Digitalisation has given a boost to the use of the internet. However, with the increasing usage, the need to be aware about cybersecurity is also important. Knowing about cybersecurity can help you protect computer systems, networks, and digital assets from unauthorized access, attacks, damage, or theft. As financial technology (fintech) is all about handling finances with the help of technology and the internet, the industry needs to combat cybersecurity challenges.
The challenge arises for the fintech industry due to its reliance on digital platforms, financial transactions, and sensitive customer information. The cases of cybersecurity threats have been rising significantly since 2017. As per a report by Carnegie Endowment for International Peace, “In 2017, the G20 warned that cyberattacks could “undermine the security and confidence and endanger financial stability.””
In recent years cryptocurrency frauds have increased to a considerate level covering US, China, Nigeria, India and numerous other countries. Recently, Finance Minister Nirmala Sitharaman while praising the increasing role of fintech in the Indian market warned the fintechs of growing cybersecurity attacks and advised them to be vigilant and proactive to the concern, as per a report by ET CISO.
Here are some cybersecurity key challenges that fintech face:
- Data security which includes protecting data from unauthorized access, breaches, or data leaks is a critical challenge.
- Regulatory compliance which includes navigating and adhering to these regulations, which often vary by region, can be complex and challenging.
- Identity theft and fraud- Fintech platforms are prime targets for cybercriminals seeking to steal personal and financial information for identity theft or fraudulent activities.
- Third-party risks- Many fintech companies rely on third-party vendors or services for various functions. These third parties can introduce additional cybersecurity risks, and ensuring their security measures align with industry standards is crucial.
- Advanced Persistent Threats (APTs)- Fintech firms are often targeted by advanced persistent threats—sophisticated, long-term cyberattacks that aim to infiltrate systems and remain undetected for extended periods.
- Phishing and social engineering- Cybercriminals often use phishing and social engineering tactics to trick employees or customers into revealing sensitive information. Educating users and implementing strong authentication measures are essential to counter this challenge.
- Mobile security- With the rise of mobile banking and payment applications, ensuring the security of transactions conducted via mobile devices is crucial. Mobile platforms may be more susceptible to certain types of attacks.
- Insider threats- Malicious or unintentional actions by employees or partners can pose significant threats. Implementing robust access controls, monitoring user activities, and conducting regular security training can help mitigate this risk.
- Cloud security- Fintech companies often leverage cloud services for scalability and flexibility. Ensuring the security of data stored and processed in the cloud, including proper configuration and access controls, is critical.
- Rapid technological change- Fintech operates in a rapidly evolving technological landscape. Keeping up with new technologies while ensuring the security of existing systems poses a challenge for cybersecurity professionals.
- Cross-border operation and incident response & recovery- Many Fintech firms operate globally, and navigating the cybersecurity regulations of different countries can be complex. Harmonizing security practices across borders is crucial. Also, preparing for and responding to cybersecurity incidents requires a well-defined incident response plan. Fintech firms need to minimize downtime, protect customer data, and maintain customer trust in the aftermath of an incident.
As the world is advancing with the digitalisation trend, the cybersecurity concerns are rising especially with the growing importance of fintechs. Fintechs are highly targeted by the hackers and thus require a high security and vigilant approach in tackling the obstacles or threats coming along its path.