What is CIAM and Why Businesses Need It

Customer Identity and Access Management (CIAM) is a part of Identity and Access Management (IAM), specifically referring to securing and managing customer access to online applications and the applications’ data. Unlike workforce IAM, which focuses on internal users, CIAM solutions secure customer identities and perform authentication and authorization across digital platforms.

A robust CIAM solution should support various authentication methods to ensure that enterprises don’t lose customers due to poor login experiences but also, at the same time, don’t compromise on security. Authentication methods include multifactor authentication, single sign-on, and passwordless authentication such as passkeys.  

Key Benefits of CIAM for Businesses 

Smooth User Experience & Strong Security 

A CIAM system enables organizations to ensure that users can seamlessly complete authentication-related tasks. Users should be able to sign up, log in, or recover access without contacting technical support—on any device and from any location. This streamlined experience helps organizations reduce user drop-off rates, improve satisfaction, and strengthen brand loyalty.

A seamless user experience, however, shouldn’t come at the cost of sacrificing security. A robust CIAM solution should offer adaptive authentication, which adjusts security measures based on the risk level. As a result, a balance between user experience and security can be achieved without compromising either of them.  

Protecting Data Access 

Customer identity and Access Management enables organizations to develop APIs that enforce secure authorization mechanisms. By relying on identity data, APIs can grant access securely. The user's identity is first verified, and then the application they are using is provided with temporary, high-security credentials. These credentials allow the application to interact with APIs securely while ensuring that authorization decisions are based on identity attributes. This approach prevents unauthorized access to sensitive resources and eliminates the need for applications to manage long-term user credentials like passwords directly.

Scalability 

A company’s user base can fluctuate unpredictably. Sudden surges in popularity in a business’s services may lead to rapid growth, significantly increasing the number of users, which can overwhelm systems when many users attempt to log in simultaneously. To prevent disruptions, a CIAM solution must automatically scale to accommodate these spikes. Without this capability, businesses risk losing customers who are unable to access their accounts.

CIAM scalability goes beyond handling traffic surges—it also involves adapting to evolving authentication needs. As the user base expands, organizations may need to integrate with external identity providers, such as those from a company merger, or introduce authentication through new social platforms. A robust CIAM solution should accommodate these changes seamlessly. Additionally, it should support multi-language and multi-region deployments, ensuring businesses can provide a consistent, secure, and compliant user experience across global markets.

As applications delegate user authentication to the CIAM system, the solution is designed to scale effortlessly across multiple applications. By integrating with the CIAM system, applications avoid complex authentication implementations. This setup also enables modifications to authentication processes without requiring changes to the front-end applications. With a CIAM solution, there’s no need to redeploy code or release new app versions in stores. 

Security & Compliance

A CIAM system enables organizations to centrally manage identity data, streamlining governance and ensuring regulatory compliance. As such, businesses can adhere to various regulations such as the General Data Protection Regulation (GDPR), the California Consumer Privacy Act (CCPA), US Consumer Financial Protection Bureau (CFPB) Section 1033, Open Banking Brazil, or the Payment Services Directive (PSD2). By leveraging protocols like OAuth and OpenID Connect, along with security extensions, businesses can meet the rigorous requirements of financial regulations. 

Reduced Risk of Phishing Attacks

Data loss poses a serious risk to businesses. The average cost of a data breach costs businesses $4.88M USD, according to a report by IBM. Additionally, the Open Worldwide Application Security Project (OWASP) ranked authorization vulnerabilities as the top API security risk in their top 10 API security risks list in 2023. Implementing Customer Identity Management solutions helps safeguard against these threats. This is because advanced, phishing-resistant authentication techniques can prevent account takeovers, while offering applications strong, temporary credentials enables APIs to enforce solid authorization. This approach reduces the likelihood of data breaches, cutting costs and preserving the company’s reputation. 

Reduced Costs

A CIAM system offers streamlined and self-serviced authentication processes, which means that customers can handle tasks like account management, password recovery, and information updates without needing to contact support. This reduces the need for customer support interactions and cuts down on support expenses. In addition, since identity management is centralized, businesses can manage customer authentication across various applications and platforms through a single system. This minimizes duplication of efforts and simplifies workflows, leading to time savings and lower operational expenses. 

Improved User Privacy Control

CIAM provides capabilities to manage customer consent, helping businesses comply with user preferences and privacy regulations. By centralizing identity management, companies can ensure they collect only the necessary data and retain it for the minimum duration required for legal or operational purposes. This approach also simplifies compliance with privacy rights, such as the right-to-be-forgotten, allowing businesses to quickly address customer requests to delete their information from systems. 

Accelerated Digital Evolution 

CIAM enables businesses to quickly adopt new digital services and applications by providing a flexible and secure identity management framework. Often equipped with APIs and connectors, CIAM solutions simplify the integration with various platforms such as marketing automation, ERP, and CRM systems, promoting a unified digital ecosystem. A robust CIAM system ensures smooth integration with both cutting-edge and legacy technologies, easing the process of digital transformation. 

CIAM is a Business Enabler 

CIAM systems are specifically designed to handle external users, whose needs differ significantly from those of internal users such as employees or administrators. As a result, businesses should avoid using internal-focused solutions for managing external customers.

It’s important to select the right tools for the specific challenges at hand. As highlighted in this article, Customer Identity and Access Management solutions address specific needs effectively, offering valuable benefits to organizations across all industries.