Thanks to the FinTech industry’s prodigious growth – and the mountains of customer data FinTech firms like yours collect – there’s a good chance your business is in the crosshairs of malicious actors.
Getting hacked can hurt your business’s reputation and competitiveness, as well as its profitability.
A recent report from IBM says getting hacked can cost a company as much as US$3.86 million, an amount which can easily derail your business.
With so much at stake, you’d think Fin Techs would be doing more to beef up their cybersecurity defenses. But that doesn’t seem to be the case.
Even FinTech startups, it seems, are failing to address critical vulnerabilities in their mobile and web applications; a mistake they could later on.
Research into FinTechs, for example, shows that eight main websites and 64 subdomains have at least one publicly disclosed and exploitable security vulnerability, compared to seven in the banking sector. That’s a lot.
With an expanding digital landscape, FinTech firms like yours must therefore make dealing their data privacy risks a priority.
Emerging Threats To Data Privacy In The FinTech Industry
A growing number of people are managing their finances remotely—thanks in large part to the COVID-19 pandemic.
This is a great temptation for malicious actors, who will take every opportunity to get their hands on your customers’ personal data, such as their credit card details.
FinTech firms like yours have business models which create a cache of this data, making your business a prime target for hackers.
Some of the data security threats that are emerging in the FinTech space include:
Deep fakes uses artificial intelligence (AI) technology to distort a person’s likeness so it resembles that of another person.
It can be a significant danger for FinTech firms like yours, as the AI tools behind such deep fakes have recently advanced to the point where they could fool trained security experts.
Hackers can use deepfakes to impersonate employees during onboarding, conduct fraudulent transfers and payments, and issue false directives.
For example, a voice-based deep fake was used recently to impersonate the CEO of a U.K.-based energy firm, with hackers demanding a fraudulent transfer of US$243,00.
The boost in traffic has triggered an increased use of FinTech apps. In Europe, for example, FinTech app usage is up 72% since the start of COVID-19.
This increase means companies have more data to manage and more storage locations to protect. This unearths opportunities for man-in-the-middle attacks.
As a result, FinTech firms like yours must either manage more servers themselves to reduce the number of opportunities for malicious actors.
Alternatively, you may want to consider relying on a cloud-based storage provider – such as Amazon Web Services (AWS) or Microsoft Azure – which have well-funded, dedicated teams to safeguard the security of the cloud servers your data is hosted on.
Increase In Phishing Attacks
Phishing attacks have nearly doubled as the number of employees working from home (WFH) in separate locations increase.
Phishing emails can compromise FinTech firms through one of two ways:
- Tricking users into revealing their login credentials by pretending to reach out from your FinTech firm, and
- Encouraging users to share their credit card numbers over the phone.
FinTech startups are especially vulnerable to these attacks because they often build apps with core functionalities business in mind, with security given lower priority. That creates vulnerabilities in their apps and other products that hackers can exploit.
Popular Strategies FinTech Firms Use To Protect Customers’ Data Privacy
The FinTech industry comes second only to retail as the sector that’s hardest hit by cybercrime. For example, in 2018, UK financial services firms reported the number of breaches to the FCA increased by 480% compared with 2017.
But FinTech firms like yours do have the tools to fight hackers and other malicious actors. They just need to be more diligent about adopting and making use of them.
Below are some of the most effective tools FinTech firms can use to protect customers’ data.
Cryptograms are a type of puzzle that consists of a short piece of encrypted text. FinTech firms which provide payment platforms use cryptograms to check the data they receive, to see if it's coming from the client’s mobile device.
This ensures that stolen data can't be fraudulently resent from another device.
2. AI Fuzzing
This involves the use of an AI to help FinTech firms find vulnerabilities in a company's software, like insecure APIs.
AI fuzzing uses machine learning (ML) to unearth potential exploits in an app's codebase, and helps your business’s IT department to eliminate holes in their cybersecurity defenses before malicious actors find and exploit them.
3. Training for in-house security teams
For FinTech firms like yours, adequate training is an indispensable component of a solid cybersecurity programme. It ensures that their security teams adapt to existing and emerging threats, as well as data protection issues.
Alternatively, your FinTech firm can also make use of cybersecurity-as-a-service (CaaS) for their data security needs. This gives them access to a team with the knowledge and skills to deliver a robust cybersecurity strategy, which includes advanced cybersecurity tools and protection.
Why FinTech Firms Should Consider Outsourcing Their Data Security Needs
FinTech firms can't ignore emerging threats to privacy of their customers’ data in the present day. They must address these threats now, or suffer the consequences later on.
However, FinTech firms who try to manage their cybersecurity in-house faces the following challenges with this approach:
- Rapid product development ensures that their products and services get to market first, but leaves security gaps.
- Increased growth in data and infrastructure makes managing cybersecurity in-house almost unmanageable.
- Fast-growing FinTech firms – especially startups in the early stages of growth – usually lack the resources to recruit in-house security professionals, which hampers security efforts.
- Insufficient resources to ensure adequate regulatory compliance to local legislation, such as the Personal Data Protection Act (PDPA).
- Lack of visibility over rapidly-growing infrastructure prevents some FinTech firms from carrying out 24/7 monitoring.
Executing a cybersecurity strategy in-house, then, is a risky option. Outsourcing data privacy efforts to a third-party managed services provider (MSP) can ease a FinTech’s cybersecurity burden, especially fast-growing ones
Choosing the right MSP gives you access to a cybersecurity team with in-depth field experience, technical knowledge, and 24/7 support capabilities.
You can also onboard an MSP and familiarise them with your FinTech firm’s security teams much faster than with a new in-house IT security hire.
Plus, MSPs can provide a host of services to bolster the data security of your FinTech firm, including detection and response to security threats, penetration testing of their products and services before market launch, and guidance on the latest compliance updates.
More importantly, MSPs allow your FinTech firm to focus its resources on growth, while still ensuring the security of their customers’ data.
Data Security Is A Priority Of FinTech Firms
The rapid growth of the FinTech sector over the past few years, and the vast amount of data collected by businesses in the industry, puts FinTech firms like yours squarely in the sights of malicious actors.
Failing to address the cybersecurity threats that are emerging in your industry could turn out to be costly for your business.
You could establish an in-house security team, equipped with the necessary tools to implement a robust cybersecurity programme for your Fintech firm.
However, this approach is costly in both time and resources, which are both valuable for a fast-growing FinTech firm like yours.
Alternatively, you could outsource your security needs to a trusted third-party MSP.
This is not only efficient and cost-effective, it also eases the burden of data security on your FinTech firm, and allows it to focus on its core value proposition and boosting its competitive edge.
At AFON, we can be that MSP for your FinTech firm. With the IT expertise and the technology at our disposal, you can entrust the security of your FinTech firm to us.
If you'd like to know more about what we can do for you, do schedule a free consultation with us today!