In spite of recent challenges, the Fintech market continues to grow at an astonishing rate. Buoyed by developments in AI and big data, and as emerging economies migrate to the digital realm, it seems almost certain that the dynamic Fintech industry will continue to rise in the coming years and decades. This means faster and more convenient financial products for consumers, and greater returns for financial institutions, but the migration from traditional practices to financial technologies isn’t without its challenges.
Cybersecurity Threats: The Existential Threat to Fintech
Between October 2021 and September 2022, around 40% of Malware attacks globally targeted financial institutions and insurance companies. The finance sector generally is widely believed to be the most cyber-targeted sector globally, as criminals are lured by highly sensitive personally identifiable information (PII) and financial information which they can leverage to commit fraud, steal identities and perform illicit financial transactions.
As Fintech companies continue to emerge onto the hostile cybercrime landscape of the finance sector, it’s vital that they address a wide range of threats and challenges. Failure to do so could see not only immediate consequences for parties affected by the likes of cyber-attacks, but industry-wide ramifications as regulators introduce tighter compliance restrictions that stifle growth and innovation. Here are some of the main security challenges all Fintech companies need to consider in their defence strategies:
Malware (malicious software) remains the number one threat facing finance sector firms worldwide, with 55% of financial services organizations targeted by ransomware attacks alone in 2021 according to a 2022 report by Sophos. Using a range of transmission pathways, including email attachments, rogue websites and illegitimate software, criminals use a wide range of malware types to hold finance firms to ransom and steal compromising data. Cybercriminals are continually evolving their practices and technologies, making malware attacks increasingly difficult to detect using conventional tools.
In order to counter the growing threat posed by malware, fintech companies should employ a multi-layered security strategy that combines policy, procedure and technical measures in order to defend all vulnerabilities comprehensively. This strategy should be deployed in a risk based manner, with high-risk activities and sensitive data types prioritised for elevated protection.
Identity authentication has long been a priority in finance, with banks and other institutions employing a range of measures, including biometric signatures, one-time passwords and card readers to keep bad actors locked out of accounts. Despite the general efficacy of these measures, more advanced hackers have developed ways to circumvent these additional controls, making it vital for traditional financial institutions and Fintech companies to utilise multiple verification gateways to further enhance authentication.
Due to the anonymity they afford and their decentralized nature, there is growing concern about the role of cryptocurrencies in facilitating financial crimes such as money laundering. Fintech firms have a leading role to play in ensuring digital currencies aren’t hijacked for illicit purposes, with strict adherence to KYC regulations and rigorous cybersecurity measures vital countermeasures in rooting our such activity.
Supply Chain Attacks
There is widespread evidence to suggest that cybercriminals globally are increasingly using less secure intermediary organizations as a vessel to infiltrate more lucrative targets, a cyber threat known as a “supply chain attack.” A 2022 report by security firm Anchore for example, found that software supply chain attacks impacted 62% of organisations in 2021, highlighting the prevalence of the threat.
From payment processing to data storage, it’s common for Fintech companies to use third party service providers. While outsourcing such services can enhance agility and prove cost effective, Fintech companies have a duty to ensure external providers adhere to data security best practice, including the stipulations of any data protection regulations that they themselves are subject to.
Internal threats, or ‘insider threats,’ are a persistent concern for financial institutions, and by extension, Fintech companies. With access to vast quantities of sensitive PII, financial records and trading strategies, malicious insiders are able to exploit information for immediate personal gain or to facilitate fraud. Fintech companies can mitigate insider threats by deploying data access controls and using threat detection systems that can detect suspicious user behaviours.
Data Protection Regulations
While financial regulations once applied mainly to conventional financial institutions, today across much of the world, regulators expect fintech companies to adhere to the same (or close to the same) standards. The growing patchwork of compliance regulation requires fintech companies to pay close attention to the demands of the jurisdictions in which they operate in order to avoid penalties, license revocation and reputational damage.
In the fast-moving Fintech market, the pressure is on for companies to release their innovative products ahead of the competition. However, this should never be done at the expense of your infrastructure’s security, as a data breach could damage your reputation and lose the trust of investors. Additionally, as regulations become more stringent and pervasive, non-compliance could hinder your growth by restricting access to lucrative markets. You need an IT support provider that understands the challenges unique to Fintech and knows how to deploy the best solutions to address them. You need Truly Secure.
Truly Secure – A Trusted Partner that Enables Your Business to Scale
Truly Secure provides IT management, support and strategy to technical, professional and regulated businesses in Dubai and across the UAE. We help businesses big and small overcome commercial challenges, surmount regulatory hurdles and scale new heights of efficiency using expertly managed, tailored technology.