- Key insight: The migration to post-quantum cryptography is a collaborative project, not a competitive one, due to the interconnectedness of financial systems and vendors.
- What's at stake: Current encryption standards are vulnerable to future quantum computers, which could break them and expose sensitive financial data.
- Forward look: In 2030, authorities including NIST will begin deprecating common algorithms such as RSA-2048.
Overview bullets generated by AI with editorial review
A leading cybersecurity consortium for the financial services sector recently said in a report that the industry must establish a coordinated, global transition timeline for adopting new encryption standards.
Transitioning to encryption algorithms that quantum computers will not be able to break will require "sector coordination and proactive strategies," according to Mike Silverman, chief strategy and innovation officer for the Financial Services Information Security and Analysis Center, or FS-ISAC, which released the report Thursday.
While no quantum computer is known to exist today that can break existing encryption standards, the threat of such a computer existing in the future presents immediate risks due to the so-called harvest now, decrypt later attack model.
In this attack model, threat actors collect encrypted data protected by algorithms that are standard and common today, such as so-called RSA or elliptic curve systems. While the data is not immediately useful to them in an encrypted state, the attackers can hold onto it until they can access a quantum computer capable of decrypting it.
FS-ISAC in its report highlights Mosca's theorem, which is a framework that helps organizations assess the risk of these attacks. It is based on three factors:
Security shelf life: Data stops being sensitive at some point. The length of time during which a bank must protect sensitive data is known as the data's security shelf life.
Migration time: This is how long it will take a bank to upgrade a cryptographic system to a quantum-proof standard.
CRQC timeline: This is how long the bank expects it will take before there is a quantum computer capable of breaking classic encryption algorithms. Such a computer is known as a cryptographically relevant quantum computer, or CRQC.
Mosca's theorem calls for companies to make sure that their security shelf life plus their migration time is less than the CRQC timeline.
In other words, the goal is for banks and other companies to start their migration soon enough that data encrypted just before the end of the migration reaches its security shelf life before a threat actor can decrypt it.
Banks do not always have the ability to change the security shelf life of data, and trying to shorten the migration timeline could come with costs. The best way to beat the CRQC timeline is to not procrastinate and start now, according to FS-ISAC.
The FS-ISAC report labels this "crypto-procrastination." Factors that might lead to this delay include underestimating the complexity of migration and misunderstanding the quantum threat as merely a future risk.
Key milestones for U.S. institutions
The paper references federal and international guidance that set clear expectations about migrating to post-quantum cryptography, or PQC. These various timelines are set by organizations such as the National Institute of Standards and Technology, or NIST.
The report suggests financial institutions focus on two critical target years:
The "critical transition point": 2030-2031. This period marks a key milestone when authorities will deprecate algorithms that are common today, including RSA-2048.
NIST has announced it intends to deprecate the use of quantum-vulnerable cryptography by 2030, and national cybersecurity organizations in other countries recommend institutions complete the migration of critical use cases as early as 2030. Some governments recommend 2031.
The final deadline: 2035. The final phase of the migration should end by 2035 to meet recommendations by security agencies.
National Security Memorandum 10, issued by the U.S. president in May 2022, established 2035 as the primary target for completing the migration to post-quantum cryptography across federal government systems.
NIST also intends to disallow the use of all classical public key cryptography after 2035.
A collaborative mandate
The transition process must acknowledge the interconnected nature of the financial system, according to the FS-ISAC report.
Critical dependencies exist among payment networks, cloud service providers and peer financial institutions.
"Post quantum cryptographic resilience is not a competition, but a collaborative project," the Thursday report reads.
FS-ISAC urges the sector to adopt a phased transition approach, which mitigates risks by prioritizing high- and medium-risk use cases first.
The report endorses NSA's Commercial National Security Algorithm Suite 2.0 as a potential model for the financial services sector. That approach, FS-ISAC argues, provides clarity, sets expectations and accelerates vendor readiness.
Cryptographic agility: An antidote to current and future changes
The migration to quantum resiliency is not a simple, one-time algorithm swap, but a journey of continuous security improvement, according to FS-ISAC.
The group strongly encourages institutions to embrace so-called cryptographic agility, defined as an organization's ability to adapt cryptographic solutions or algorithms quickly and efficiently in response to threats or technological advances.
FS-ISAC recommends banks and credit unions focus on four principles of cryptographic agility:
Inventory cryptography: Institutions can assess their current cryptographic inventory, noting where systems store keys, the lifecycle of those keys and what systems use which versions of encryption algorithms. "You cannot transition what you do not know," reads a 2024 FS-ISAC report on the matter.
Establish governance: Financial firms can set clear policies and governance structures, such as a post-quantum cryptography steering committee to oversee the transition and ensure compliance with industry standards such as the Digital Operational Resilience Act, or DORA, in Europe or PCI-DSS globally.
Assess vendors: Companies can engage their third-party service providers to ensure these vendors are identifying which of their data security standards need updates.
Upskill teams: Organizations can dedicate resources to manage the transition and upskill IT teams to understand cryptography and its associated new challenges.
Institutions can also initiate pilot projects to test migration approaches and identify potential issues like performance trade-offs and system integration complexity.
