Banks remain prime targets for cyber threats due to the wealth of sensitive financial information they store. According to recent data from the FBI’s Internet Crime Complaint Center (IC3), financial institutions face an increasingly sophisticated threat landscape, with cybercrime complaints rising nearly 10% year-over-year and associated financial losses climbing by 22% to exceed $12.5 billion in 2023 alone [1][2]. This trend shows no signs of slowing as attackers continuously evolve their tactics.
The stakes couldn’t be higher. Banking institutions maintain vast repositories of highly sensitive customer data—from account numbers and transaction histories to personal identification information. When breaches occur, the consequences extend beyond immediate financial losses to long-term reputational damage and regulatory penalties. In this environment, robust data security frameworks aren’t just beneficial—they’re essential for operational continuity and maintaining customer trust.
Current Security Landscape
The Expanding Threat Surface
Today’s banking sector faces a multifaceted threat landscape characterized by increasingly sophisticated attack vectors:
- Ransomware attacks targeting financial data repositories
- Social engineering schemes aimed at gaining unauthorized access
- Supply chain compromises through third-party vendors
- Advanced persistent threats from highly organized criminal groups
- Insider threats from employees with privileged access
The banking industry has witnessed several high-profile breaches in recent years. Major financial institutions have fallen victim to attacks that exposed millions of customer records. In many of these cases, attackers specifically targeted data during active processing—the moment when traditional encryption solutions fail to provide protection.
The Cost of Insufficient Protection
The financial toll of data breaches continues to escalate. Beyond direct financial losses, banks must contend with:
- Regulatory penalties under frameworks like GDPR, DORA, and state-level privacy laws
- Remediation costs including forensic investigations and system upgrades
- Business disruption during recovery operations
- Long-term reputation damage affecting customer acquisition and retention
- Increased insurance premiums following security incidents
According to Cybersecurity Ventures, global cybercrime costs are projected to reach $10.5 trillion annually by 2025 [3], with a significant portion affecting the financial sector. This staggering figure represents not just direct losses but also the broader economic impact of cybercrime.
Limitations of Traditional Encryption
The banking industry has generally implemented two standard forms of encryption: data-at-rest and data-in-transit protection. While these approaches are valuable components of a comprehensive security strategy, they leave a critical vulnerability unaddressed.
The Gap in Protection
Data-at-rest encryption secures information in storage—like databases, archives, and backups. However, this data must be decrypted before it can be used for any operational purpose, creating an exposure window [4].
Data-in-transit encryption protects information as it travels between systems, using protocols like TLS/SSL to create secure tunnels for data transmission. Yet once data reaches its destination, it typically exists in plaintext form for processing [5].
This creates a significant security gap: data-in-use remains unprotected. When customer information is being actively processed—during account lookups, transaction processing, or reporting—it exists in plaintext, fully vulnerable to theft, manipulation, or ransom [6].
The Operational Reality for Banks
In practical terms, banks maintain large pools of unencrypted, plaintext data to support day-to-day operations. Consider these scenarios:
- A customer calls to check their account balance—the service representative queries an unencrypted database
- A lending officer reviews a mortgage application—sensitive financial details sit in plaintext
- A compliance team runs AML checks—transaction histories exist unencrypted during analysis
- A mobile banking user transfers funds—account details are processed in plaintext
These everyday banking functions create persistent vulnerability windows that sophisticated attackers can exploit. Without encryption-in-use technology, banks are essentially leaving their most valuable asset—customer data—exposed during critical operational moments.
Implementing Encryption in Use
Encryption-in-use technology represents the missing component in banking data security frameworks. This approach enables data to remain encrypted throughout its entire lifecycle—even during active processing and analysis.
How Encryption-in-Use Works
At its core, encryption-in-use allows computational operations to be performed on data while it remains in an encrypted state. Unlike traditional approaches that require decryption before processing, this technology maintains protection continuously [7].
Several newer encryption technologies enable this capability, but only Searchable Symmetric Encryption (SSE) enables searching encrypted databases without decryption and without any latency. SSE is gaining traction as the most viable solution to the encryption-in-use challenge, though adoption rates remain below 1% globally [8].
Benefits for Banking Institutions
Implementing encryption-in-use delivers several critical advantages for banks:
Comprehensive Security: By eliminating the plaintext vulnerability gap, banks achieve true end-to-end protection for sensitive data throughout its lifecycle. Even if attackers penetrate network defenses, they cannot access usable information.
Regulatory Compliance: Financial institutions face expanding regulatory requirements. The EU’s Digital Operational Resilience Act (DORA), which took effect January 17, 2025, explicitly mandates encryption-in-use for financial institutions operating in the EU [8][9]. Similar requirements are emerging in other jurisdictions, making adoption increasingly necessary for compliance.
Advanced Threat Mitigation: Encryption-in-use neutralizes several advanced attack vectors, including memory scraping malware, insider threats, and database exfiltration attempts.
