| 8 min read
Fintech companies have been disrupting the financial industry for almost 20 years. They have introduced new products and services that seek to satisfy the evolving needs of customers. The change in users' demands and behaviors drive the fintech industry. As customers are looking for easier, faster and more accessible ways to manage their money or do things like banking, investing and bill paying. From 2019 to 2024, the number of fintechs has more than doubled. It's been calculated that around the world there were 12,211 before 2020. As of 2024, there are around 29,955 companies, with the Americas, Europe, the Middle East and Africa experiencing the most significant growth.
As these companies grow, so does the critical need for robust cybersecurity measures to protect sensitive financial data and keep customer trust. Fintechs can be impacted by the constant threat bad actors pose. Their sheer nature of being internet-based companies makes them a coveted target for any cyber threat. And it leaves them open to data breaches, identity theft, ransomware attacks, API vulnerabilities and other incidents, not to mention that the value of the data fintechs manage can incite even insider threats. Needless to say, any kind of incident in a fintech company can lead to reputational damage, operational disruptions, compliance issues. Some lead to regulatory fines, and loss of customers. No company wants any of the above. That is why cybersecurity needs to be an integral part of the fintech industry.
Fintech companies
The fintech —short for financial technology— industry is all about using technology to innovate and change the way financial services have been provided. Fintechs are part of different sectors, among entities that offer products or services like:
- internet or mobile payment services
- peer-to-peer lending
- e-money (electronic money)
- wealth and financial management
- insurtechs
- neo or digital banks
- trading and cryptocurrency platforms
- virtual asset service providers (VASPs)
Fintech companies’ services are delivered via mobile apps and web-based solutions. They rely on a combination of cutting-edge and established technologies to provide their services. The most prominent technologies utilized are:
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Application programming interfaces (APIs): APIs are messengers that allow different applications to talk to each other. Fintechs use APIs to connect with entities like reporting agencies, accessing a wider variety of services from various providers.
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Artificial intelligence (AI) and machine learning (ML): Learning and problem-solving made easy. In fintech, AI and ML are used for customer data analysis, fraud detection, transaction patterns to detect abnormalities, and to provide automated customer service with chatbots.
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Blockchain: This makes decentralized and unchangeable ledger systems possible, where every financial transaction is recorded chronologically and securely, which makes it nearly impossible to tamper with the data.
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Cloud computing: Cloud platforms (like Amazon Web Services, Google Cloud Platform or Microsoft Azure) allow organizations like fintechs to expand their operations, store and process massive amounts of data, and access powerful computing resources without requiring a lot of on-premises infrastructure.
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Open-source software and software-as-a-service (SaaS): Open-source components might be used to build the core of fintech platforms, and SaaS solutions can assist in providing apps with different functionalities like customer management or marketing.
Fintech companies have access to a wide range of sensitive data and personal information due to the nature of the financial services they provide. This data includes:
- Personally identifiable information: Full names, addresses, phone numbers, email addresses, geolocation, birthdates.
- Financial information: bank account details, credit and debit card numbers, transaction history, account balance, loan details, investment portfolios.
- Authentication data: Usernames and passwords, security questions and answers, biometric data.
- Credit information: Credit scores, reports, history.
- Behavioral data: Spending habits, investment behaviors, savings patterns, online and mobile banking usage data.
- Transactional data: Peer-to-peer details, bill payments.
- Corporate data: Financial statements, tax numbers, business credit scores, payroll, supplier and vendor payment details.
Access to this diverse and sensitive information highlights the critical need for strict cybersecurity measures within each fintech company. Data protection is crucial for maintaining strong consumer trust, avoiding financial or reputational harm, and adhering to legal and regulatory requirements.
Fintech security compliance
Depending on the location where the fintech operates and the type of service it provides, specific security standards apply and legal compliance must be ensured. Some of those regulations are:
- Anti-Money Laundering (AML)
- Know Your Customer (KYC)
- 6th Anti Money Laundering Directive (AMLD)
- eIDAS
- PSD2
- General Data Protection Regulation (GDPR)
- ISO 27001 for the Fintech Sector
- National Institute of Standards and Technology (NIST) Cybersecurity Framework
- California Consumer Privacy Act (CCPA)
Security challenges and threats
Fintechs face a unique set of threats and challenges because of their nature of operating online, through internet portals exposed to cybercriminals that are always lurking.
Data breaches from fintechs can expose customer information to blackmail, identity theft, financial fraud and fraudulent transactions. These kinds of incidents are not uncommon. In 2020, the digital banking app Dave experienced a data breach that affected 7.5 million users.
Ransomware attacks could also happen to a fintech company. In early 2024, a ransomware attack on EquiLend Holdings ended in a data breach that forced the firm to suspend its services for several days and later inform its employees notifying them that their information was stolen.
API attacks have been growing with the use of fintech technologies. In 2020, hackers breached the hardware wallet provider Ledger’s API marketing tools, which were used for sending marketing emails, and led to a million email addresses being exposed.
Not less disturbing are other attacks like phishing, distributed denial-of-service (DDoS), and insider threats.
Fintechs also encounter challenges that demand constant vigilance and adaptation. One of those challenges is mobile security, which is of special importance for some fintechs, as mobile devices are their lifeblood. From online banking to contactless payments apps, their convenience often depends on smartphones. However, mobile apps offer a large attack surface to be exploited, are susceptible to malware or social engineering attacks. In addition, applications can be overlooked and not updated regularly, which would prevent security vulnerabilities from being fixed.
