FinTech firms have become a favorite for fraudsters globally. According to a report, FinTech firms faced 2.5 times more attacks in Q1 2022. FinTech firms deal with sensitive customer data, so they’re a goldmine to fraudsters. The data stolen is used for financial fraud and only makes it that much harder to detect fraudulent activities.
Not only data, but a data breach also costs an organization reputational damage. Handing cybersecurity threats have become a significant challenge for businesses. FinTech businesses must be vigilant and explore every weak point that could leave them vulnerable to attack.
FinTech organizations, regardless of their scale, audience, and location face the same challenges when it comes to supercharging their cybersecurity practices.
Importance of Cybersecurity in the FinTech Industry
Fraudsters love to get their hands on financial data. FinTech firms have become a favorite target because they don’t have to adhere to as many rules as traditional banks. Thus, leaving out potential vulnerabilities in the system.
Products that are not properly protected lead to data breaches, and financial fraud.
Preventing cybersecurity risks requires businesses to develop a proactive risk prevention approach.
Understanding and amending the vulnerabilities in the system can prevent fraud before it even happens.
Cybersecurity Audit Goes a Long Way
There’s only one way to come up with a proactive approach to cyber fraud. Having a proper understanding of your systems, and knowing the vulnerabilities should be your first step.
Businesses won’t get rid of fraud just because new measures are in place. Chances are there will be vulnerabilities in your fraud prevention methods as well. Businesses need to do a complete audit of their products, and their workings to find out the weak points fraudsters could exploit.
Changes in Cybersecurity and FinTech
Cybersecurity practices in the BFSI industry have become incredibly complex. Customers globally want seamless digital banking over traditional banking methods.
Cybersecurity Tips for FinTech
To be able to prevent cyber threats, businesses need to follow a list of practices, including:
1. Build Robust Security Policies
Here are some things to keep in mind while building these policies:
- Set clear goals, objectives, and expectations.
- Choose security frameworks and implement them strongly.
- Clearly define security processes, procedures, and tools.
- Define roles and responsibilities.
- Set up continuous risk monitoring.
- Build a flexible system that’s able to handle all kinds of fraud.
- Update policies regularly.
2. Leverage AI, ML, and Analytics
If fraudsters can rely on sophisticated tech to enhance their attacks, then so can businesses.
Relying on AI, ML, and analytics tools can help businesses spot threat trends, track suspicious activities, and more. AI, ML, and analytics tools can help businesses in identifying:
- Financial fraud
- Know security threats
- Identify emerging risks
- Unauthorized data access and usage
- Anomalous activities
3. Implement Secure by Design Policies
As a FinTech, it should be your aim that all the products and services you release are secure. Fraudsters aim to find these vulnerabilities so they can exploit them. Make sure these policies include:
- Integration of security into the early SDLC stages.
- Only work with specific frameworks, libraries, and components.
- Continuously test and fix code during the early stages of development.
- Fix all vulnerabilities before the release.
4. Continuous Threat Monitoring
Attackers are relentless and they keep on trying until they get a breakthrough. BFSI is a primary industry that’s continuously under attack. It is essential for financial institutions and FinTech firms to continuously look for threats.
Relying on traditional signature-based detection techniques could result in grieving mistakes.
To be able to detect and prevent complicated threats, use the following methods:
- Global threat intelligence
- Contextual awareness
- Custom rules
Centralized visibility is an essential threat-monitoring practice. Real-time alerts and triggers help you improve cybersecurity in FinTech.
5. Manage Vulnerabilities Proactively
As we’ve mentioned above, more than anything fraudsters love to exploit vulnerabilities. Vulnerabilities of any kind can be an entry point for attackers.
FinTech firms need to identify, assess, and prioritize their vulnerabilities. The aim should be to minimize as much vulnerable entry points as possible. Uncover vulnerabilities and fix them before an attacker can exploit them.
6. Implement Zero Trust Policy
Did you know that 60% of instances of fraud happen from within the organization? This is why no one must have unverified access to your company’s assets. Enforcing zero trust policy can help to prevent:
- Insider threats
- Brute force attacks
- Privilege escalation
- Data theft
It is advised to strictly enforce role-based, least-privilege access to stakeholders. Moreover, businesses should implement strict password and MFA policies. Encrypt sensitive data with passwords.
7. Manage Third-Party Risks Effectively
Businesses in the BFSI industry rely on third-party components, services, and APIs. With third-party attacks growing more and more every day, handling third-party risks is a major challenge.
Third-party vendors are one of the biggest fraud risks for FinTech businesses. Securely verifying third-party vendors is one of the best ways to prevent fraud. DIRO vendor verification technology is built especially to help financial firms and other businesses prevent vendor fraud. This technology can help businesses verify vendors before onboarding them.
8. Don’t Ignore Robust API Security
Managing API risks is a big part of managing cyber fraud risks. With the growing use of APIs in the BFSI industry, businesses must know how to manage API risks.
9. Build a Culture of Cybersecurity
The banking and FinTech industry suffers from Phishing fraud attacks more than any other industry. To reduce phishing attacks, businesses should aim to teach their customers how to spot phishing emails.
Creating a robust cybersecurity culture within your organization can be done by:
- Continuously teaching your employees how to spot fraud.
- Employees and customers must know what to click and what not to.
- Implement a clear chain of command. Employees should know who to report to when something is suspicious.