Top Cybersecurity Challenges for FinTech Industry in 2021

FinTech is a huge emerging industry that is changing the way financial services around the world operate. In the modern age, as the world adjusts to high-technology, and a huge proportion of people own a smartphone, technology can be used in everything from investing to personal banking and more.

The world of work in 2021 has changed. The events of recent years have challenged virtually every industry, but FinTech is continuing to grow. Of course, there are always some risks and teething pains in a new industry, but when it comes to peoples’ finances, you can’t be too careful.

In this guide, we’re looking at cybersecurity in banking, and how FinTech companies need to keep their customers protected.

Migrating to The Cloud (Or to Different Cloud Systems)

It makes sense that financial companies use the cloud for the huge levels of data storage. However, a FinTech might not be able to keep everything completely secure in this respect. Moving data is not always 100% secure, and you will probably need to partner with a third party. This means that you can only ever be as secure as those whose services you use.

Migrating data is definitely full of danger for cybersecurity. Cloud systems may not be 100% secure either, so there is every chance that hackers might target cloud storage.

Cybersecurity Vulnerabilities From Installed Apps

There are a lot of links in the chain, and all of these can form a “back door” for hackers and cybersecurity vulnerabilities.

The apps that are installed deal with users’ data, and even names and addresses are valuable commodities for hackers, so there are a lot of chances for security attacks.

FinTech apps need to be extremely secure, they are handling some of the most important data possible, and this makes them prime targets. Just having “good” security is not enough, you need to have state-of-the-art security to stay one step ahead of hackers who might be trying to gain entry.

Employee Errors and Cybersecurity

Human error plays a part in pretty much every aspect of cybersecurity. In this modern age of tech, humans can be seen as the weak link.

Hackers can target this, and phishing schemes have become more and more sophisticated as people start to wise up to the outdated methods, like those scammy emails promising that you’ve won a huge amount of money and that you just need to send $10,000 to access it.

As well as phishing methods, scammers use some other methods such as “whaling” which is when they target a specific executive. They might even go to the extent of pretending to be a business associate to try and steal their data and gain access to your valuable information.

All it takes for one member of staff to have a lapse and your whole company can be compromised.

Compliance and Regulation

This is a challenge that every FinTech has to overcome. There are a number of financial guidelines and regulations that need to be followed. This means a lot of FinTech companies spend a lot of money on compliance employees, checking regulations and litigation, and ensuring that your company follows the regulations.

This can be further complicated by operating in numerous locations. If you operate in multiple territories then you need to comply with the law in each one. Some FinTech companies are worldwide. For a startup to reach this stage they need to have a reliable compliance department.

Compliance guidelines are in place to keep you from risking your customers’ data and money, and if they aren’t followed then there is every chance that you can get hit with fines or other legal action. For further reading, look into the Specialized Bank, Electronic Money Institution, and Payment Institution regulations on FinTech businesses.

Privacy Laws

Similar to the compliance required for the financial industries, different countries have regulations about how peoples’ data must be stored. This often means you can’t just throw their data in a spreadsheet, and it may need to be encrypted or disposed of.

The data privacy laws protect us all, and it is so important for any FinTech company to consider these.

Malware

Malware is not a new concept in the digital age, it has been around for decades now, and it is a way for hackers to gain access to a computer. Going back to the “human error” factor, malware just requires one person to let their guard down, and download some software or click a link by mistake.

The first line of defense for this is to educate all employees and to keep things under control. For example, ensuring that servers are secure, and that communications between employees are private. Something as basic as reminding employees to regularly update their password makes all the difference.

Something a lot of FinTech companies are doing is “simulating” malware attacks in order to educate employees. This can involve sending an email from an external email address that has a harmful link, and seeing if employees know how to spot an email that is not genuine.

Antivirus software, and not allowing employees to access their emails or other sensitive information via their own personal devices, are essential for ensuring that people don’t drop the ball and allow access to hackers.

You should also segregate data, and make sure that people within the business can’t access servers and data they don’t need. This just poses a further security risk.

Conclusion

Cybersecurity is something for every business to carefully consider in the modern age. If you are handling your clients’ data, as well as employee information, there is a risk of people trying to attack your business.

Fortunately, there are many lines of defense you can put in place, and building a strong compliance department can leave your business to focus on the areas it is good at, and flourish in the process.

Planet Compliance

Planet Compliance is a marketplace where institutions and corporates can discover RegTech and LegalTech solutions. Planet Compliance also operates a content platform that provides information and insights on technology, regulation, compliance, finance and innovation.
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