Let me walk you through some of the lapses we’ve seen happening in financial institutions that rely on AS400 and similar legacy systems. These aren’t theoretical risks, they’re drawn from real breaches and misconfigurations that have cost organizations millions in losses, fines, and reputational damage. From delayed patching and weak monitoring to insider threats and poor identity management, the patterns are clear: when basic security hygiene is overlooked, attackers find a way in.
In one case, attackers exploited a known vulnerability that had not been patched in time. They slipped in through a weak web application, installed malware, and quietly siphoned off sensitive payment data for more than a year before anyone noticed. The lack of timely patching, weak monitoring, and outdated certificates turned a preventable flaw into a multi-million-dollar breach.
In another instance, an employee who left the company still had active credentials to core systems. Weeks after their departure, they were able to log in and download sensitive financial records without being flagged. The absence of proper offboarding controls and real-time audit checks turned a simple oversight into a large-scale data exposure.
And beyond headline incidents, we continue to see common misconfigurations that create unnecessary risk, like users with *ALLOBJ authority, weak passwords without MFA, unencrypted backups, open legacy protocols like TELNET, and live financial data copied into unsecured test environments.
Each of these lapses reinforces the same lesson: AS400 may be a strong platform, but without disciplined security practices and the right service provider, even the strongest systems can become points of failure.
5 Practical Steps for Locking Down AS400 Security
Securing AS400 (IBM i) in financial institutions is not about one control or one tool. It requires a layered approach that addresses the network, the system itself, data, users, and operations. Each layer strengthens the others, helping institutions protect sensitive data and reduce compliance risks.
1. Network Security
Restrict access with firewalls, subnet segmentation, and VPN-only remote connections.
Encrypt all communication with SSL or TLS to prevent interception.
Monitor network traffic using SIEM tools for real-time anomaly detection such as unusual login times or unknown IP addresses.
Eliminate unused or legacy protocols. Keep only what is essential, such as secured FTP or encrypted ODBC.
2. System-Level Security
Set the QSECURITY parameter to level 40 or 50 for financial workloads.
Stay current with IBM’s monthly security patches and firmware updates.
Enable QAUDJRN audit logging to capture system activity, profile changes, failed logins, and unauthorized access attempts.
Use compliance automation tools to validate configurations continuously and generate audit-ready reports.
3. Object and Data Security
Apply least privilege principles by granting minimum necessary authority.
Avoid giving *ALLOBJ authority except in rare cases, and log its use.
Encrypt sensitive data stored in Db2 and in backups. Ensure all in-transit data uses encrypted channels.
Keep production data out of test environments. Use masking or anonymization if test data is required.
Harden the Integrated File System (IFS) by removing *PUBLIC write permissions and monitoring folder access to prevent ransomware.
4. User Identity and Authentication
Enforce strong password policies with high complexity, length, and expiration rules.
Deploy multi-factor authentication for administrative and sensitive accounts.
Review user access regularly, disabling inactive or obsolete accounts.
Implement role-based access control so that permissions align with job responsibilities.
Integrate AS400 with enterprise IAM and single sign-on for consistent policies.
5. Data Protection and Backup
Encrypt all backup media with strong keys and rotate them regularly.
Test disaster recovery procedures to ensure they work under pressure.
Mask sensitive fields such as card numbers and social security data in reports and logs.
Use replication and high availability features to maintain uptime and data consistency.
Learn more about the top cybersecurity concerns facing AS400/IBM i environments and the best practices financial institutions can follow to strengthen defenses, ensure compliance, and reduce breach risks.
Why Security Issues Surface on AS400 Systems in Financial Institutions
The AS400 (IBM i) has long been trusted in banking and finance for its security and reliability. However, security problems still arise in many institutions. These issues are not caused by flaws in the platform itself but by mismanagement, poor configurations, and a lack of ongoing discipline in operations.
1. Legacy Security Settings
Many environments still run at lower security levels than IBM recommends. Systems left at QSECURITY 30 or below remain exposed to unauthorized access and privilege abuse. Too often, users are given broad authorities such as *ALLOBJ without proper separation of duties. This is not a weakness of the AS400, but a management choice that increases risk.
2. Misconfigurations from Complexity
The AS400 provides granular object-level security and flexible configuration. In practice, this flexibility is mismanaged. Sensitive objects and directories often have *PUBLIC access set incorrectly. Without regular reviews and clear deny-by-default policies, financial institutions create hidden vulnerabilities through configuration mistakes.
3. Operational Oversights
IT teams responsible for AS400 environments are often stretched thin. As a result, user accounts remain active long after employees leave, patches are delayed to avoid downtime, and privileged access reviews are skipped. These gaps in daily operations undermine the system’s built-in security.
4. Weak Monitoring Practices
Audit logs such as QAUDJRN are powerful tools, but many banks fail to monitor them properly. Logs are collected but not analyzed in real time, and alerts are not connected to SIEM systems. This mismanagement allows suspicious activity to go unnoticed until it is too late.
5. Underestimating New Threats
Although AS400 is less prone to common malware, mismanagement of the Integrated File System allows external ransomware or malicious files to spread inside. Attackers often succeed not because the platform is weak, but because staff overlook credential theft risks, insider abuse, and supply chain vulnerabilities.
6. Poorly Managed Integrations
AS400 systems are increasingly connected with cloud platforms, APIs, and third-party applications. When encryption, access policies, and monitoring are not consistently managed across these systems, financial institutions open doors that lead back into the core environment.
7. Compliance Failures
Financial regulations require strict controls, encryption, and reporting. Many banks fail audits not because AS400 cannot meet these standards, but because compliance activities are handled manually or inconsistently. Incomplete access reviews, missing encryption, and poor log retention are the result of weak management, not weak technology.
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