Why MFA alone isn’t enough for your fintech’s cyber resilience strategy

As cyber risks grow alongside digital adoption, fintechs face unique threats that cannot be adequately addressed by foundational cyber security measures deployed in single layers.

The IMF’s latest Global Financial Stability Report revealed a strong correlation between rising cyber threats and the rapid expansion of digital systems, labelling financial firms as particularly high-risk. For fintechs, where technology is even more central to operations than traditional financial firms, cybersecurity must extend beyond isolated solutions to build a resilient, multi-layered defence.

Cyber insurance can act as a force multiplier for fintechs, providing not only a financial safety net, but also becoming a cybersecurity ally. Cyber insurance providers count in their ranks experienced cybersecurity professionals who can assist in the management of a cyber event; from handling the claims process, and offering insights and guidance, to helping navigate incident response and recovery. Applying for cyber insurance also strengthens an organisation’s long-term protection by mandating certain cyber resilience practices. Many insurers additionally offer proactive risk prevention services such as vulnerability assessments, threat intelligence, and cybersecurity training.

Multi-factor authentication (MFA)

MFA now serves as a baseline requirement for many industries, marking the initial step in a cyber resilience strategy. This approach is both cost-effective and highly effective at reducing unauthorised access risks to systems. MFA is so effective, in fact, that providers of cyber insurance regularly mandate the implementation of multiple forms of MFA before issuing coverage.

However, the specific complexity of the MFA setup can vary depending on factors such as the industry type and the revenue bracket of the insured organisation.

For industries deemed less risky or with lower revenue, MFA can be simplified and focus on basic authentication methods such as passwords combined with one additional factor like SMS verification or email confirmation. But for those considered more susceptible to cyber threats – such as fintechs – or those with higher revenue bands, a more rigorous and intricate MFA system may be necessary. In such cases, multiple authentication factors – such as biometric scans, hardware tokens, or behavioural analytics – may be needed to create a more robust defence against potential breaches.

Ideally, organisations should tailor their MFA requirements to their specific risk profile and operational needs; this ensures adequate protection against cyber threats, and avoids putting an undue burden on day-to-day operations.

Quote from the author: “Cyber insurance can act as a force multiplier for fintechs, providing not only a financial safety net, but also becoming a cybersecurity”

Enhancing cybersecurity posture

While MFA is a critical component of cyber resilience, it should form part of a broader cybersecurity framework, which is often required by cyber insurance providers. Key additional measures include:​​

1. Cybersecurity awareness training: Organisations should conduct regular training programs tailored to their specific industry and operational needs. Covering essentials such as phishing detection, strong password practices, and recognising unusual activity, the goal is to educate employees.

2. Incident Response Plans (IRPs): A well-defined IRP outlines the steps an organisation would take in the event of a security breach. IRPs include incident detection, containment, investigation, and recovery, and are essential for effectively mitigating and managing cybersecurity incidents. Enterprises should regularly review, test and update their IRPs to address emerging threats and any changes in their network and processes.

3. Data backups: Regularly backing up critical data is one of the best ways to ensure business continuity and mitigate the impact of data loss or ransomware attacks, which is why some insurers require it. Backup systems should be secure, and again, regularly tested for reliability. It should also include off-site or cloud-based storage options for redundancy.

4. Critical patching procedures: Timely patching of software vulnerabilities is essential for addressing known security flaws and reducing the risk of exploitation by cybercriminals. Many insurers expect organisations to have procedures in place to identify, prioritise, and deploy patches promptly, especially for critical systems and software components.

Insurers often consider compliance with these requirements a key factor in underwriting cyber insurance policies. But the complexity of these controls will vary based on the industry sector and the revenue level of the organisation.

A comprehensive, collaborative approach

Currently, the threat of cyberattacks is constant and organisations simply should not face these risks alone. Attacks are becoming increasingly sophisticated – thanks in part to emerging technologies such as AI and machine learning, which give attackers powerful tools . Moreover, the attack surface for cyber threats also expanded. From cloud computing and Internet of Things (IoT) devices to remote working environments, organisations are faced with a complex web of endpoints and entry points that are extremely susceptible to exploitation.

To safeguard against these threats, meet insurance requirements, and adhere to the financial sector’s heightened regulatory standards, fintechs must adopt a comprehensive approach that integrates robust internal security practices with strategic insurance partnerships.

Stay Ahead of the Financial Curve with Our Latest Fintech News Updates!