Another challenge is third-party issues, given that fintechs often rely on these suppliers’ networks. Issues like overreliance on a specific vendor, security gaps in third-party systems and ensuring compliance with regulations across various third-party vendors can occur.
An emerging challenge is now on the rise with AI and machine learning being integrated into the fintech industry. It has been reported that there may be bias in algorithms within the data they are trained with, leading, for example, to unfair outcomes for certain groups when asking for loans. This raised questions on the transparency and fairness of systems using these technologies.
Fintech cybersecurity: Why is it important?
As previously stated, fintech companies deal with a vast amount of personal and financial information, making them a prime target for cyberattacks. The importance of cybersecurity in this industry is paramount. Any breach or security incident can significantly erode customer trust, which could lead to customer loss and long-term reputational damages. Therefore, implementing robust cybersecurity measures is essential to protect this data from breaches and unauthorized access, ensuring the privacy and security of customers.
Moreover, the fintech industry is regulated with strict compliance requirements, and adhering to these regulations can be better achieved just by having robust cybersecurity practices, thus avoiding legal repercussions or hefty fines.
Security best practices for fintechs
We present the following best practices for this sector:
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Data encryption: Through this process, the information is transformed from its original representation into an encrypted form. This can shield information from unauthorized external access.
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Multi-factor authentication (MFA): This goes beyond passwords and requires additional verification steps, biometric scans or one-time codes be used for logins or transactions.
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Constant backups: Important information can be saved from total loss by making a copy of it, and every time information is added or edited, it can be modified.
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Access controls: Apply the principle of least privilege and grant access to data and systems only on a role basis.
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Regular security audits: Proactively identify and address vulnerabilities through regular penetration testing and vulnerability management.
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Incident response plan: A documented plan should be in place that outlines the effective response to a security incident, which seeks to minimize damages and downtime.
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App security during development: Implement secure coding practices and conduct security testing in the early stages of development to identify and fix vulnerabilities in the systems.
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Vendor risk assessment: Thoroughly assess the security posture of third-party vendors and make sure they meet the necessary security standards before establishing partnerships. Monitor the security performance of third-party vendors and have established mechanisms to address any identified weaknesses.
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Keep software updated: Patching vulnerabilities and updating operating systems, mobile apps and all software components regularly is crucial.
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User and employee education: Educate employees and users on their particular best practices for staying safe. For employees, regularly train them on cybersecurity practices and vulnerabilities they are susceptible to. For users, inform them about safe mobile practices like keeping software updated, avoiding suspicious links and using strong passwords.
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Embrace a security culture for software development: Foster a culture of security awareness where everyone plays an important role in protecting data and systems.
Adopting a DevSecOps culture
In this dynamic time where threats evolve daily and malicious actors are always coming up with innovative ways to cause havoc, security must also be an ongoing process rather than a one-time effort. Developing software should include constant security testing, be it manually or automatically, and throughout the whole software development lifecycle (SDLC).
A DevSecOps culture can help to emphasize collaboration and communication between development, security and operations teams from the start, where everyone has a share of responsibility for security. By making security a part of the development process from the beginning, the software product is developed collaboratively, and security vulnerabilities and issues are found in it proactively, which reduces the need for after-the-fact fixes. Catching vulnerabilities early also means a lowering on mitigation costs and time in remediations.
Transitioning to DevSecOps is a collective responsibility. Security teams can take the lead in planning, aiming to incorporate security with minimal disruption to the existing workflow, and addressing the identified vulnerabilities. Developers do their part by writing secure code, and operations maintain a secure infrastructure.
DevSecOps can be achieved by shifting security to the left. This involves moving security considerations earlier in the development lifecycle and integrating security testing tools and practices throughout the development pipeline.
The fintech industry, among other sectors, can greatly benefit from adopting a DevSecOps culture. By proactively addressing security throughout the development lifecycle, fintechs can significantly reduce the risk of data breaches and cyberattacks, enhancing their security posture.
Fluid Attacks’ expertise shines here, as we offer our security testing solution where we leverage our ethical hacking team and automated techniques (SAST, SCA, DAST and CSPM) to find as many real vulnerabilities as possible and continuously report them in our diverse platform. By performing security testing early on and identifying and resolving vulnerabilities, DevSecOps helps expedite the development process and ensure a secure deployment.
Because we believe in it, we assist companies in implementing a DevSecOps culture. Organizations that choose to use the DevSecOps methodology will benefit from it, particularly in terms of the security and quality of their products and operations.
Success stories with Fluid Attacks
With our Continuous Hacking solution, which is skilled at identifying, exploiting and reporting vulnerabilities, we continue to assist fintech organizations in establishing robust security postures.
One of those fintech companies is the digital wallet entity akaunt, who operate in Colombia and have been using our solution since early 2023. Through the usage of our AppSec testing tools, ethical hacking team and generative AI to find vulnerabilities, they have been ahead of incidents and reduced their risk exposure at a fast pace. Here, they discuss their success story.
Another fintech company that has benefited from our solution is the payment gateway Payválida that operates in Latin America. They are pleased with our ability to find vulnerabilities at the speed of their company, deliver reports on schedule, and quickly accommodate their needs for reattacks. Payválida remediated 96% of their system’s vulnerabilities while working along with Fluid Attacks, remediating vulnerabilities throughout the development lifecycle, leveraging the DevSecOps methodology. More of their success story can be found here.
Let us know if you are interested in how Fluid Attacks can help your fintech organization by contacting us.
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