The vast majority of banks in the US are small- to mid-sized. Roughly 4,000 of the 4,487 FDIC-insured banks in the United States are community banks, with assets of around $1 billion or less.
Though smaller in size, these essential financial service providers still operate in a threat (and regulatory) landscape that is little better than that of their larger counterparts. Tellingly, nearly 46% of financial institutions (of all sizes) reported experiencing a data breach in just the last 24 months.
SplitSecure helps small and mid-sized banks create cryptographically-backed identity and access management, stopping breaches and ensuring compliance. Learn More.
For small banks and other small financial services providers like credit unions, putting in place a banking-ready identity and access management system that is compliant with GLBA rules and evolving regulations has always been an operational pain point.
What's changed now is that, as every bank's systems have become more digitally connected, cloud-based, and horizontally integrated, access management is also emerging as a major source of bank breach risk.
We see this play out in situations like when a trusted insider leaks hundreds of thousands of customer records (as happened with FinWise Bank) or when an external threat actor does something similar.
In this blog post, I want to explain why part of the problem is that the privileged access management (PAM) systems that govern identity and access management are overly complex and not well-suited to the challenges small banks face in 2026.
All banks, not just large ones, deserve a layer of assurance for their critical secrets that is best-of-breed (i.e., highly resistant to phishing and/or malicious unilateral action), while also being rapid to deploy and easy to maintain.
Yet, in many banking breaches, some form of PAM solution was likely already in place. Most banks that are breached also tend to be regulatory compliant, having demonstrated compliance and audit readiness at some point prior to the breach.
Clearly, compliant or not, few banks turn out to be truly secure when tested by compromised insiders or determined threat groups.
Part of the reason why is that, without dedicated PAM teams or the capacity to properly configure or maintain expensive infrastructure, it's unlikely that a small bank will have best-in-class financial services identity and access management (IAM) technology in place.
Change is needed, but the prospect of overhauling IAM to deploy a best-of-breed solution is often overwhelming for a small bank. This is doubly true for a modestly resourced institution that is already managing regulatory examinations, incident response, and day-to-day operations.
Making change harder still is that most banks either use or aspire to use on-premises privileged access management solutions that store complete credentials in centralized vaults.
These kinds of solutions are attractive because they can technically enforce separation of duties through policy-based access controls, but the vault itself remains a single point of failure. If the vault is compromised, every credential it stores is exposed.
They also present a massive implementation challenge. PAM implementation projects regularly span months, with 44% of IT leaders describing PAM implementation complexity as a top blocker.
For a small or mid-market bank without a dedicated PAM engineering team, the typical result is a PAM implementation that stalls or is only partially completed, leaving weak points exposed or reliant on policies alone. Small banks now run complex infrastructure that might include modern cloud environments alongside legacy mainframe systems. They need a simple-to-implement solution for secrets management that is as flexible as they are.
SplitSecure provides financial services identity and access management that is compliant by default. Learn More.
I believe there is an increasingly material risk for any bank to operate without continuous, architectural assurance against breaches or compliance drift.
That’s why the most efficient route to creating a secure, architecture-enforced identity and access management system is to build PAM around the "last secret" that protects the entire system. Those last secrets are a bank's largest liability from a business protection and compliance point of view.
A solution like SplitSecure offers a layer of protection for these secrets that ensures compliance and protection as a function of how it allows access in the first place. Here’s what a smaller bank can do with SplitSecure in place.
Shamir Secret Sharing ensures no single device in a bank's team ever stores critical credentials. Even if an attacker fully compromised the devices and user accounts of an IT admin, they could not extract the protected information.
This is fundamentally different from vault-based PAM solutions, where complete secrets sit behind access controls, or cloud-based IAM solutions, where the vendor stores your credentials on their infrastructure.
With SplitSecure, reconstructing a secret requires a ‘threshold’ of team members to collaborate from their individual devices. This is a mathematical property of how SplitSecure works.
For identity access management in banking, this means that the separation of duties requirement in DORA Article 9, FFIEC guidance, and NYDFS Part 500 is met by the architecture itself.
Every secret reconstruction in SplitSecure generates an audit record automatically because the distributed architecture requires coordination across devices. No one can access a credential without creating an audit trail.
As a result, audits become far less onerous with compliance proof generated as a default output of the system being used.
Risk Managers and CROs can use SplitSecure to write policies for when secrets may be accessed, but also specifically how they may be used.
Depending on a bank's needs, they can add requirements for integrations with multiple tools, MFA, or human approval, covering everything from routine morning logins to highly sensitive actions that require the approval of multiple humans.
See how SplitSecure helps small and mid-sized banks and financial institutions move from checkbox compliance to cryptographic assurance for separation of duties, audit trails, and third-party risk management.
We give you regulatory-compliant access management built into your bank's processes rather than built on top of them.
Learn more about our banking identity and access management solutions.
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