The pandemic left many businesses with consequences. Some are still struggling to adapt or stay afloat. Despite that, many industries have experienced revolutionary success due to the demand for swift, secure remote services. One of the prime examples of this newly created digital scenery is the fintech industry.
More traditional banks are now adopting fintech services to match the exceeding customer expectations. Despite that, this rapid change came along with its challenges. The fast transition raised alarming concerns for data security. That’s why it’s so important to be aware of the most common vulnerabilities to fraud.
Tag along to find out more about the hidden risks of fintech and how to safeguard your business.
Fintech and its road to success
The pandemic and its restrictions caused staff losses and many financial losses in general. Of course, those who didn’t shift to the online sphere were hit the hardest. That’s why the sectors that were in demand, such as fintech, experienced major growth along with the interest from investors. For instance, daily finance-related app download numbers skyrocketed during the pandemic, showing an increase rate of 21%- 26%.
The obvious convenience and efficiency led many consumers to switch their standard financial institutions to smarter alternatives. If the current bank doesn’t connect to a fintech app, chances are the customer will leave for an easier way to control their money. On top of that, fintech solutions are known to be the number one choice when it comes to saving time.
Why cybersecurity is still an issue for fintech
With the new opportunities that fintech opened, came new ways for criminals to exploit the vulnerabilities. Since fintech deals with large amounts of money, it’s become a major target for hackers. Digital finance services are everywhere nowadays, from standard daily banking operations, or loans and crypto, to big investors.
Naturally, the reward for cybercriminals is huge, as data is the most valuable asset today. The issue with fintech is that it’s based on technology and innovations. The efficiency sometimes doesn’t keep up with the security factor. Fintech sometimes means vulnerable solutions because some solutions are released to the public without proper testing.
There are cases of compatibility issues with traditional operating systems as well as lack of compliance. For example, many fintech firms have a proper data policy but don’t communicate it well enough to their customers. That blocks them from building a trustworthy relationship with customers who believe that fintech apps are more likely to sell their data to third parties.
Malware isn’t a thing of the past
Hacking and malware remain the most common security issues in today’s global market. Kaspersky reported finding 3.5 million malicious installation packages on mobile devices last year. Downloads from compromised websites or malicious online adverts are great examples of malware.
Nowadays, hackers go the extra mile to target Society for Worldwide Interbank Financial Telecommunication (SWIFT), as SWIFT is practically used by almost all banks in order to exchange financial info.
Banks and other financial institutions have security gaps in their internal processes, which creates a perfect advantage for hackers to strike. Such attacks allow criminals to quietly collect data from the fintech sector. The consequences are serious for both clients and businesses, starting with data breaches and ending in identity theft.
Digital identity risks are more common than you think
Users leave traces of data all over the internet. When it comes to passwords, the digital tools in the banking industry showed that many still lack proper password hygiene. One-time passwords or security codes for fintech apps strive to eliminate this issue. In reality, they can be easily hacked and stolen by cybercriminals.
For this reason, essential financial information can be stolen because of faulty systems or the fintechs’ security gaps. To upgrade online security architecture, more fintech players are implementing digital identity verification solutions. The special AI-powered algorithm scans the person’s face and their ID document automatically.
Only verified, trusted customers are allowed to access the fintech services; this way, prevents fraudulent accounts and criminals from entering using fake identities. The ID verification procedure also detects phishing attacks and prevents unauthorized users who try to access funds by using deepfake technology. Even though this technology claims to mimic voices and faces, thanks to identity verification, fake users are stopped from committing their crimes.
Phishing is now more sophisticated than ever
When it comes to phishing attacks, think before you click is the greatest rule. Did you know that malicious links can be sent from friends who have been infected too? Fintech users aren’t prone to fraudsters’ attacks. Unfortunately, with the introduction of fintech, the issues of data breaches and phishing reached a new level.
To avoid falling into the fraudsters’ traps isn’t easy – you need to be suspicious of emails or possible phishing phone calls. It’s common for hackers to target bank account information or payment card details via phishing. As a fintech business owner, the key factor in proper risk management is training the staff about phishing and the potential fraud patterns.