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When a fintech company becomes a target for a cyberattack, there's more than just finances at stake. A successful attack will irrevocably damage a company's relationships with its customers, ruin trust, and break compliance with security standards. Therefore, maintaining high cybersecurity standards is paramount for any participant in the fintech market.
In this article, we're going to take a look at the main cybersecurity threats that endanger fintech companies, the most important regulations, and policies to comply with, and consider some practices for implementing banking custom software to enhance a company's levels of security.
First, let's take a look at legal regulations and policies that define the shape of the modern fintech cybersecurity context.
While there are common practices in the global fintech legislation, the exact regulations a company would need to comply with still depend heavily on the company's country of origin. Let's focus on more widespread regulations that are most likely to be used for compliance.
This regulation is used in European Union countries. eIDAS stands for "Electronic Identification and Trust services". The main goal of this regulation is to help solve complications in the legal field which arise during electronic border crossing for all kinds of financial institutions and private users.
While GDPR is considered another European set of regulations, it is widely used all over the world: any financial cooperation with European companies or end-users requires compliance with it. A short for General Data Protection Regulation, GDPR covers e-payments and provides an additional level of data security and performance in banking.
There are some notable overlaps between GDPR and Payment Service Providers Directive 2 (or PSD2), and certain legislative problems might arise if your activity is subjected to compliance with both, as stated in a research by Deloitte.
This set of regulations is a revamped iteration of the original Payment Service Providers Directive (created back in 2007) and has the main goal of enhancing the competition in the world of electronic payments and encouraging the creation of new electronic means of payment.
In the UK financial activities are regulated by FCA or Financial Conduct Authority. The main goal of FCA is to protect the end-user and enhance the overall level of market safety. If you want to start a fintech project in the UK you'd need to register with the FCA too.
Practicing somewhat more strict regulations and laws, GPG13, or The Good Practice Guide regulates the activities of those financial institutions which are cooperating with the United Kingdom's government. Relations with state affairs, of course, leave their mark on GPG13, and as a result, it includes quite detailed and heavy regulations aimed at cybersecurity and preventing intrusions.
If you want to cooperate with Japanese financial institutions (from abroad as well), you need to make sure that your activities comply with the Act on the Protection of Personal Information or APPI. This set of regulations deals with the protection of the private information of Japanese residents.
Due to its complicated relationships with its closest neighbor, South Korea has some of the more harsh regulation laws in the world. PIPA or the Personal Information Protection Act can cause not only administrative responsibility but a criminal liability as well if violated.
Wherever a fintech company is located, if it deals with credit cards, it would require compliance with the Payment Card Industry Data Security Standard or PCI DSS. In particular, if a company wants to provide services for Visa, or MasterCard, PCI DSS validation is mandatory. This regulation set is somewhat flexible, providing four levels of standards depending on the number of transactions a company conducts annually.
A set of policies used in fintech to ensure data protection. ISO/IEC 27001 helps fintech establishments protect the information used in their service providing, covering access control, cryptography, and many other aspects.
All these regulations were not created just for the sake of bureaucracy: the fintech sector is full of cybersecurity threats.
The fintech industry attracts a lot of money, more with each passing year. It makes the sector a natural target for all kinds of cyber criminals and malefactors, trying to get possession of valuable data, or conduct plain unauthorized transactions, effectively stealing money from fintech participants. According to the IBM report, financial service providers are one of the most targeted organizations by criminals.
With cybersecurity being a quite complicated matter, the probability of mistakes is high, creating more opportunities for criminals. Here are some most notable security problems in fintech:
The number of possible breaches grows in correlation with the increase in fintech services and solutions. To deal with this ever-persistent fintech threat, industry participants use a great number of financial security solutions.
Any fintech company that cares for its reputation and customer relationships should invest serious resources in cyber protection. There are several effective practices often used to build a good fintech cybersecurity solution:
Encryption ensures a great level of protection for digital information. It is conducted using various algorithms, such as 3DES or RSA, and can provide further protection by establishing token vaults and tokenization of data.
Access to information should be strictly regulated, with only a handful of appointed users having access to sensitive information at any time. Furthermore, a solution should include means to monitor all interactions with information databases.
Of course, strong passwords are mandatory for any fintech institution, however, they are not enough. If you want to ensure the top level of security, you'd need to use advanced authentication technologies, such as one-time passwords, short sessions, and adaptive authentication.
A fintech company can never be completely secure from cyber threats, therefore a security solution that fixes all potential issues once and for all is impossible. Security is a process of constant awareness, relevant throughout the whole product lifecycle. To maintain this process, a company can use DevSecOps methods, drastically increasing security at all stages.
Desktops-as-a-Service, or DaaS, is one of the key types of cloud services that really help companies to maximize cybersecurity as part of a digital transformation effort. DaaS securely provides virtual apps and desktops to any gadget or location. DaaS solution makes it simple to control and secure desktops in any location.
With the constant growth of the fintech market, new technologies and fintech app security solutions are likely to keep emerging at an increasing rate. Cybersecurity threats will surely follow, creating a never-dwindling supply of problems for the industry participants. It is important to stay constantly aware of these threats in order to succeed in the growing market.
