Why BFSI needs column-level encryption

The BFSI (Banking, Financial Services, and Insurance) industry is experiencing constant pressure on cybersecurity issues in the ever-growing digital financial environment. Stakes are not higher yet. Whether customer account information and transactions or personally identifiable information (PII), the number of sensitive data managed by BFSI organizations on a routine basis is excessive. However, the number of data breaches in the financial sector continues to be too alarming and harmful despite the improvement in cybersecurity.

To meet these challenges with accuracy, institutions in the BFSI sector are shifting beyond their first line of defense, which is the perimeter, toward the column-level encryption, a highly zealous form of data protection because it is granular. This article examines the importance of column-level encryption in BFSI, dives into the details of the encryption of customer account information with advanced encryption and focuses on real-life applications that shows the importance of column-level encryption.

The Evolving Threat Landscape in BFSI

Incidents of cyberattacks on BFSI institutions are becoming more advanced. The average cost of a breach in the financial sector, as reported by IBM in 2024, was also the highest across all industries data breach, i.e US$ 5.9 million; which is much higher than the world average. The attack vectors no longer exclusively focus on the breach of the network, threat actors are going directly into databases with attempts made to extract structured data and usually customer accounts which are commonly either stored using relational databases.

In 2022, one of the large Indian banks fell victim to a breach as hackers stole sensitive customer data by using improper access controls settings in a database server. Through encrypted links and firewalls, the attackers were able to have direct access to plaintext account numbers and balance data that would have been safe with the column level encryption in place.

What is Column-Level Encryption?

Column-level encryption is a technique that encrypts specific columns within a database; such as account numbers, Social Security numbers, credit card details, or login credentials, rather than encrypting the entire database or data-at-rest.

This granular control allows BFSI organizations to:

• Protect highly sensitive fields without burdening the entire system.
  
• Support fine-grained access control, ensuring that only authorized roles or services can decrypt specific columns.
  
• Maintain performance efficiency by avoiding the need to decrypt large volumes of non-sensitive data.

Deep Dive: Protecting Customer Account Info with Advanced Encryption

Let’s examine how column-level encryption can safeguard customer account information, arguably the crown jewel in BFSI data.

1. Selective Sensitivity Protection

Customer databases in banks typically store fields like:

• Account number
  
• Account balance
  
• Transaction history
  
• Customer name and contact info

Not every field has the same risk profile. For instance, while customer names may be considered low-risk, account numbers and balances are high-value targets for attackers. Column-level encryption allows BFSI organizations to encrypt just these critical fields with robust algorithms like AES-256, without impacting the usability of less sensitive data.

2. Minimized Attack Surface

Even in the situation when an attacker breaches the database, column level encryption allows the breach to gain access to the most sensitive information only in case they obtain access to the keys used to decrypt the data. This puts an extra layer of security in addition to authentication and firewalls.

Example: A scammer gets the pass of perimeter defenses and gets a dump of database. The attacker can read names and telephone numbers of customers in clear text and can view a ciphertext only in account numbers and balances and the stolen information cannot be used in any financial affair.

3. Seamless Integration with Role-Based Access

Column-level encryption integrates effectively with role-based access controls (RBAC). A bank can configure its system such that:

• Front-line customer service representatives can view masked or partial account details.
  
• Backend systems handling transaction processing have full access but only via secure API layers.
  
• Auditors or data scientists access only anonymized, encrypted fields.

This not only complies with least privilege principles but ensures operational fluidity.

Real-World Scenarios: Lessons from the Field

Case 1: Unsecured Test Environment at State Bank of India (2019)

In 2019, State bank of India (SBI) unintentionally revealed the confidential information of millions of customers, because of an unsecured server where tests had been conducted. The uniform account numbers, balances, and recent transactions as well as phone numbers were among the information leaked and attained without verification.

What would have helped: In non-production environments, the leaked data could have been in a form that would not be usable by any other party by encrypting data at column-level, and scrambling the data such that it would only make sense to those in possession of the relevant decryption keys. Cloaking sensitive columns such as account information and account balance; would have reduced this hack into a non-incident.

Case 2: The Capital One Data Breach (2019)

Capital one experienced one of the most outrageous breaches in the financial industry- a cyber-attack revealed the personal information of more than 100 million of customers. An incorrectly configured AWS firewall enabled a discharged Amazon Web Services worker to acquire other sensitive data such as credit scores, credit limits, balances, and social security numbers.

What might have helped: Encryption should have helped; however, Capital One encrypted some of the information but the intrusion showed the dangers of using perimeter protection to the exclusion of other systems. Such sensitive data as SSNs and account balances could have been encrypted column-level with only strict access-based decryption to remain above plaintext exposure even in the case of such a misconfiguration.

Case 3: Barclays’ Compliance Model for Data Encryption

On the other hand, Barclays has put in place an effective data protection system which features field-level encryption of its core systems. A regulatory audit carried out in 2021 on Barclays praised the bank where new account-level data were encrypted to the column and attribute level, so the data is safe even in distributed systems and the cloud environment.

What went right: Barclays encrypts its data, applying a layered approach: each column is encrypted, in addition to general encryption. It enables them to securely have the customer data accessed in an analytics and in compliance processes whilst not being exposed in plain text, and is what is known as a textbook example of encryption being a source of competitive advantage rather than as something that needs to be in place to protect yourself.

Compliance, Regulations, and Future-Readiness

The regulatory climate is pushing BFSI institutions toward zero-trust architecture and data-centric security models. Column-level encryption supports major compliance frameworks, including:

• PCI DSS – Requires encryption of cardholder data.
  
• GDPR – Mandates protection of personal data, including strong encryption.
  
• RBI Cybersecurity Framework – Urges Indian financial institutions to adopt data encryption and key management best practices.

Moreover, column-level encryption aligns with future-forward security frameworks such as Confidential Computing and Tokenization, giving organizations flexibility in adopting emerging technologies.

Thought Leadership: Encryption as a Strategic Imperative

BFSI institutions have to reorient themselves about taking the approach of using encryption as a reactive exercise, and should use it as a strategic differentiator. It is not only compliance that ensures sensitive data is properly guarded, but a competitive advantage. In a world where credibility is money, financial organizations which will be able to prove that they can secure the information of their customers will outrun those who cannot.

Column-level encryption is not to be taken as a technical implementation only. It has to be promoted to the CISO and CTO level as an extension of an overall process of data protection. Organizations that adopt granular, context-aware encryption mechanisms are better equipped to:

• Resist advanced threats
  
• Navigate complex compliance landscapes
  
• Maintain customer trust and brand integrity

Conclusion

In a world full of digital dangers, BFSI companies need more than old-school security. Using column-level encryption helps safeguard important information such as account numbers and balances. It cuts down risks even if hackers get into the system. This is more than meeting rules. It’s about creating trust and staying strong. With more cyberattacks and tougher regulations, column-level encryption is no longer optional but expected.