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The COVID-19 pandemic has opened the way for great opportunities for FinTech companies. Customer penetration has increased to record highs in an effort to ride the digital transformation wave that everyone wants to be a part of.

However, with new opportunities come new risks, especially the cyber security kind. According to an Accenture report, financial services incur the highest cybercrime cost of all the industries studied. Just think about one of the largest data breaches in recent history, the Equifax incident in 2017, which exposed the personal information of 147 million people. Equifax has spent $1.4 billion on security upgrades alone in the wake of the incident. Of course, that doesn’t include the compensation paid to people whose data was breached, legal expenses, and many other costs.

In the long run, we expect more and more FinTech companies to be the target of similar attacks.

Why?

While startups in this industry can move fast and innovate quickly, as soon as they start to grow they become viable targets for cyber criminals. After all, what’s more attractive than financial AND personal data all wrapped in a single package? This is exactly what FinTech companies hold and what makes them so likely to be the target of cyber-attacks.

If you run a FinTech company, cyber security should be your top concern. Yes, even before innovation.

To mitigate risks, you have to get to know them first. These are the top 10 cyber security challenges for FinTech companies in 2021:

  • 1. Cloud Computing Security Issues

More and more financial services like digital wallets, payment gateways, internet banking services, and others rely on cloud-based platforms. The benefits of cloud computing are undeniable: speed, accessibility, scalability – to name a few.

However, it also has a lot of data flowing through it and this makes the cloud a perfect smoke screen for attackers. This is why it’s essential to choose a reliable cloud provider, whose security approach is up-to-date and pro-active.

  • 2. Malware Attacks

Perhaps the most prominent example here is the series of attacks on SWIFT (the Society for Worldwide Interbank Financial Telecommunication), the protocol that most banks and other financial institutions rely on.

While newer FinTechs are moving away from SWIFT and into blockchain-based payment protocols, the malware attacks are still an important risk. Unlike other types of attacks, malware can use multiple entry points from various sources: emails, pop-ups, malicious websites, third-party software, and so on. These attacks are especially dangerous as their rate of transfer is high and as they can cause whole networks to crash.

Features like automated real-time malware detection and regular VAPT can keep your FinTech safe from malware attacks.

  • 3. Application Breaches

FinTech companies rely heavily on applications that allow end-users to fill in sensitive data and transfer money with a single screen touch. Applications are also one of the main attack vectors.

Since they are user-facing, gaining access to them is easier than gaining access to the company’s network directly. But if an attacker has gotten access to your application, it’s only a matter of (short) time until they gain access to your entire network.

Regular vulnerability scanning is essential for any mobile or web application, along with penetration testing.

  • 4. Money Laundering and Cryptocurrency-Related Risks

Cryptocurrencies have gained a lot of popularity in recent years, but they have also established themselves as a major security challenge for FinTech. Since the origin of the money can be anonymous, cryptocurrency can be used to launder money.

More notably, cryptocurrency transfers can be scams that hackers use as entry points for data theft. Such a security risk can cause both significant financial losses and law enforcement problems.

This is why FinTech companies that deal with cryptocurrencies should only use secure trading platforms. Even more, it’s important to stick to mainstream cryptocurrencies that are universally recognized.

  • 5. Identity Theft

Most financial institutions use biometrics, passwords, or one-time payments to ensure the security of each transaction and to verify the identity of the person who initiates it. However, there is a major drawback of these methods: they can easily be replicated and become an entry point for hackers who can then siphon large amounts of money.

The best way to mitigate this risk is to use more than one verification gateway. Better yet, the verification gateways should be based on different principles and technologies to make penetration more difficult.

  • 6. Meeting Compliance Requirements

Depending on the types of financial institution you run (Specialized Bank, Electronic Money Institution, Payment Institution), you may have to comply with different standards related to security and data privacy, like GDPR, PSD2, PCI DSS, and so on.

Failing to meet the compliance requirements can result in hefty fines but, more importantly, in major security flaws.

  • 7. Scalability Issues

“Growth pains” are inherent to startups, especially in the FinTech industry. Why? Because growing means scaling your infrastructure constantly.

Ideally, you should have a highly-scalable infrastructure in place from the very beginning. But, even if that is the case, the fast developing cyber security challenges in this field will require additional changes in your infrastructure. Which brings us to the next point;

  • 8. Financial Challenges

Securing FinTech infrastructure can get very expensive very fast. Irrespective of how scalable your architecture is, you will need to change or improve your infrastructure constantly.

However, it is important to note that the investment in cyber security measures and tests are a drop in the ocean compared to what you stand to lose if you forego them.

Looking for affordable cybersecurity solutions for FinTech? Talk to our experts and get a personalized offer.

  • 9. Mobile Platforms and IoT Devices

We now have access to our financials anytime, anywhere through our phones and other mobile devices. The only problem? So do hackers!

The more devices are used to access a certain account, the greater the chances of that account being broken are. IoT and voice assistants add considerably to this risk.

While moving fast is imperative in FinTech, it’s also recommendable to add new supported platforms only after heavy security testing.

  • 10. Convenience or Security?

Customers want fast access to financial products. FinTech companies know that oftentimes they have to choose between convenience and security.

However, the increase in regulatory bodies and compliance requirements in FinTech will force the industry to strike a solid balance between convenience and security before launching a new product.

  • Final Thoughts

The only industry that develops as fast as FinTech is cybersecurity, although the latter seems to be one step behind attackers. For financial institutions, cyber security is a major concern and a major expense.

Affordable cyber security solutions for companies of all sizes are the only way to be one step ahead of attackers for a change. This is why at Bluedog we have made it our mission to provide SMEs with the security solutions they need to keep their digital assets safe but without breaking the bank.

Want to know what we can do for your security? Request a free demo of our solutions!