Operational Continuity: Modern implementations introduce minimal performance overhead, allowing banks to maintain operational efficiency while significantly enhancing security posture.
Competitive Differentiation: Banks that implement encryption-in-use can differentiate their services based on superior data protection, building customer trust in an increasingly security-conscious market.
Paperclip’s Solution
Paperclip offers a cutting-edge approach to encryption-in-use through its SAFE® technology, powered by SSE and specifically engineered to address the unique security challenges facing banking institutions.
SAFE®: Always-Encrypted Data Security
SAFE® represents a revolutionary advancement in data protection, combining Searchable Symmetric Encryption (SSE) with proprietary shredding technology to deliver powerful capabilities:
- Non-deterministic encryption that randomizes outputs to prevent pattern analysis
- Under-determined protection through data shredding that breaks content into fragments
- Dual symmetric key architecture requiring multiple credentials for search operations
- Millisecond-level performance adding minimal overhead to database operations
- Whole and partial word search capabilities supporting natural query patterns
- Flexible return data options including masked, pseudonymized, or anonymized results
Unlike other approaches to encryption-in-use that require massive computational resources or complex architecture changes, SAFE® integrates seamlessly with existing banking systems through standard API connections, requiring no disruption to end-user experiences.
Banking Use Cases
Paperclip’s SAFE® technology enables several transformative applications in the banking sector:
Customer Information Protection: Customer personally identifiable information (PII) remains encrypted even during active service operations, enabling representatives to assist customers without exposing sensitive data.
Secure Lending Operations: Loan applications, credit histories, and financial documentation remain protected throughout the approval process, with only authorized personnel able to access specific information components.
Fraud Detection Enhancements: Banks can perform fraud analysis on encrypted transaction data, maintaining customer privacy while still identifying suspicious patterns.
Secure Multi-Party Collaboration: Financial institutions can securely collaborate with partners, regulators, or other stakeholders without exposing raw data, using SAFE’s ability to return masked or anonymized results.
Regulatory Reporting: Banks can meet compliance requirements for sensitive data reporting while maintaining encryption throughout the process, reducing breach risks during audit procedures.
By implementing SAFE®, banking institutions close the critical security gap in their data protection framework, addressing the vulnerability that has contributed to numerous high-profile breaches across the industry.
Conclusion
The banking sector faces unprecedented data security challenges as cyber threats continue to evolve in sophistication and scale. Traditional encryption approaches, while valuable, leave a critical gap in protection during active data processing—precisely when information is most vulnerable.
Encryption-in-use technology, particularly Paperclip’s SAFE® solution, offers banks the missing link in their security framework. By maintaining continuous encryption throughout the data lifecycle, financial institutions can significantly reduce breach risks, enhance compliance posture, and build stronger customer trust.
As regulatory requirements like DORA explicitly mandate encryption-in-use protections, adoption is no longer optional for forward-thinking financial institutions. Banks that implement comprehensive encryption strategies now will not only enhance their security posture but also position themselves as leaders in data protection—a competitive advantage in today’s privacy-conscious market.
For banking executives seeking to address the most significant vulnerability in their data protection framework, encryption-in-use technology represents not just a security enhancement, but a strategic imperative for sustainable operation in an increasingly hostile threat landscape.
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References
[1] FBI. (2024, April 4). FBI Releases Internet Crime Report. Retrieved from https://www.fbi.gov/contact-us/field-offices/sanfrancisco/news/fbi-releases-internet-crime-report
[2] The National CIO Review. (2024, March 8). A Breakdown of the 2023 FBI Cybercrime Report. Retrieved from https://nationalcioreview.com/articles-insights/information-security/a-breakdown-of-the-2023-fbi-cybercrime-report/
[3] Cybersecurity Ventures. (2024). Global annual cost of cybercrime statistics. Retrieved from https://www.getastra.com/blog/security-audit/cyber-crime-statistics/
[4] Ascendant. (2024, January 31). Enhancing Data Security: Encryption at Rest. Retrieved from https://ascendantusa.com/2024/01/31/encryption-at-rest/
[5] Fit Small Business. (2024, April 24). Encryption At-rest & In-transit Explained: Benefits & Examples. Retrieved from https://fitsmallbusiness.com/encryption-at-rest-and-in-transit/
[6] Mimecast. (2024). Data Encryption – Data at Rest vs In Transit vs In Use. Retrieved from https://www.mimecast.com/blog/data-in-transit-vs-motion-vs-rest/
[7] Newsoftwares. (2024, June 22). Enhancing Data Security: Encryption In Transit Vs Encryption At Rest Against Espionage. Retrieved from https://www.newsoftwares.net/blog/encryption-in-transit-vs-encryption-at-rest-against-espionage/
[8] Paperclip. (2025, January 23). DORA Compliance: Encryption Solutions & Requirements. Retrieved from https://paperclip.com/dora-regulations/