A recent report suggested that the J P Morgan Chase breach teaches us the importance of encryption.
We know that information was recovered in the clear. What we do not know is whether encryption would have been effective in protecting it or even whether it was used but was not effective.
What we do know is that the credentials of authorized users were compromised and used to access the data. Authorization to the data includes the ability to see it in clear text even though it might be stored in encrypted form.
Encryption is not magic. It is a tool. Government propaganda to the contrary not withstanding, it is no more perfect security for the bank, than it is for the criminal.
Encryption is used to restrict access to data at rest, for example on file servers, from those who do not have credentials to access the server. It is used to protect data in transit, for example user credentials, as they cross networks. Properly used, it is very powerful. It is not effective against those with the credentials, the authorization, whether legitimate or otherwise, to access the data.
Are there many banks that are storing information in the clear that should be encrypted? Yes. Was JPMorganChase one of these? We do not know; that information has not been disclosed. Should all banks take to heart the lesson that they should be using encryption to protect data at rest? Yes. Does that lesson flow from the "breach" of JPMorganChase? No, but it does flow from the "attacks."
What we do know is that of the thousands of applications and servers at JPMorganChase, fewer than a hundred were compromised and none of those were using strong authentication. So, the first lesson that I want banks to take from the JPMorganChase breach is to use strong authentication, particularly for privileged users of applications, databases, and servers. Without this, encryption is not likely to be effective.
Strong authentication is policy at JPMorganChase and appears to have been effective where used.