What’s Customer Identity Access Management and why it Matters

What is Customer Identity and Access Management (CIAM)?

Customer Identity and Access Management (CIAM) is a type of Identity and Access Management (IAM) that is specifically focused on managing and securing how external users, such as customers, access data and services. While IAM does not differentiate types of users very often IAM is associated only with internal users, like employees, rather than external users. CIAM systems; however, contain features aimed at managing and authenticating the identities of external users when they access online applications and the applications’ data.

Good Customer Identity Management solutions should allow you to easily grow and maintain your customer base, minimizing churn. They should support multiple login methods, minimize login friction, and create fraud- and phishing-resistant authentication while enabling seamless access between websites and applications. This ensures that organizations do not lose customers due to poor login experiences and that they do not waste resources on customer care. The best solutions offer vast combinations of authentication methods, introduce modern authentication solutions like passwordless authentication with Passkeys, and leverage the power of additional features such as Single Sign-On (SSO) or Multi-factor Authentication (MFA).

Benefits of CIAM and the Challenges it Solves

The core purpose of IAM is always the same regardless of who constitutes the user base — to identify the user and protect data by authorizing access. However, these systems focus on different aspects based on the type of users. When working with a workforce the main concern will usually be maintaining a clear hierarchy of permissions. Employees should only access the resources they are allowed which can change dynamically when they switch posts in the company or are temporarily assigned a new role when they need to fill in for an absent employee. What is more, organizations can manage employee onboarding centrally, and access recovery tends to be simpler. When working with external users the requirements change drastically as you can see below.

Seamless User Experience

With a CIAM system organizations want to ensure that users can perform all authentication-related tasks quickly and easily. The user should be able to sign up for the service, log in, or recover access without the need to contact support while using any device and from anywhere in the world. This helps organizations achieve important business objectives like reducing user drop-off rates, boosting user satisfaction, and enhancing brand loyalty.

A good CIAM solution should balance user experience and security. High security often means complex login procedures which can frustrate users. On the other hand, allowing low-security solutions can lead to data breaches. A CIAM system can implement adaptive authentication which adjusts security measures based on the risk level to help achieve this goal.

A Customer Identity and Access Management solution allows users to have a unified experience across different platforms and services, reducing the need for multiple logins. This can further boost user engagement and enhance security.

Secure API Access

Eventually, the purpose of an IAM system is to protect data access. A robust CIAM solution should allow organizations to create APIs that can perform secure authorization decisions. APIs grant access securely when they base authorization on identity data. A CIAM system authenticates a user and then issues strong, short-lived credentials to the application the user operates. This allows the application to call APIs with these temporary credentials and eventually enables the API to perform authorization decisions. This ensures that APIs work with identity attributes for authorization, users do not get unauthorized access to restricted resources, and applications do not have to directly handle long-term user credentials like passwords.

Scalability

A company’s user base can be a volatile cohort. A business’s popularity can explode overnight causing the user base to grow exponentially. A system can be susceptible to spikes in traffic when a lot of users log in at the same time (think of concert ticket sales). It is crucial that a CIAM solution scales automatically to handle such scenarios. Otherwise, companies could lose customers because they won’t be able to authenticate.

There is also another aspect to CIAM scalability. Once the user base grows, the organization will want to offer new ways to authenticate. It might be an integration with an external identity provider to manage customers acquired through a company merger. Or the company might want to offer authentication through a new social provider. The CIAM solution should cater to these requirements. It should also support multi-language and multi-region deployments, making it easier for businesses to offer consistent and compliant services worldwide.

As applications externalize user authentication to the CIAM system, the solution also scales well to many applications. The applications simply integrate with the CIAM system so that they don’t need complicated implementations of authentication flows. This also allows modifying authentication without making any changes in frontend applications. With a CIAM system there is no need to redeploy code or publish new versions in application stores.

Regulatory Compliance

When handling external users’ data, companies have to comply with specific regulations. Think of the General Data Protection Regulation (GDPR), the California Consumer Privacy Act (CCPA), the US Consumer Financial Protection Bureau (CFPB) Section 1033, Open Banking Brazil, or the Payment Services Directive (PSD2). A CIAM system allows organizations to manage identity data centrally which simplifies governance to ensure compliance with regulatory requirements. A good CIAM solution uses the OAuth and OpenID Connect protocols with security extensions that make it compatible with strict financial regulations.

Reduced Risk of Data Breaches

Loss of data is a grave threat to any business. According to a report from Liminal, 2023 was the worst-ever year for phishing with almost 5 million successful phishing attacks — a 6% increase compared to 2022. The average phishing attack costs businesses $5,285 per event. What is more, the Open Worldwide Application Security Project (OWASP) lists authorization issues as the top API vulnerability. Employing Customer Identity Management solutions can help companies protect against these threats. Modern, phishing-resistant authentication methods can prevent account takeovers, while providing applications with strong, short-lived credentials allows APIs to perform robust authorization. As a result, companies reduce the risk of data breaches which subsequently reduces costs and helps maintain brand reputation.

