Making a safe and secure FinTech application can be challenging and expensive. According to Atos, a European multinational information technology services and consulting business, $50 billion is invested in FinTech annually. 

According to another Allied Market Research report, global FinTech will be worth $698.48 billion by 2030. Rising client demand for e-financing, a surge in FinTech implementation in banks and other institutions, and increased internet usage in everyday life are all factors driving the global rise of the FinTech industry.

Based on the facts shown above, it is clear that the financial services business has seen a significant transformation in recent years. As the sector contains sensitive information about FinTech companies and individuals, it is a prime target for hackers seeking quick cash. As a result, the industry must be alert to cyber security concerns.

What are the Cybersecurity Threats the FinTech Industry is Facing?

For decades, thieves have targeted financial institutions. The first bank theft took place in 1831. Since then, banking has evolved into fintech financial institutions, making significant advances in the digital arena.

The following are some of the threats the industry is currently facing:

Theft and Phishing

Hackers extort or hack users’ login information and impersonate account holders to get illicit data access and steal funds. 

It is repeatedly performed using API hacks designed to compromise authentication tokens. As a result, having verification is critical to any fintech’s security approach.

DDoS

A DDoS attack occurs when hackers attempt to flood a website or application with traffic. They are highly detrimental to FinTechs because many APIs lack rate limiters. 

Rate limiters govern the frequency or quantity of user or IP requests, which helps to prevent distributed denial of service attacks.

Third-Party risks

Third-party risks are related to a breach or other security incident caused by a third-party vendor or partner.

A cybercriminal, for example, may gain access to a financial company’s system by exploiting a hole in an outsourced company’s system. 

It should include doing background checks and reviewing their security rules and practices. Contracts with third-party contractors should contain cybersecurity restrictions. It includes routinely monitoring their security posture to ensure they fit the criteria.

Data breaches

Fintechs acquire massive amounts of personal and financial data from their users, including credit card details, bank account numbers, and even responses to security questions.

As a result, their databases are a veritable hacker honeypot, with hackers able to utilize and sell the information.

Malware and phishing attacks are the most popular methods for accomplishing this. As a result, it is vital to check all consequences and risks associated with API usage.

Penetration Testing

It is just an expertly performed simulation of an attack by a hacker. Furthermore, these experts can find security flaws in the system before hackers do, protecting the company and its customers. They have access to the same tools that actual criminals use to breach security.

Strategies for Improving Cybersecurity in FinTech

First and foremost, a financial organization should start with a plan and a thorough understanding of the fintech solution requirements. Data security for fintech applications should cover the following sensitive financial information.

Secure Code and Encryption

The code is crucial for application security. As a result, one of the fintech app security tips is to plan ahead of time and how to handle any potential flaws or weaknesses in the application.

On the other hand, encryption creates algorithms that convert data into code that can only be seen by the intended receiver. If the material is correctly encrypted, unauthorized individuals cannot access sensitive information without the decryption key.

Secure Data Communication

Another crucial procedure requires the use of encryption technologies. There are a variety of financial industry-tested encryption algorithms on the market to choose from.

The AES (Advanced Encryption Standard) algorithm is one of the most secure and resistant to cryptanalytic attacks. The United States Federal Government makes use of it.

The TripleDES (Triple Data Encryption Standard) technique is utilized for securing credit cards, PINs, and passwords.

RSA is suited for small-scale financial companies with limited data transit and processing capabilities.

Twofish uses network applications involving frequent changes and programs that do not require RAM or ROM.

Multi-factor authorization

Accessing mobile banking apps will require more than just a login and password. Businesses must verify that the app has two-factor authentication, which requires a step to log in.

The user can input a phone number, email, ID, Touch ID, or Face ID. This verification is likewise required to complete all transactions, regardless of their value.
Approvals and Functions

FinTech applications have many features, but access is limited to specific user profiles for security purposes. Role-based access control (RBAC) is a method for creating and organizing permissions. 

It is easy to implement since it works as administrators expect. Another paradigm is the ACL (Access Control List), which lists all of the operations that a particular user is allowed to conduct.

Payment Suppression

One security measure that banks commonly use to prevent financial fraud and money laundering is the payment-blocking feature. It functions by causing the system to halt any strange or questionable transactions.

Assurance of Quality

The testing stage of the software product development process is vital. As a result, financial app security solutions must have quality assurance engineers and regular testing. 

The first elements that must be examined in publicly accessible locations are network equipment, servers, and domain name systems. Furthermore, the focus must be on the operating system, database, storage, and other attack-prone systems.

Provide internal testing to ensure that everything functions properly on the client end. It includes testing the application in the browser to confirm that no vulnerabilities exist.

Server security testing is another type that ensures correct frameworks and technologies are operated in the software.

Tokenization

Card numbers, expiration dates, and CVV codes are all secret and should never be kept in cleartext in a single database. It makes it difficult for unauthorized users to access and read data.

Tokenization is a method for reducing the risk of identity theft and credit card fraud. It ensures that vital card information is securely stored in the database, whereas the app database only keeps cardholder information like names, addresses, and so forth.

ZTA, or zero-trust architecture

ZTA models differ from standard cyber security models, which depend on ongoing verification. Conventional systems require only a single password entry for users to gain access. 

People consider them to be reliable. ZTA increases the difficulty of stopping hackers from wreaking massive damage and facilitates the simpler containment of cyber security breaches.
Blockchain

It is possible to alter an immutable data chain using blockchain technology without creating a record. As a result, anyone can leave behind independently verifiable information footprints.

AI & ML

Artificial Intelligence (AI) is a commonly used acronym. Fintech companies need to understand the constantly changing data security landscape they face.

AI is getting better at sifting through vast volumes of data to identify patterns and highlight potential instances of financial crime.

Specifically, you can use AI and ML to do the following tasks:

• Improve their ability to make financial decisions and include security
• Identifying and stopping fraud
• Assist customers
• Create budgetary estimates

Conclusion

Finally, a few aspects must be stressed before we conclude this thorough analysis of the cyber and security challenges facing FinTech software development. 

Fintech cybersecurity is an indisputable issue as, despite the financial technology industry’s evident potential and exceptional achievements, safeguarding these platforms is nonetheless imperative.

It is also clear that any fintech company hoping to thrive in this changing environment must take third-party risks seriously. Every action that is handled, from storing backups resistant to ransomware to controlling API security, goes toward laying the groundwork for effective cybersecurity measures.

Techniques like leveraging AI, applying machine learning, and integrating advanced analytics demonstrate the potential impact of tech-driven approaches on fintech cybersecurity. Following the Zero Trust principles emphasizes how access control can significantly reduce unanticipated financial fraud vulnerabilities.