The financial landscape has been going through a significant digital transformation throughout the last couple of years. New digital solutions have enriched the fintech sector, which also made room for new security risks and even more advanced cyber threats. As it was reported by Accenture’s 2019 Ninth Annual Cost of Cybercrime report, the sector of financial services had the highest cybercrime costs out of all other industries.
Fintech Cybersecurity Risks
The risk of information theft within the fintech industry has grown tremendously since 2018. These are some of the most prominent fintech cybersecurity risks:
- Malware attacks – As the most common type of security issue, malware attacks are the number one risk all banks and financial institutions have to deal with. Any business that exchanges vital financial information is at high risk of malware attacks.
- Data breaches – Fintech businesses deal with a vast amount of credit card details and sensitive data, which motivates attackers to perform data breaches and steal valuable information. Financial service providers are likely to partner up with third parties, which further increases the risk of data breaches.
- Software application risks – Fintech services use software applications to perform real-time transactions and data transfers. A faulty software application with poor security can shake up the whole system and create a backdoor for hackers to breach through.
- Money laundering risks – Many banks that use fintech solutions rely on cryptocurrency for financial transactions. Since cryptocurrencies allow for anonymity when making transactions, they also leave room for money laundering operations, which exposes entire organizations to risk.
- Digital identity risks – Thanks to the ongoing digital transformation in this sector, customers can now use mobile-based services secured with one-time passwords. However, these temporary security codes are not the safest solution and they can easily be accessed by hackers and third parties.
Safeguard Your Fintech Startup
Given the amount of sensitive data fintech startups have to shuffle around, it is crucial to ensure the highest level of security and preparedness. On top of combining the common security measures, fintech businesses should make use of governance tools such as File Level Encryption and other tools for the prevention of data loss.
Another helpful resource to look into is the NIST cybersecurity framework which serves as a guideline to establishing a durable security system. However, the best thing you can do to protect your fintech startup is to bring together a team of security experts with experience in the field. You should put your company’s data and reputation into safe hands, meaning you will have to choose the best individuals for your team of security defenders.
If hiring a full-time in-house security expert is out of your budget right now, consider partnering with an MSSP or a managed security service provider. This is a way more financially realistic solution for brand new or small fintech startups with lower budgets. Once you’ve set a proper security strategy in place, consider testing it by simulating attack scenarios and assessing your system’s capabilities.