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In this article, we will discuss the major fintech security challenges that fintech companies face today.
Top fintech cybersecurity challenges
Some prominent fintech security concerns include the following:
Cloud-based solutions are now a prominent part of software products. Cloud computing provides easy integration to multiple third-party features like payment gateways, digital wallets, bank account management, etc.
Cloud computing also ensures the easy scalability of services. As cloud service providers manage resources and networking for their customers, more businesses are opting for cloud computing practices in their businesses.
A huge cloud computing market also means a large number of users sharing cloud resources making them vulnerable to malicious data traffic from cybercriminals and hackers.
Therefore, it is quite important for fintech companies to invest in a credible cloud computing host platform.
A private cloud, for example, ensures that your cloud resources such as servers, database files, etc. are protected from unauthorized access.
Moreover, networks are secured from intrusions, data spoofing, etc. to a great extent as there is no other user sharing them.
Malware is a cyberattack that performs unauthorized functions on the victim’s computing system. Cybercriminals transfer malware through emails, pop-up notifications, third-party websites, etc.
Malware is a generalized term for various types of cyberattacks like viruses, spyware, bots, ransomware, etc.
For fintech applications, the target of malware software is to steal users’ confidential data including bank account information, users’ passwords, etc. The nature of such malware attacks is very dangerous as they can swiftly replicate compromising the financial network in no time.
A recent example of such malware attack on the fintech sector is multiple malware attacks on the SWIFT network. SWIFT is an inter-bank messaging protocol that is largely used by banking institutions worldwide.
A real-time malware detection feature can help you secure your fintech application from malware threats effectively.
Also, rigorous testing procedures ensure timely detection and prevention of cyberattacks. Regular vulnerability assessment and penetration testing (VAPT) is one such testing method of timely finding vulnerabilities in fintech service applications.
Fintech applications require users to enter their personal information for seamless access to financial services. Such sensitive information make fintech applications the prime target of cybercriminals.
If cybercriminals are able to breach a software application, they can easily penetrate the whole network of a fintech company.
You as a CTO or CEO must prioritize regular penetration testing of your fintech products including mobile applications and websites.
One major fintech security challenge is protecting users from digital identity theft. Mobile applications allow fintech companies to offer a seamless experience of multiple financial operations such as wealth management, online payments, etc in one place.
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Advanced digital identification methods such as biometrics sensors, OTP (one-time password generation), code-generating apps, etc. have improved fintech apps security to a great extent as compared to the traditional methods of passwords and PINs.
However, given the advancements in software technology, these security techniques are not considered much safer now as they are somewhat replicable.
To avoid the risk of identity theft and replication, fintech companies should invest in measures like adaptive authentication, also called risk-based authentication. These security techniques analyze user behavior before granting access.
Digital currencies such as cryptocurrency have gained a lot of popularity. However, cryptocurrency has emerged as a major fintech security risk.
As there is no record of the origins of the cryptocurrency, it can be used for money laundering. Cybercriminals can also use crypto entry points as a source of stealing data.
Therefore, fintech companies should be very vigilant about using digital currency networks. Always invest in a secure and reliable blockchain trading platform and globally recognized cryptocurrencies.
Strict Fintech Security Compliance
The fintech industry has strict compliance regulations to follow. Failure to comply with these laws results in huge monetary fines, etc. You can secure your fintech products from all major cybersecurity threats by following complaint standards like GDPR, PCI DSS, PSD 2, etc.
You will have to meet these regulations depending upon the fintech service you are offering such as a banking institution, electronic money institution, payment institution, etc.
Planning to Invest in Fintech Security?
The worth of the cybersecurity market is expected to reach $345.5 billion by 2026. The fintech sector is the major contributor to this growth. As a fintech business CEO or CTO, today is the right time to engage in fintech security practices.
Read more on cybersecurity in fintech in our blog here.
To effectively implement your fintech cybersecurity plans, it is necessary that you partner with the right cybersecurity professionals.
DevTeam.Space can help you here. We have a competent team of security engineers that can help you ensure your fintech product’s safety.
You can easily reach out to us via this quick form and one of our technical managers will get back to you for discussing further details.
Top FAQs on Fintech Security Challenges
Some prominent cybersecurity challenges faced by financial technology and financial institutions include overcoming cloud computing security, maintaining data security, protecting fintech applications from malware, data breaches, identity theft, financial fraud detection, etc.
Effective fintech security solutions include adopting a security-first software development life cycle approach, partnering with a professional security testing team to implement security protocols effectively, adding security features to your information security management system like multi-factor authentication, biometric verification, etc., strictly complying with the industry’s general data protection regulation standards, etc.
Fintech firms often need access to users’ sensitive data including bank accounts details, biometric information, etc. Such critical data makes fintech applications vulnerable to cyber threats such as data phishing, spoofing, viruses, etc.