A practitioner’s perspective
Financial institutions depend on a multitude of technology providers to support important financial workflows, protect sensitive information, and help maintain reliable services for their customers. Given the regulatory environment and threat landscape, it is important to build solutions with a security-first mindset. Security must be part of how products are conceived, built, deployed, operated, and improved.
Security is foundational and a shared responsibility throughout the product development lifecycle. Product teams help define the customer and risk requirements. Architects and developers incorporate secure design and development practices. Operations teams protect the production environment and support high availability. Security, privacy, governance, and risk teams provide oversight, challenge, monitoring, and assurance. Customer-facing teams help translate those practices into clear expectations and effective support.
Understand the financial services environment
Building solutions for financial institutions requires a deep understanding of the operating environment in which the product will be used. Customers may include commercial banks, credit unions, equipment financing and leasing companies, fintech players, agricultural lenders, solar finance, and other financial services organizations. Their requirements are shaped by the strong need to protect sensitive information, execute critical business processes, meet regulatory requirements, manage third-party dependencies, and maintain operational resilience.
The threat environment is also continually evolving. Attackers continue to use credential compromise, ransomware, social engineering, software vulnerabilities, and supply-chain weaknesses. At the same time, generative AI is making it easier to create more convincing impersonation, phishing, and fraud campaigns at greater speed and scale.
The threat landscape is also becoming increasingly interconnected and focused on the technology ecosystem. Verizon's 2026 Data Breach Investigations Report found that 31% of breaches began with software vulnerabilities and that third-party involvement was present in 48% of breaches. These findings reinforce the importance of secure development, vulnerability management, and effective third-party risk oversight.
Financial institutions operate within a stringent regulatory environment that emphasizes customer information protection, privacy, and operational resilience. The Gramm-Leach-Bliley Act (GLBA), FTC Safeguards Rule, SEC Regulation S-P, and state regulations such as New York's Cybersecurity Regulation (23 NYCRR Part 500) establish important expectations for safeguarding information and managing risk. Beyond regulatory compliance, security incidents can affect customer confidence, operational performance, business continuity, and institutional reputation.
Start with security and privacy by design
Security and privacy considerations need to be incorporated from the beginning as the products and capabilities are planned, designed, and evolved. This includes understanding what information the solution handles, how that information moves through the environment, who requires access, and how the information should be protected throughout its lifecycle. Key considerations include:
- Information classification and establishment of appropriate handling requirements.
- Protection of confidential and restricted information based on business need and authorized access.
- Usage of encryption and secure transmission methods appropriate to the data and service.
- Protection of encryption keys and sensitive credentials through controlled, monitored security-management practices.
- Logging and monitoring to support security operations, investigation, and accountability.
- Consideration of retention, transition, return, and secure disposal requirements during product and service design.
This approach helps teams address security and privacy decisions early in the software lifecycle before they become costly or difficult to change. It also helps customers understand how solutions support their own data-protection and risk-management responsibilities.
Build security into the development lifecycle
Secure software development is a central component of building trusted solutions and reducing operational, compliance, and reputational risk. Mature organizations support security awareness through structured training programs and designated Security Champions who help embed secure practices throughout development activities.
Security testing is integrated into the development process. Automated testing capabilities evaluate both application code and its operational behavior to identify and address vulnerabilities before software is released into production, and when combined with secure coding practices and peer reviews, enable earlier issue detection and remediation, reducing risk and improving software quality, as noted in Google's DevOps research.
External testing provides an additional layer of independent validation. Mature organizations conduct annual penetration testing through third parties, review results, and remediate findings according to defined timelines. Financial institutions may include independent testing and remediation expectations within contractual agreements.
Independent SOC examinations can benefit both solution providers and customers. For providers, the process creates structured accountability around control ownership, evidence collection, issue remediation, and operational discipline. For customers, a SOC 2 Type II report provides independent evidence that controls relevant to security, availability, processing integrity, confidentiality, or privacy are operating effectively over time. These reports also help simplify due diligence and vendor-risk review activities.
Development and security teams should maintain a strong working relationship through regular reviews of testing results, remediation efforts, and improvement opportunities. This continuous improvement approach helps strengthen encryption, logging, monitoring, and data-protection practices throughout the software lifecycle.
Protect the production environment
The need for security continues after software is released. Product and operations teams must protect customer-facing environments while maintaining visibility into changes, vulnerabilities, access activity, and emerging threats. This includes:
- Well-established change management and release process.
- Network security controls, firewalls, and secure remote access.
- Identity and access management practices that help ensure personnel have access only to the systems and information necessary to perform their responsibilities.
