Most financial institutions rely heavily on applications to help end users complete transactions. Application developers must be aware of the challenges and risks to implement effective security measures to mitigate them.
With the onset of digital payments and wallet options, the Fintech ecosystem has been expanding at an exponential rate. A wider adoption of innovation and technology in the finance industry has created countless opportunities to improve customer experience. However, opportunities do not come without some unavoidable challenges, and one of the biggest issues facing the Fintech sector right now is unquestionably security.
The rise in cyber-attacks has resulted in some significant monetary losses for financial institutions.
As financial services become fully digital, the number of cyber-attacks is rising alarmingly. Even worse, financial services companies occasionally fail to detect a data breach until it is too late.
Here are the top Fintech security issues that, if not addressed, could harm the company:
Data Security is a Top Concern
The Fintech sector’s biggest issue is data breaches and identity theft. One-time passwords and other forms of authentication are used by Fintech companies to protect the payment system. Threat actors are still able to access these systems, stealing financial and personal data. Fintech companies have always had the risk of data breaches as cyber threats become more sophisticated every day; achieving comprehensive security in the digital environment can be quite a challenge.
Security Concerns Around Cloud Computing
The days of storing data on personal systems or in local data centers are long gone. Cloud computing has become the foundation for the online delivery of financial services. It’s crucial to be aware of a few security issues as cloud technology becomes more prevalent. There is no denying that accessibility, speed, and scalability are advantages of cloud computing. However, given the volume of data passing through the cloud, attacks can be launched more easily. Financial institutions must ensure that the cloud services chosen for them are reliable. A minor breach can quickly grow into an irreparable loss.
Third-Party Security Risks
Another security risk that affects financial institutions is third-party access. Financial companies frequently use third-party applications. But hackers also use these third-party applications as a point of access. They provide hackers with an opportunity to pretend to be legitimate users in order to get access without authorization, compromising data security. Financial institutions must select a reliable service when working with third-party software.
Another common cyber threat affecting the financial services industry is malware attacks. Users are vulnerable to malware attacks when using unreliable websites, emails, or third-party software. Malware attacks are more likely to spread faster and result in irreparable damage.
Compliance is a Challenge
For the security of sensitive data that is exchanged, financial services companies are required to adhere to several regulations and standards. For Fintech organizations, compliance is a significant barrier because it calls for the deployment of stringent security processes to ensure that there are no gaps that hackers could exploit. Furthermore, compliance must be maintained without compromising the performance of software and applications. While some regulations apply to all financial institutions, others are specific to the industry that a company is in. Financial institutions would be subject to severe penalties for non-compliance.
Migrating from an Existing Banking System
Data exposure during the migration to newer systems is a significant security problem. Fintech companies are quickly replacing legacy technologies with newer ones. Although it is a step in the right direction, security is compromised while the transition is taking place. The risk increases with migration complexity. When a lot of data is transferred from one place to another, security flaws are inevitable. As security weakens during the migration period, threat actors have a golden opportunity to take exploit the core banking system. Fintech companies must pay close attention to security concerns during migration.
While certain security lapses can be attributed to the desire of companies to be first in the market, it is undeniable that cyber-attacks have also evolved to be more sophisticated than they once were.
Fintech companies must design plans and processes for the secure development of systems and applications and remain alert to cybersecurity issues. Security must not be an afterthought; it must be given top priority as soon as the idea of creating an application or providing services online is conceived.