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Table of Content
Table of Content
Blog Summary:
This blog is an extensive guide for Fintech organizations’ owners to understand the security risks involved in building a Fintech app. It will give them insights into the major risks that they can face if security is compromised. Besides the risks, they will also learn how to tackle cybercrime attacks by following best practices.
Fintech app security is similar to protecting money and valuables from theft. Banks install vaults, alarms, and security guards, while organizations install firewalls, encryption, and intrusion detection to shield their digital assets from hackers, fraud, and cyber threats.
Here are some figures that show the current picture of fintech organizations that necessitate investing in cybersecurity:
98% of web applications are vulnerable to malicious software attacks. The average time to detect a data breach is 118 days.
Yet, only 55% of companies run internal security audits to defend their networks, applications, programs, software, data centers, and devices from digital threats. In the further sections of the blog, we’ll uncover the potential risks and best practices that organizations can follow.
Fintech security is a set of practices that organizations use to protect data management, communication with customers, and their security systems. These include policies, frameworks, and other activities required to protect different types of data from any type of cyber attack.
Two main concepts associated with fintech app security, cybersecurity attacks, and data breaches, are critical to understand. Cyber attacks occur when someone attempts to gain unauthorized access to software, systems, or computer networks to disable or destroy the data stored in them.
Data breaches happen when a malicious third party attempts to access, view, or steal the databases. These threats underline the importance of robust fintech security measures.
Since contactless payments, online platforms, and many fintech-enabled activities are growing, maintaining top-notch security standards is essential for fintech organizations.
Moreover, fintech security is highly significant in dealing with sensitive data like bank accounts, transaction history, seamless data sharing among consumers, managing digital identities, and preventing malware.
Safeguard your FinTech operations by accurately evaluating your security measures.
Protect Your FinTech Apps
The financial services industry’s front face is its app, but the Application Programming Interfaces (APIs) powering it face the maximum risks. Hackers have targeted them in many contemporary breaches.
Every piece of customer data and information is vulnerable to a blackout or ransomware if the security mechanisms are not maintained. Here are some risks associated with fintech app security that an organization can encounter:
There have been many cases of customer data worth millions stolen by breaching credit card account information from established fintech companies like JP Morgan Chase and Equifax.
Additionally, thefts of an app’s business logic carry huge risks as they directly attack the legal functionality to access sensitive information. Data breaches also include stealing desired financial data through malware smuggling, phishing, and open API endpoints that don’t have access restrictions.
Fuzz testing is a technique used by hackers to feed random and invalid data to applications or APIs and find errors. By monitoring the program, hackers look for exceptions like app crashes, security code fails, and memory leaks.
Earlier, the fuzz tests required a lot of labor from the security teams to fix errors and flaws before hackers exploited them. However, hackers and other cybercriminals now use AI and ML to find weak APIs.
Code faults are usually areas of the app’s business logic that are potentially at high risk of threats. Hackers use the tool to point out specific vulnerabilities in the source code, uncovering vulnerabilities that can be exploited by SQL injection and cross-site scripting (XSS) attacks.
Integration of fintech apps with other existing legacy applications can create compatibility issues, giving rise to many loopholes. Each system’s communication systems use different protocols, creating barriers to smooth data transfers.
High-tech apps can create many security risks when communicating with financial institutions and banks to carry out financial functions. Most of these financial risks are associated with APIs that can create gaps that are easy for hackers to discover and exploit.
Exposed API endpoints can contain many vulnerabilities even after the smallest source code modifications, as solving a weakness in one area can lead to a new weakness elsewhere.
Distributed Denial of Service (DDoS) attacks are extremely popular amongst hackers to force crash an app by flooding it with traffic and introducing a security breach. Many fintech apps have APIs with limited resources to prevent DDoS attacks, making it one of the most significant security risks.
These limitations restrict the quantity and frequency of traffic requests permitted to be submitted by a user’s IP address over a period. Excess traffic from different sources and locations slows down and restricts user access, creating a distraction in the background and causing serious cyber fraud.
A highly prevalent security risk in the fintech industry, a phishing attack is a deceptive tactic that compels a user to divulge private information. Hackers and cybercriminals use it to bait users into divulging their login credentials or changing their passwords.
They carry out this attack by sending malicious links via text messages, emails, and phone calls, posing as legitimate businesses, banking institutions, financial companies, governments, or other prominent organizations.
Phishing attacks can become serious security threats, as it’s extremely difficult to distinguish this type of communication from the authentic one. The consequences are even more severe because hackers and criminals are looking to access a database through these attacks.
Once they gain access to a system, it’s easy for them to install malware or ransomware, which can lead to a bigger data breach or a chain of identity thefts.
Learn to mitigate risks by ensuring your apps are strong enough to withstand any attack.
Ensure Comprehensive App Security
Protecting organizations’ personal and financial data sources is essential because organizations are the biggest sources of customer information. This massive source of information makes it vulnerable to potential damage by cybercrime attacks.
Adopting some principles and best practices for fintech app security solutions can serve as the foundation to minimize those risks:
Since most users access the fintech apps through mobiles, the APIs that connect the backend are the favorite target of cybercriminals. An app’s architecture defines how it interacts with internal and external APIs and becomes a strong source to secure FinTech apps.
