In industries where compliance and data protection are paramount — such as financial services, healthcare, insurance and telecommunications — identity security and data privacy are crucial to maintaining customer trust and ensuring operational success. As digital transformation accelerates, organizations in these highly regulated industries face the challenge of meeting stringent security requirements while delivering seamless, innovative user experiences.
To address these challenges, a variety of standards and certifications have emerged as critical frameworks for organizations handling sensitive data. They provide the necessary guidance for securing customer information, ensuring regulatory compliance, and supporting efficient customer interactions. Among the most important of these standards are Financial-grade API (FAPI) 2.0 and PSD2, each offering essential security and compliance features that businesses in regulated industries must adhere to.
In this blog post, we will explore the challenges faced by organizations in highly regulated industries and highlight the key measures they must take to protect customer data while delivering an exceptional user experience.
Addressing key challenges in regulated Identity Management
Organizations in regulated industries must tackle several critical issues to ensure secure and efficient operations:
1. Strengthening security with robust measures
Fraud and data breaches are constant threats in highly regulated environments. Advanced token binding protocols, such as Mutual-TLS (mTLS), establish secure communication channels and prevent unauthorized access. Strong Customer Authentication (SCA) and Multi-Factor Authentication (MFA) ensure that users validate their identity through multiple independent factors, creating a robust defense against malicious actors.
Comprehensive logging and traceability further enhance security by capturing detailed records of data access, authentication attempts, and system interactions. This enables organizations to monitor user behavior, identify anomalies, and quickly detect and respond to potential security threats. By maintaining an extensive audit trail, businesses can ensure compliance with regulatory requirements, facilitate forensic investigations, and strengthen overall risk management.
2. Simplifying user interactions while ensuring safety
Customers expect smooth, frictionless experiences without compromising security. Frameworks like FAPI 2.0 support consent-driven mechanisms that ensure only necessary data is shared, enhancing transparency and trust. These features not only simplify user journeys but also foster loyalty by demonstrating a commitment to privacy and user control.
Organizations can use dynamic consent flows to adapt to specific scenarios, balancing security with ease of use. For instance, high-risk transactions can trigger step-up authentication, while low-risk actions maintain a streamlined process.
3. Adapting to Dynamic Regulations with Precision
Evolving regulatory requirements such as PSD2 and Open Banking demand agility. By adopting standardized practices like audit-ready logs and granular consent management, organizations can seamlessly align with new compliance mandates without significant operational disruptions.
Automation and scalability are key to staying ahead of these changes. Modern platforms enable organizations to quickly deploy updates and adjust configurations, ensuring they remain compliant while minimizing downtime and resource allocation.
Compliance in real life: How security and compliance frameworks grant a secure yet seamless experience
Here are a few real-world examples of how security and compliance frameworks are applied across different industries, ensuring both data protection and a smooth user experience:
Open Banking: Simplifying data sharing with user consent
In a typical Open Banking scenario, a user wants to link their bank account to a budgeting or other finance app. Before the connection is established, the bank requests the user’s consent to share specific data — such as account balances or transaction history — with the app. A consent request appears, outlining exactly what data will be shared and why.
Once the user reviews and approves the consent request, the bank securely transmits only the authorized information to the app. This ensures the user retains control over their data while the connection remains secure. By incorporating secure communication protocols, the bank open enrollment protects sensitive data throughout the process, fostering trust and transparency.
Finance: Ensuring security in transaction signing
When a user initiates a high-value transfer through their bank’s mobile app, the transaction must be signed and verified. The app presents the transaction details — such as the recipient’s name, account number and the transfer amount — clearly to the user.
Before finalizing the transfer, the user is required to authenticate using multiple factors, such as a fingerprint scan or a one-time passcode sent to their phone. This step not only confirms the user’s identity but also verifies the accuracy of the transaction data. By implementing strong authentication methods and secure channels, the bank ensures the transaction is processed safely, reducing fraud risks.
Healthcare: Improving patient care with medical record access
A patient logs into their healthcare provider’s app to access their medical records, schedule an appointment and message their doctor. To provide these integrated services, the app connects securely with the provider’s medical records system. Before syncing the data, the app presents a consent screen explaining what personal health information — such as lab results, medication history, and appointment details — will be accessed and how it will be used.
Once the patient grants consent, the app retrieves the authorized data, enabling the patient to view their records, manage appointments, and communicate with their care team seamlessly. This secure, transparent process empowers patients to stay informed and in control of their health while ensuring their sensitive information remains protected.
The Path Forward with Transmit Security
With our recent FAPI 2.0 certification, Transmit Security empowers organizations in highly regulated industries to enhance security, streamline compliance and deliver exceptional user experiences. The Mosaic platform provides a trusted foundation for implementing FAPI 2.0, helping businesses:
- Prevent fraud and secure sensitive data across all touchpoints.
- Meet compliance standards with built-in consent management and audit readiness.
- Deliver frictionless, secure interactions that foster trust and loyalty.
- Reduce costs and improve agility with scalable, future-proof solutions.
As the landscape of highly regulated identity continues to evolve, Transmit Security remains your trusted partner in navigating these challenges. Contact our experts today to discover how Mosaic and FAPI 2.0 can transform your organization’s approach to security, compliance and customer experience.
