As with every other sector that has embraced digital transformation, cybercrime has become a more prominent threat in finance. According to VMware’s Modern Bank Heists study, since the COVID-19 pandemic, there have been 238% more cyberattacks on companies in the financial sector, a shocking rise.
The recent string of attacks on DeFi platforms shows clearly how fintech companies tend to be a big prize for bad actors. Fintech apps, especially, tend to offer the potential for massive payoffs. Attackers can also cause more damage by targeting users of the tech, who may implement less rigorous cybersecurity measures. One malicious app can strip fintech users of their assets and leave the fintech company with a reputation in shambles.
Fintech companies are having to rethink how they approach their identity and access control strategy to ensure that their platforms are equally trusted by both consumers and businesses. As this industry continues to adapt to the cloud, it’s imperative that the proper controls be put in place to retain an organization’s security posture — and this comes with its own array of challenges.
Why Fintech Applications Are Hard to Secure
Cloud development has made new types of apps possible and existing apps work better than ever. However, it has also generated new opportunities for misconfigurations, human error, and identity management issues, and it has rapidly expanded potential attack surfaces. Because fintech apps are leveraging a massive range of technologies, this continues to be one of the most challenging areas when it comes to security.
Whether moving a legacy app to a new and better cloud-based architecture or expanding existing capabilities, any type of change leaves an organization vulnerable at cloud scale. This can make the blast radius of a single attack much larger, since an infrastructure’s attack surface now expands and is dynamic in the cloud.
Fintech applications also must meet tight regulatory standards that vary around the world, and often face steep fines for noncompliance. For example, in 2019, the Spanish DPA fined a financial service provider 1 million euros due to an insufficient legal basis for data processing, which violated General Data Protection Regulation (GDPR). Operating in the financial realm means providing a higher level of accountability to customers and across the industry, which can be a tall order. Fintech demands that organizations ensure visibility, reliability, and correct configuration.
To stay competitive in this very crowded arena, fintech companies need to keep a tight grip on security and privacy from day one of development, especially as third-party services continue to grow.
How Third-Party Services Can Increase Security Challenges
As fintech organizations become more dependent on vendors and other partners such as manufacturers, suppliers, and subcontractors, as well as increasingly complex supply chains, they also become more exposed to attackers. Respondents from CRA Business Intelligence’s recent Third-Party Risk Survey believe that third parties are increasingly the cause of IT security incidents, with more than half of all respondents (57%) reporting they were victims of an IT security incident — either an attack or a breach — related to a third-party partner in the past 24 months.
Organizations often lack visibility into third- and fourth-party partners, and with that, the vast scope of data accessible to them. In today’s software-centric world, interoperability is essential, but it often leaves organizations even more vulnerable to attackers. Fintech developers must remain constantly alert for potential software supply chain issues and the security challenges third-party services can bring to their organizations.
Remaining Compliant Amid Tight Regulatory Standards
In direct response to recent high-profile cases of fraud within cryptocurrency, regulators are beginning to pay even closer attention on the already highly regulated space, creating a challenge for fintech applications and companies to stay on the pulse of these changes and remain compliant and protective of their sensitive information. According to Gartner’s Fintech in 2022 Report, fintech leaders ranked regulatory challenges as the top threat to their business right now.
In the midst of these shifting regulations and requirements that vary around the world, including Payment Card Industry Data Security Standards (PCI-DSS), Anti-Money Laundering (AML)/ Know Your Customer (KYC), and newly established California Privacy Rights Act (CPRA) regulations, companies are being pushed to button up their data protection and privacy standards. So, how can businesses remain compliant?
Every enterprise must know who has access to the data and applications, their location, and what they do with it. As threats continue to grow exponentially within fintech, implementing identity and access management (IAM) tools will be essential.
It’s important for an enterprise to have the proper technology and processes in place to not only ensure they remain compliant with industry regulations, but also provide consistent protection for their sensitive data, especially in the cloud. IAM tools, for example, provide organizations security that won’t slow down development or add more work for their teams.
The security threats posed by financially motivated cybercriminals will unfortunately only become increasingly sophisticated. The fintech industry is faced with much pressure to protect sensitive customer data and needs to be prepared for cyber threats by establishing a proactive security posture and robust identity and access management strategy that can handle the complexity and scale of today’s cloud security challenges.