Here are some things to consider to build an app’s architecture:
It’s advisable to bring aboard a seasoned fintech software development team to build a blueprint of architecture that is well-qualified to face any potential attacks.
Conducting security audits ensures that organizations can protect themselves by identifying and addressing potential threats. Regular backups prevent data loss completely by maintaining a copy of all information changes and edits.
It’s not always an outside threat that could lose data; sometimes, there is a hardware failure and human error, too. Hence, it’s recommended that backups and recovery processes be configured every quarter or six months.
Using a risk-based approach, qualified security professionals focus on areas of the organization that contain sensitive information. Identifying these threats also includes updating security protocols, applying robust security measures, patching software systems, implementing firewalls, and monitoring any usual network activities.
Setting user permissions defines a role for each user, defining their responsibilities regarding what they can and cannot do within a system. Assigning specific roles with limited access allows organizations to ensure that only authorized users perform what’s required or necessary for their jobs.
This approach works best, especially in fintech organizations, as it lessens the chances of harmful actions and unwanted access. When only the right people can access confidential data, the chances of viewing, altering, unintended sharing, and leaks are reduced.
An expert tip our fintech developers recommend for organizations is that they should create read-only and admin-level roles and control permissions.
Tracking metadata involves gathering IP addresses and device IDs to get login access and detect any unauthorized access. The data an organization can track depends on the type of fintech organization, such as loan lending, money transfer, banking, etc.
They can only track the data that they’re allowed to access. Hence, it’s critical to ensure that they don’t track sensitive customer information that goes against privacy regulations. The tracked data can provide valuable insights into user behavior and potential threats that could be prevented beforehand.
Encrypting organizational data is a powerful method to prevent data breaches and restrict unauthorized access to cyber attackers. Data encryption is the practice of making sure that the data is unreadable and unusable to any cyber attacker who attempts to gain access to the database. It is readable only with a decryption key.
It’s important always to keep user data encrypted—whether in the database, while sharing, or while on the move. The data may include all information regarding user transactions and customer personal details. Hence, encryption management should also be centralized to ensure streamlined storage, access, and distribution.
Fintech organizations must ensure fintech security compliance and that their customer data protection policies adhere to the regulations and standards mandated by the statutory bodies.
Compliance with major regulatory standards includes the following:
Some fintech companies in the USA may require a special license if they want to open a crypto exchange or crypto wallet company. These regulations apply according to the region and location of the app, and some might be subject to more stringent restrictions while others are not.
Fintech apps are highly susceptible to unauthorized and malicious activities by cybercriminals and hackers. Hence, organizations need to ensure that their apps are always updated with user addresses, device IDs, transactional activities, and geolocation to prevent these.
To track user transactions, they can implement Artificial Intelligence and Machine Learning to monitor users’ behavior. They can monitor unusual patterns and activity and block suspicious activity and transactions from unidentified IP addresses.
AI and ML also provide many analytical tools to detect fraud, potential security vulnerabilities and risks, anomalous activities, and gaining unauthorized access to data.
Fintech mobile apps often work with many third-party applications, which have vulnerabilities that hackers can easily penetrate. To attack the security risks and weaknesses of this software, hackers often introduce a supply chain attack. In such attacks, hackers compromise the security of third-party data to gain access.
Hence, organizations need to check these third party software providers before installing them and monitor them regularly once they have been implemented. This can help them spot vulnerabilities early on and fix errors in the affected areas.
Combat cyber crimes by adopting consistent encryption protocols to prevent data leaks.
Contact a Fintech Development Expert
The cost of developing a fintech app can vary from USD 25,000 to USD 2,40,000. The complexity of the app, advanced features, tools, languages, development hours, and location all come into play to reach an estimated development budget.
Generally, a team of 4 to 7 finance app developers works towards building a fintech app. Another essential factor that affects development cost is development time.
Depending on the type of fintech app you want to develop, the hours will vary. If your app is for personal finance and investment purposes, the hours can range from 1,200 to 2,300. Similarly, banking and insurance apps will take around 1,800 to 3,200 hours.
Fintech projects often involve a lot of technical complexity and can, hence, become challenging throughout development. Additionally, potential security-related risks and regulatory complaints need to be addressed in order to create effective apps.
Hiring Moon Technolabs, a trusted FinTech app development partner provides the ideal blend of seasoned experts with experience and knowledge of technology and business logic.
To ensure that data security and privacy are not compromised and overlooked, our fintech software developers will help you mitigate all the risks associated with fintech app security solutions. Contact us for a FREE consultation.
The fintech industry is equipped with advanced technology solutions, which also makes it a critical target for cyberattacks. As new solutions emerge, cybercriminals have vast opportunities to exploit the vulnerabilities of fintech organizations that may bring sensitive data under scrutiny.
It often becomes challenging to assess and address these risks and protect customer information. To ensure that your organization is always a few steps ahead of hackers, fintech security systems must be foolproof to keep your customer base evolving.
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Jayanti Katariya is the CEO of Moon Technolabs, a fast-growing IT solutions provider, with 18+ years of experience in the industry. Passionate about developing creative apps from a young age, he pursued an engineering degree to further this interest. Under his leadership, Moon Technolabs has helped numerous brands establish their online presence and he has also launched an invoicing software that assists businesses to streamline their financial operations.
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