Cost-Effectiveness

Employing a centralized CIAM solution eliminates the requirement for multiple, separate identity systems which cuts down maintenance costs. According to the Link Index™: Customer Authentication report by Liminal, regional financial services, and healthcare providers can expect to save approximately $5M annually when adopting a leading customer authentication vendor. Additionally, self-service account management and access recovery features help lighten the load on customer support teams resulting in significant cost savings.

Enhanced Privacy Management

CIAM offers features to handle various consents from customers assisting companies in respecting user choices and privacy requirements. Using a centralized CIAM enables companies to ensure that they gather only essential user data and that they keep it for the shortest time necessary to meet legal or operational requirements. It also makes it easier for organizations to comply with right-to-be-forgotten privacy mandates that require companies to honor customer requests to remove their data from their systems.

Accelerated Digital Transformation

Businesses can embrace new digital services and apps more rapidly thanks to CIAM's scalable and secure identity management system. To facilitate a cohesive digital environment, CIAM solutions frequently provide APIs and connectors that make it simpler to integrate with other platforms, including marketing automation, ERP, and CRM. A good CIAM system allows easy integration with both modern and legacy solutions which facilitates technology transitions.

How CIAM Fits With a Workforce

Organizations use CIAM technology to manage external users. However, sometimes a company’s workforce needs access to the data that is protected by a CIAM. Think of a scenario where a customer support employee needs to verify a user’s problem by impersonating them, or when a company wants to allow its employees to also use its systems as customers using workforce identities.

A good CIAM system caters to these scenarios. It enables integration with any external identity provider which allows companies to use technologies like Active Directory as the source of identity data. A Consumer IAM solution should be expendable enough to allow organizations to implement any scenario. For example, it should allow the implementation of impersonation techniques so that employees can more easily verify customer issues.

How Industries Use CIAM

Financial Services

Financial data requires enhanced security, and CIAM tools help companies protect financial information and meet data regulations requirements. CIAM does that by implementing solutions administered either by standards (like FAPI) or regulations (like Open Banking). Using modern authentication methods and MFA is also an important requirement in the financial sector.

Public Sector and Government Services

CIAM enables government services to deliver secure digital solutions to citizens. Governments can manage citizen identities through Customer IAM to guarantee safe and effective service delivery for public services, including social security, healthcare, and tax filing. Thanks to the use of CIAM, citizens can securely apply for services, access personal information, and communicate with different government entities through e-government portals. CIAM ensures that sensitive data is shielded from cyberattacks and unlawful access and that government services adhere to data protection laws. Using centralized CIAM tools allows governments to prepare for future requirements, like the European Union’s eIDAS regulations, or using Verifiable Credentials.

Health Sector

In the post-pandemic world, the digitalization of healthcare has seen exponential growth aiming to make healthcare more accessible to patients. This trend has also increased the use of online electronic devices in medical settings for sharing data, such as monitoring devices, wheelchairs, and tablets. As a result, data is stored and utilized to form electronic medical records, and API calls are used to exchange data between these devices. By implementing a CIAM platform, health-tech providers can offer better patient experiences, protect sensitive health-related information, and comply with regional data privacy and governance laws. A good CIAM solution will enable healthcare providers to deliver user-friendly, secure login experiences through a single, central IAM platform.

Technology Sector and Software as a Service (SaaS)

SaaS solutions are popular due to the cost-efficiency they provide, eliminating the need to invest in on-premise hardware and software. SaaS products are accessible and easy to use, and don’t require lengthy deployments or ongoing maintenance. As such, SaaS developers need to ensure that these expectations are met and that the services are scalable and secure. With a CIAM solution, organizations can ensure tenant-based access to their SaaS products. They allow companies to monitor their service usage to ensure accurate calculations of product usage fees.

Telecommunications

Telecom organizations very often handle legacy systems with large volumes of users, and they face the requirement of modernization. Expendable CIAM solutions help telecom companies bridge the gap between old and new by providing centralized API access management. A Consumer Identity and Access Management solution can also help to fulfill regulatory requirements such as GDPR and other privacy regulations.

CIAM is a Specialized Tool

CIAM systems offer features that are tailored to managing external users. These requirements are usually very different from handling internal users like employees or administrators. This means that organizations should not manage external users with solutions designed for workforce scenarios. Companies should always try to choose correct tools for the problem they are working to solve. As this article shows, Customer Identity and Access Management solutions offer concrete answers to concrete requirements, and any industry can benefit from them.

Published: 2024-11-20

Michał Trojanowski

Product Marketing Engineer at Curity