As financial technology, or 'fintech', continues to revolutionize the financial industry, new cybersecurity threats emerge. Cybercriminals are constantly devising new ways to infiltrate systems and access sensitive financial data, ranging from social engineering to ransomware.
In this article, we'll go over the top fintech cybersecurity threats and how to protect yourself and your company from them.
Attacks Using Social Engineering
For fintech companies, social engineering attacks are a common cybersecurity threat. The practice of manipulating individuals into disclosing confidential information or performing actions that could compromise security is known as social engineering. This can take many different forms, such as phishing, pretexting, and baiting.
The practice of sending fraudulent emails or messages that appear to come from legitimate sources, such as banks or financial institutions, is known as phishing. The goal is to dupe the recipient into providing personal information, such as login information or credit card numbers.
Cybercriminals who have gained access to a company's email system and send messages that appear to come from someone within the organization are frequently used in phishing attacks.
Another social engineering tactic is pretexting, which involves fabricating a false pretext or scenario in order to obtain sensitive information. A cybercriminal, for example, may impersonate a customer service representative and request personal information from the customer, such as their account number or password.
Baiting entails providing something of value in exchange for personal information, such as a free gift card or download. This is especially useful in the fintech industry, where customers are frequently looking for ways to save money or earn rewards.
To defend against social engineering attacks, it is critical to educate employees and customers about the tactics used by cybercriminals. Employees can benefit from regular training sessions to recognize phishing emails and other fraudulent messages. To protect sensitive information, it's also a good idea to use two-factor authentication and encryption.
Ransomware and Malware Attacks
Malware and ransomware attacks are yet another common threat to fintech firms. Malware is software that is intended to harm, disrupt, or gain unauthorized access to a computer system. Ransomware is a type of malware that encrypts the files of a victim and demands payment in exchange for the decryption key.
Because they frequently store large amounts of sensitive data, including customer financial information, fintech companies are particularly vulnerable to ransomware attacks. After a ransomware attack, it can be difficult to recover data without paying the ransom, which can be costly.
It is critical to keep software up to date and use strong antivirus software to protect against malware and ransomware attacks. Regular backups can also aid in mitigating the effects of a ransomware attack.
Insider Dangers
Insider threats pose a significant cybersecurity risk to financial technology companies. Employees who steal information on purpose, employees who accidentally disclose sensitive information, or employees who are tricked into providing access to sensitive data are all examples of insider threats.
It is critical to have a comprehensive cybersecurity policy in place to protect against insider threats.
Regular employee training sessions, background checks for new hires, and strict access controls should all be part of this policy. It's also a good idea to keep an eye on employee behavior in order to spot any suspicious activity.
Third-Party Dangers
Third-party risks are another major cybersecurity threat for fintech firms. Third-party risks are those associated with a breach or other security incidents caused by a third-party vendor or partner.
A cybercriminal, for example, could gain access to a fintech company's system via a vulnerability in a third-party vendor's software.
To guard against third-party risks, thoroughly vet vendors and partners before working with them.
This should include background checks as well as a review of their security policies and practices. Contracts with third-party vendors should include cybersecurity requirements. This includes their security posture on a regular basis to ensure they are meeting those requirements.
Frameworks for Cybersecurity
Implementing a cybersecurity framework is an efficient way for fintech companies to protect themselves from cyber threats. A cybersecurity framework is a set of best practices and guidelines for managing cybersecurity risks.
The National Institute of Standards and Technology (NIST) Cybersecurity Framework, the Payment Card Industry Data Security Standard (PCI DSS), and the ISO 27001 are all popular frameworks.
A cybersecurity framework can assist fintech firms in identifying and mitigating risks, implementing security controls, and developing incident response plans. It is critical to select a framework that aligns with the goals and needs of your organization.
What Are the Most Common Fintech Cyber Threats?
There are risk factors which fintechs must take into account. We’ve highlighted 4 of the most important ones.
Identity Theft & Phishing
Identity theft is still a moderate risk which fintechs must tackle as both actual account takeovers and attempted takeover rates are still relatively high.
Hackers either steal or hack one’s login credentials and impersonate the account holders to gain access to their personal (and often sensitive) information and steal their money. This is usually done via API attacks targeted at compromising auth tokens.
As such, having a strong auth becomes quintessential in any fintechs’ security policy.
As for phishing attacks, phishing emails have evolved and become almost indistinguishable from legitimate institutional emails. And, once hackers gain access to the users’ system, there’s ample opportunity for id theft.
Data Breaches
Fintechs obtain large amounts of data, both personal and financial, from their users, including credit card info, bank account numbers, and even answers to security questions.
This makes their databases a true hacker honeypot as hackers can use said data or sell it to other people.
To do so, malware and phishing attacks are the usual go-to methods. Once again API endpoints are targeted, so it becomes important to test every outcome and possibility of API abuse.
Distributed Denial of Service Attacks (the Infamous DDoS Attack)
A DDoS attack, in simple terms, happens when hackers attempt to flood a website or app with traffic.
They do so as it's their preferred method of crashing it. By crashing the app, they aim at forcing a security breakdown as well.
DDoS attacks are incredibly dangerous for fintechs as many APIs out there simply do not come with rate-limiters. Rate limiters will restrict the frequency or number of user or IP requests and, thus, help against distributed denial of service attacks.
AI Fuzz Testing (AI Fuzzing)
AI has proven itself to be a consistently good resource for fintechs around the world. However, it can also help hackers’ exploits as they found a way to 'scramble' APIs via AI Fuzzing.
The goal here is to confuse APIs with random bits of invalid data or unexpected data as a way of finding errors, crashes, and memory leaks.
Conclusion
Fintech firms are increasingly vulnerable to cybersecurity threats ranging from social engineering to ransomware. To combat these threats, it is critical to educate employees and customers about cybersecurity best practices, keep software up to date, implement strong access controls, and manage risks using a cybersecurity framework.
Fintech companies can help ensure the security of their customers' financial information and maintain the trust of their stakeholders by taking these steps.
Furthermore, fintech firms must maintain vigilance and be proactive in their approach to cybersecurity. They should conduct vulnerability scans and penetration testing on a regular basis to identify potential vulnerabilities.
It's also critical to have an incident response plan in place that outlines what to do if a cybersecurity incident occurs.
When selecting third-party vendors and partners, fintech companies should prioritize cybersecurity. This includes thoroughly screening vendors, auditing their security practices, and incorporating cybersecurity requirements into contracts.
Finally, fintech cybersecurity threats pose a significant threat to the financial industry. Fintech companies can protect against these threats and maintain the trust of their customers and stakeholders by implementing best practices and a comprehensive cybersecurity framework.
As the fintech industry grows and evolves, it's critical to stay vigilant and proactive in the fight against cybercrime.