- Vulnerability assessments, penetration testing, and timely remediation.
- Security monitoring, logging, and alerting.
- Data-protection practices for encryption, keys, storage, transmission, and retention.
The specific controls and procedures vary by service and environment, but the objective remains consistent: protect the confidentiality, integrity, and availability of information and services. Effective providers maintain visibility into their software components, prioritize internet-facing exposure, and verify remediation when new vulnerabilities emerge.
Effective providers maintain visibility into their software components, prioritize systems with the greatest business and security impact, and verify remediation when new vulnerabilities emerge.
Design for resilience and incident response
Security and resilience are closely connected. Mature organizations recognize that incidents, outages, supplier disruptions, and other unexpected events can occur. The goal is to detect and contain events, minimize impact, restore services, and continuously improve based on lessons learned. Key considerations include:
- Defined incident response responsibilities and escalation paths.
- Monitoring and investigation to support detection, containment, mitigation, and recovery.
- Business continuity and disaster recovery planning with well-defined recovery objectives.
- Backups, replication, and recovery capabilities appropriate to the service.
- Periodic testing and continuous improvement of recovery and response plans.
- Clear coordination and timely communication with customers during material events. These practices are important not only for the provider, but also for the financial institution's own continuity planning and risk management.
Organizations evaluating technology providers should understand not only how incidents are prevented, but also how providers respond, recover, communicate, and improve following an event. These capabilities play an important role in supporting both provider and customer continuity planning efforts.
Govern AI-enabled capabilities responsibly
AI creates significant opportunities to accelerate product development and improve customer experience and workflows. It also introduces new considerations for data protection, model risk, access management, third-party dependencies, and output reliability.
When building financial solutions, AI should be governed through the same security-first lifecycle applied to other technologies. Considerations include:
- Using AI platforms that operate under existing security and governance frameworks.
- Protecting confidential and restricted information.
- Evaluating model, data, platform, and third-party AI provider risk.
- Applying appropriate authorization controls and logical separation of customer environments.
- Enabling human review where output could materially affect customers, data, or business decisions.
- Testing for inaccurate, unsafe, biased, or unexpected results.
- Managing changes through established governance and release processes.
Manage security across the third-party ecosystem
A solution’s security posture is influenced by more than the provider's own employees and systems. Technology providers rely on cloud services, data sources, infrastructure providers, subcontractors, integration partners, and other suppliers. This interconnected ecosystem requires a structured approach to third-party risk. Key considerations include:
- Established vendor due-diligence and risk-based security-assessment framework that standardizes and streamlines evidence collection, follow-up, and remediation tracking.
- Contractual expectations for security, privacy, resilience, and incident-notification.
- Reviews of suppliers and subcontractors supporting important services or handling information.
- Ongoing monitoring and reassessment as risks evolve.
- Coordination of incident response and business continuity activities.
- Planning for data return, transition, retention, and secure disposal at the end of the business relationship.
For financial institutions, third-party risk management is an important part of provider selection and ongoing oversight. Providers should be able to explain how they identify and manage third-party dependencies while supporting due diligence and audit requirements.
Demonstrate rather than describe security
Security statements are more meaningful when they are supported by evidence. Financial institutions expect providers to demonstrate how controls are implemented, tested, monitored, and improved over time. These include:
- Independent assessments and assurance reports.
- External penetration testing and documented remediation.
- Continuous security scanning and vulnerability-management processes.
- Governance reviews and documented oversight activities.
- Business continuity and disaster recovery reports.
- Security policies, training practices, and role-based accountability.
- Support for customer security questionnaires, risk assessments, and due diligence reviews.
Regular security reviews, development scanning, independent testing, remediation practices, and audit evidence help connect security commitments to operating practices. The assurance documentation available to customers varies based on the service provided, the scope of engagement, and applicable confidentiality requirements.
Security as an ongoing partnership
Building solutions for financial institutions with a security-first mindset is an ongoing responsibility. It begins with understanding the customer's environment and data, continues through secure design and development, and extends into operations, incident response, third-party oversight, responsible AI adoption, and continuous improvement.
Financial institutions evaluating technology providers should look beyond individual controls or point-in-time certifications. They should assess how security is embedded into the provider's product lifecycle, engineering practices, operating model, governance, culture, and ecosystem. The strongest provider relationships are built on transparency, evidence, collaboration, and shared accountability.
Trust is not created by a single control, assessment or certification. It is built through consistent application of secure design, disciplined development, resilient operations, responsible innovation, effective third-party oversight, and transparent partnership.