confirming “whether authentication is successful,” the layers behind it include authorization, transaction recording, auditing, and encryption remain vulnerable to attack. In reality, most incidents involving asset loss or data leakage originate from weaknesses at the authentication stage: compromised accounts, stolen OTPs, or spoofed biometrics. Therefore, financial institutions must regard authentication as a strategic component of personal data protection, not just an operational function.

However, if authentication is treated as an isolated step, organizations may face several risks:

• Fraud and account takeover: Cybercriminals can exploit OTP vulnerabilities, SIM-swap schemes, or social engineering to gain unauthorized access.

• Biometric data leakage: Storing or transmitting biometric templates insecurely may cause long-term consequences, as biometrics cannot be changed like passwords.

• Regulatory compliance: In case of incidents, banks may face severe penalties under personal data protection and payment safety regulations.

• Brand impact: Loss of customer trust increases acquisition costs and reduces profitability.

These risks are not purely technical, they are strategic responsibilities of the Board of Directors and Executive Management.

Technology Framework: From Authentication to Data Protection

To transform authentication into an effective security layer, financial institutions need to establish a comprehensive technical framework, including:

1. Strong Authentication

 Implementation of MFA, prioritizing passwordless solutions such as FIDO2 and Passkeys, combined with biometric authentication (face, fingerprint) with liveness detection. Device attestation should also be included to prevent compromised devices.

2. eKYC and eKYB

Using eKYC for individuals and eKYB for enterprises automates initial identity verification, cross-checking against authoritative databases (e.g., national citizen database, business registration portal) to minimize fake profiles.

3. Identity and Access Management (IAM)

Deploy IAM with the principles of least privilege, RBAC/ABAC, and Privileged Access Management (PAM). IAM systems must integrate with internal approval workflows and support audit trails.
Data Protection

Encrypt data both at-rest and in-transit, apply tokenization to sensitive data, implement Data Loss Prevention (DLP), and adopt masking techniques when sharing data with third parties.

4. Monitoring and Detection (SIEM/UEBA)

Centralized SIEM/UEBA enables detection of abnormal behavior, early warning, and automated incident response. Comprehensive logging and traceability are prerequisites for forensic investigation.

5. Biometric Anti-Fraud Layers

Implement liveness detection, anti-spoofing, and regular AI model testing to ensure accuracy, coupled with explainability to make automated decisions transparent.

6. Secure API Architecture
   Use API Gateways, mutual TLS, rate limiting, and HSM-based key management. While microservice and cloud-native architectures accelerate integration, they must be reinforced with robust security policies.

Governance and Compliance: The Role of Leadership

Leadership must establish a clear governance framework: appointing a Data Protection Officer (DPO), defining data-related risk appetite, and approving the security roadmap. Key performance indicators (KPIs) to be monitored include: mean time to detect (MTTD), mean time to respond (MTTR), proportion of transactions with MFA, proportion of accounts registered with biometrics, number of data leak incidents, and audit pass rate. Embedding security KPIs into executive performance evaluation ensures that security becomes a strategic priority rather than a technical item.

Culture, People, and Process

Technology cannot replace people. Security awareness programs, incident response playbooks, and human-in-the-loop models are essential. Business staff must understand authentication logic such as how to respond when the system raises an alert. Product teams need to recognize security risks from the design stage. Legal departments must be prepared with reporting procedures in the event of data violations.

Suggested Roadmap (6–12 months)

• Conduct assessment and gap analysis: evaluate current authentication, IAM, and data encryption practices.

• Pilot eKYC/eKYB: test with a critical business process.

• Deploy strong authentication for critical transactions: integrate FIDO2 and biometric authentication into mobile apps.

• Expand IAM and encryption: implement PAM and tokenization for sensitive data.
  Activate SIEM and anti-fraud: enable comprehensive monitoring and fine-tune detection rules.

• Training and culture: roll out awareness programs and incident response exercises.

FPT eID: Comprehensive Authentication and Data Protection Platform for Financial Institutions

In an era where personal data has become both a strategic asset and a prime target of cyberattacks, selecting a reliable authentication and data protection solution is an urgent necessity for financial institutions. FPT eID, developed by FPT, was designed to meet this exact requirement.

FPT eID offers a comprehensive suite of solutions:

• eKYC: Fast and accurate online customer identification in compliance with regulations of the State Bank of Vietnam.

• FPT.IDCheck: Identity verification and document anti-counterfeiting using scanning technologies, chip-based ID analysis, and facial biometrics.

• eKYB: Enterprise identification and authentication to support partner risk management and compliance with AML and extended KYC requirements.

The distinct advantage of FPT eID lies in its integration of advanced biometric authentication (facial and fingerprint) with chip-based ID data analysis, eliminating the inherent limitations of OTP. The solution is also designed for scalability, suitable for banks, financial companies, and large enterprises.

By applying AI and multi-layered security, FPT eID not only helps financial institutions comply with personal data protection regulations but also builds robust digital trust with customers. This enables enterprises to accelerate digital transformation, expand services securely, and optimize user experience.

Conclusion

For the leadership of financial institutions, the shift from basic authentication to a comprehensive data protection system is no longer optional, it is mandatory. Investment in strong authentication, eKYC/eKYB, IAM, encryption, and monitoring not only reduces compliance and fraud risks but also establishes a trusted foundation for digital product development. Executives must make timely strategic decisions: prioritizing resources for a 6–12 month security roadmap, embedding security KPIs into performance metrics, and selecting technology partners with proven integration and compliance capabilities.