Today, approximately 75% of global consumers use at least one fintech-powered financial service, and that number is expected to increase as more people embrace these services.

Unfortunately, while fintech offers some great benefits such as improved customer experience, it also presents some risks— fintech apps are a gold mine for threat actors looking to steal valuable financial and personal information. Just think of the 2017 Equifax incident, which exposed the personal information of 147 million people.

That said, as more people adopt fintech, cybercriminals are launching increasingly creative attacks, making fintech cybersecurity more critical and more challenging than ever.

This post outlines high-risk fintech challenges you should be aware of so you can develop the right strategies to manage personal data and protect your organization from cyberattacks.

Top Cybersecurity Challenges in Fintech

Financial services companies handle and manage the storage of confidential data for individuals and businesses. This data is usually targeted by threat actors, looking to steal and sell it on the dark web or use it to hold an organization at ransom.

Here’s a look at the primary cybersecurity challenges in Fintech:

1. Data Breaches
Fintech apps contain large volumes of personal and financial data, including bank account numbers, credit card numbers, security question answers, and customer addresses. Such data is usually targeted by threat actors looking to sell it on the dark web or use it to commit financial fraud. To get hold of this data, the threat actors use malware and phishing attacks to breach vulnerable API endpoints.

You can prevent data breaches by promptly identifying and correcting business logic flaws before hackers get a chance to exploit the legitimate functionality of your application to access sensitive data.

2. Identity Theft
Cybercriminals often use hacked or stolen credentials to impersonate and access users’ accounts on fintech apps, allowing them to steal personal information and money. The most common identity attack used by bad actors entails API attacks compromising authentication tokens and other verification tools meant to keep the accounts secure.

You can prevent identity theft by developing measures to manage personal data and implementing strong authentication solutions in your security policy.

3. Integration Loopholes
Fintech services such as mobile transfer require that apps interact with legacy banking systems. However, integrating modern apps with legacy systems can be challenging, especially since it usually involves numerous custom APIs. Without thorough testing and extreme attention to detail, you can easily leave loopholes the threat actors can exploit.

As a rule of thumb, you should frequently conduct vulnerability scans to identify vulnerable API endpoints and protect them from exploitation.

4. DDoS Attacks
DDoS attacks involve hackers flooding an app with traffic in an attempt to crash it, and ultimately force a security breakdown. Since most fintech apps lack resource restrictions or rate limiting for fending off DDoS attacks, they are usually susceptible to these attacks. You can defend against DDoS attacks by simply enforcing rate-limiting.

5. Phishing Attacks
Phishing attacks are among the most common cyberattacks. In fact, there have been over 255 million phishing attacks in 2022. so far. These attacks occur when cybercriminals pose as trusted individuals or organizations to trick users into divulging their personal or financial information. A successful phishing attack can result in significant data theft or data breach.

Phishing attacks can be prevented by training employees on how to identify these attacks and avoid falling victim to them.

6. Insider Threat
Insider threats can manifest in different ways such as a dishonest or disgruntled employee intentionally leaking or destroying data. It could arise as a result of an employee falling victim to a phishing attack.

Either way, it’s a threat you can't ignore. Implement account and password management policies within your organization to mitigate insider threats.

7. Regulatory Compliance
While regulatory compliance isn’t a cybersecurity risk per se, it’s a challenge that the fintech industry faces. Banking financial services companies must comply with various data privacy laws, banking regulations, investing regulations, payment processing standards, and standard security protocols, the failure of which could lead to them incurring heavy penalties.

You can consult with a cybersecurity specialist to ensure you remain compliant with cybersecurity and data privacy regulations.

Wrapping Up
The fact that cybersecurity poses a challenge in fintech can’t be refuted. With that in mind, you need to identify the cybersecurity risks your organization faces and then develop measures for protecting it against those risks.