Cybersecurity is constantly evolving with the development of new technologies, and so are the hacking techniques of cyber criminals. Fintech is not new, but recently it has been noticed that cyberattacks on fintech firms have increased. Every 39 seconds, a different attack takes place. With so many individuals now using financial technologies, there is a considerable threat that sensitive data breaches may affect many people. It is critical to ensure that fintech companies maintain high levels of security.
FinTech has advanced significantly in recent years, providing new solutions to the financial threats introduced by new technologies. The sector must remain flexible and ahead of the curve in cyber defense as it manages assets worth billions of dollars. This article walks you through the prominent threats to the financial sector and the importance of cybersecurity in Fintech.
Threats to the financial sector
- Industry-specific attacks
Banks and financial institutions significantly influence the economic cycle. The failure of banking procedures or payment transactions would result in large-scale threats that affect not only the financial institutions but also industrial and service businesses, the government, and private citizens.
- Targeted attacks
In a targeted attack, a financial institution is directly attacked, for instance, through security flaws in the company network. Even though this type of attack poses a major personal risk to any bank or financial institution, it is also the simplest to safeguard against.
- Widespread attacks
These have been prevalent for a long time, such as in the form of phishing emails. If banks defend themselves against targeted and industry-specific attacks, everyone will be protected against all types of attacks.
Importance of cybersecurity in Fintech
- Safeguard customer data
When a customer becomes aware of fraud, it is already too late. The extent of the distribution can make it challenging to take back private information that has already been lost or compromised. Cybercriminals sell personal data for use in additional hacking attempts and security breaches.
Financial institutions must ensure that the right cybersecurity technologies are in place to safeguard their network and, most crucially, consumers’ data as they grow their customer base.
- Prevent financial losses
It may take some time for a financial institution to recoup customer funds if a data breach causes the loss of those funds. Not only does it harm the institution’s reputation, but it also puts the consumer through a great deal of stress. Financial institutions must have a cyber risk management strategy that secures their network from any intrusion attempts and guarantees the financial security of their clients to prevent breaches.
- Avoid penalties for non-compliance
For the protection of customers, rules and regulations are in place, and banks risk severe fines if they violate or circumvent them. These fines can be difficult to overcome and may cause prospective clients to doubt the reliability of the financial institution. Many setbacks are likely to occur if an institution is a target of cyber threats as a result of non-compliance.
- Maintain the institution’s reputation
If a customer’s information is hacked, they will typically stop doing business with that company, and many of them will tell other people about their unpleasant experiences. For any company, but especially for a financial institution, reputation is crucial. Constant security monitoring and excellent cybersecurity practices reflect favorably on the organization and foster confidence. This is of utmost importance in a sector where each customer’s financial security and personal information are taken care of.
Fintech app security solutions are projected to continue to develop at an accelerating rate due to the fintech market’s ongoing growth. Cybersecurity threats will undoubtedly follow, posing an endless stream of issues for anyone working in the sector. To succeed in the expanding market, it is critical to remain vigilant against these threats. In upcoming years cybersecurity will continue to be of utmost importance to all FinTech companies. But we can find some solace in the fact that the sector is leading the battle to safeguard its clients, foster trust, and beat hackers to the punch.