The fintech industry is undergoing extraordinary transformations that are digitalizing how individuals and organizations interact and conduct finance-related services.
With the advent of fintech apps, businesses can now automate payment transactions, data security, finance management, and other critical financial aspects like insurance management. However, bold innovations open the possibilities for substantial threats, such as the current explosion of cyberattacks.
As digital financing becomes widespread, fraudsters are equally updating their tactics to bypass the security protocols of fintech applications. This underscores the urgency for robust safety measures to protect customers and organizations from cyberattacks.
This article details the common risks associated with the fintech industry and offers practical tips to overcome them. Read on to learn more
Six practical ways to enhance fintech app security
Cyber threats are diverse and have varying levels of severity and consequences. To fortify the security of your fintech solutions, you require an all-around strategy that incorporates industry-standard practices at every phase of development and operations. Follow these tips to get you started;
1. Maintaining compliance with regulations
Most organizations adhere to industry regulations and policies like GDPR and PSD2 to escape fines and other legal actions; what they fail to realize is that these regulations have the potential to form a solid framework for secure fintech development.
For instance, critical aspects of compliance, such as the rules to monitor transactions for AML, aim to protect integrity and credibility, and as such, mandate fintech platforms to authenticate customer identities, keep track of user activities, and integrate automated tools like transaction monitors to detect and flag suspicious transactions.
Also, AML policies require fintech services to make regular audits. These audits make your data security infrastructure more resilient to attacks by identifying outdated systems, poor access controls, and gaps that may exist in your data security protocols.
Staying data compliant has other immense benefits, such as keeping fintechs one step ahead of cybercriminals. Instead of waiting to respond to attacks after they have wreaked havoc, AML helps you predict and prevent imminent threats that may sabotage company growth.
In a time where customer trust and loyalty define business success, embracing a data compliance culture reinforces transparency and demonstrates your organization as a reputable brand.
2. Embracing a security-first coding workflow
Building a secure fintech strategy also implies getting everything right at the start of the development cycle. Developers must adhere strictly to coding fundamentals that align with industry best practices and conduct regular assessments of code for possible vulnerabilities.
What better way to start than filtering all customer inputs to keep harmful data out of the system?
Developers can use data encryption to protect sensitive data during transmission and storage. Fintechs can also prioritize software security tests like penetration testing and state-of-the-art analysis to detect and eradicate vulnerabilities before integrating them into workflows.
Furthermore, software developers should conduct regular updates on third-party libraries and frameworks to fix known security vulnerabilities and also ensure equal security attention is given to both internal and external dependencies.
3. Upgrading authentication and validation procedures
Approximately 86% of data breaches stem from stolen credentials, like usernames and passwords. To that effect, fintechs can deploy multi-factor authentication (MFA) to prevent cybercriminals from gaining unauthorized user access using customer login details.
MFA is designed to add extra verification procedures beyond inputting a password or PIN. It could be in the form of tokens, One-Time Passwords (OTP), or push notifications. Alternatively, it could also be biometrics, like facial and fingerprint scanning, to ensure only users can gain relevant access to their data.
While there is no fool-proof authentication protocol, especially at a time when biometric hacking is becoming increasingly popular, hackers do have a hard time bypassing biometric security measures compared to other forms of validating user identity.
4. Integrating AI and machine learning tools
The AI revolution is reshaping the fintech landscape, automating the process of data analysis to derive insights, identify vulnerabilities, and prevent anomalous activities that can translate into real-time fraud attacks.
Additionally, ML-based software can learn from past events, like transaction history, to flag inconsistent spending patterns or bulk and rapid fund transfers. Fintechs can also integrate AI into verification operations like facial and document authentication to ensure fraudsters are not impersonating real customers.
As AI tools are versatile, fintechs can also use them in risk assessment to evaluate the creditworthiness of customers with little or no transaction history.
Leading firms understand the potential of AI and ML and how they can reshape the security standards of an organization. Investing massively in AI systems can reduce cyberattacks of any sort, allowing fintechs to build a more secure and scalable business.
5. Defining user roles and permissions
Role-based access control (RBAC) is a critical aspect of fintech app development that ensures optimum security by defining user-specific roles within a system. This security protocol solves the challenges associated with unauthorized user access and controls.
By clearly defining roles and granting required access, fintechs can ensure that users only have access to areas within their specific roles and they can only see or work on activites that match their job description.
RBAC can be very effective when it comes to protecting sensitive information since user permissions are given to only authorized individuals. With this, the likelihood of data breaches is greatly reduced, and it becomes easier to narrow down points of leakage and privilege escalations.
In fintech, it’s important to draw clear distinctions on file accessibility and usability, such as financial reports and company invoices. Depending on the nature of the intended activities, you can provide viewing, commenting, and editing access, depending on individual roles.
6. Safeguarding the API and third-party software
Application Programming Interface (API) is a defining element in the development of fintech applications. It enhances communication and data sharing across various systems, allowing fintech apps to integrate with other platforms for seamless financial services.
However, cybercriminals often exploit the vulnerabilities in API to gain unauthorized access and perform fraudulent activities. As a countermeasure, fintechs can implement safety protocols like OAuth 2.0 and OpenID Connect to validate and authorize access to specific API endpoints.
Developers must ensure all data inputs are validated to the tee to prevent injection attacks. Responses should also be filtered to avoid exposing sensitive information. Furthermore, implementing rate limiting and strict access control systems can prevent abuse and unauthorized access.
And of course, regular system updates should be conducted throughout the whole system. It could reveal new vulnerabilities. Since security testing is a continuous process, developers can identify potential issues and take proactive steps to address them.
The most prominent threats to fintech application development
Having taken you through workable tips to safeguard your fintech platform from cyberattacks, let’s check out some of the most common threats in the finance industry.
- Phishing attacks
Fraudsters use deceptive means to lure customers into revealing sensitive information, like personal information and login credentials. They often pose as trusted personnel or use fake emails, messages, or calls to gain unauthorized access to financial data.
- Data breaches
Hackers exploit the vulnerabilities in fintech applications, such as misconfigurations, poor access controls, or outdated systems, to gain unauthorized entry. Stolen information results in fraud attacks and reputational damage.
- Insider threats
This happens when negligent or resentful employees, business partners, or contractors who have authorized access intentionally or accidentally expose confidential information.
- Malware and ransomware
Cybercriminals use malicious software to corrupt computer programs until a ransom is paid. Fintechs are usually prime targets since they handle multiple transactions and high payouts.
- Scams and identity theft
Fraudsters impersonate original users or customers using fake identities, stolen information, or fabricated accounts to exploit fintech platforms. It often leads to significant financial losses and may attract the involvement of financial regulators if not addressed in time.
Other forms of cyberattacks include DDoS attacks, account takeovers, API vulnerabilities, and many more.
Fortifying security protocols: key to building a resilient fintech ecosystem
If hackers and other cybercriminals are upgrading their tactics and re-strategizing to beat security standards that exist in fintech applications, software developers should be extra attentive to heightening their security profiles.
If done well, each of the tips mentioned above can enhance your security standards and eradicate the possibilities of cyberattacks. Naturally, customers are drawn to fintechs that prioritize a security-first approach in all operations.
Building a secure fintech in itself has a competitive edge; it enhances your brand reputation and goes a long way in attracting and retaining business prospects. Thanks for reading, and I hope you found this article beneficial.
