Cyber Security Challenges by Fin tech

cyber Security Challenges Fintech. This era of digitization and digitization, where every segment of businesses is using technology to provide services to customers, banking and financial industry has transformed their services by financial technology- FinTech.

Fin Tech were providing their services in the form of e-wallets, online and mobile payment systems (Paytm,PayPal, Apple Pay), virtual buying of stocks, etc. But the recent times did bring a bunch of new disruptors that will displace traditional e-commerce providers.Such new FinTechstart-ups are offering more efficient services, seamless customer’s experience, and free person-to-person payments.

FinTechs business can increase profitability and enhance a company’s performance while helping them improve customer service. FinTech also provide an opportunity for companies to expand their portfolio online while solving industry issues such as credit card processing, money transfers, or processing a loan.

But everything is not so smooth with Fintech business. There are few cyber security challenges and risk associated with Fintech business, which every FintechStatups shall be aware of.

WHAT IS FIN TECH?

Fin Tech is the abbreviation used for Financial Technology which aims to compete with traditional method of finance. There are many financial institutions consider this term as backend of their business and sometimes regular banking apps are included in this term.

Fintech business includes mobile payments, money transfers, loans, crowd funding, asset management and many other things.

In simple words-FinTechis the implementation of modern technology in traditional financial services and in the management of financial aspects in various companies and business. Anything from the financial mobile apps and new software installed, processing the money transactions and calculating business models.

Risk in Financial Sector:

Even, in general ,every individual and organisation ,  are worried about information and cyber security , conditions in financial sector is more critical  and fin tech business take the issues more seriously. Some of the recent studies shows that banks are investing a large amount of their funds in designing and implementing security to safeguard themselves from cybercriminals

Few more areas of concern includes cloud based technologies, mobile updates and system upgrades. These findings show that cyber security is the most important risk which the Fin Tech companies are facing.

CYBERCRIME AND CYBER SECURITY IN FINTECH LANDSCAPE

As FinTech start-ups and companies continue to disrupt the global financial landscape, a peculiar feature and perhaps their biggest advantage is that they are not held back or burdened by law, regulations, or existing systems. Also, they are more aggressive, more agile, and more willing to explore and make risky choices. But this total dependence on technology and adventurous attitude to aid financial services delivery may also be their greatest weaknesses.

 

FINTECH FIRMS ARE FACING CYBER SECURITY CHALLENGES  IN FOLLOWING AREAS

Application Security

Fin Tech firms mainly relies on applications that can access users’ financial profiles to perform a variety of real-time transactions. Applications are used by multiple persons and, are an increasingly common attack vector, and vulnerable code can be exploited as an entryway into financial networks.

FinTech firms and Banking companies need to ensure that a secure application security strategy such as a virtual private network is in place to protect user data. This should include a web application firewall enabled with current threat intelligence to identify and mitigate known and unknown threats, as well as to detect and patch vulnerabilities

Network and Cloud Security

Like other organisations, many FinTech firms also utilize cloud services to provide consistent, salable performance with lower upfront costs, rather than the traditional network. However the cloud infrastructure shall be secured differently than a data center or traditional network. Banks and FinTech firms must ensure that the same security standards they apply to their networks are applied in the cloud.

Along with detection and prevention, this security must also be dynamically salable and adaptable to ensure that is can grow seamlessly alongside cloud use. Additionally, in order to secure financial data, FinTech firms need to implement aloud access security, along with internal segmentation to improve data visibility while integrating industry security standards.

Inadequate Threat Intelligence

Threat Intelligence is another challenge for Fin Tech firms, an integrated defense needs to be enabled with automated threat intelligence to become a holistic system. As Fin Tech firms and banks enter partnerships, it will be impossible for IT teams to gather and assess all of this threat intelligence promptly manually. Automation, artificial intelligence and Machine learning will be integral to this process.

Cyber criminals are already leveraging automation to make attacks more persistent and effective. Likewise, artificial intelligence, machine learning and automation integrated into network security tools enable the detection and prevention of attacks in real-time, allowing organizations to keep pace with cyber-criminals.

LACK OF ESTABLISHMENT OF BETTER SECURITY PROTOCOLS

This is one of the most significant issues that Fin Tech start-ups firms face is selecting best security mechanism, like security protocols to enhance encryption data. Inadequate security protocols, data is easily exposed, leaving companies vulnerable to attacks.

Tunneling protocols used in VPNs are effective at encrypting Fin Tech data. Some of the best-known tunneling protocols include:

• Internet Protocol
• Point-to-Point Tunneling Protocol.
• Layer Two Tunneling Protocol.
• Internet Key Exchange version 2.
• Secure Socket Tunneling Protocol.

These tunneling protocols provide different levels of protection and provide security in different ways. Fin Tech should research and become more familiar with the different types of protocols and how to use them within a virtual private network – this is especially true in a financial environment where cyber threats are imminent and ongoing

ADDRESSING VULNERABILITIES IN INFORMATION TECHNOLOGY SYSTEMS

Integration of multiple systems and technologies leads to multiple cyber vulnerabilities. When two systems that are not designed at the same time by the same developers often pose compatibility issues and challenges in security, given the limitations in technology. Technology Engineers face issues while integrating two different systems, sometimes engineers working on different systems doesn’t even know how the other system works and vice versa, which makes identification of vulnerabilities more difficult.

Cyber criminals like hackers exploit these vulnerabilities to gain access to the system.

Many cyber criminals gain access to applications and networks because of improper configuration during installation. There are other techniques that are often used like spear-phishing, where humans mistakenly open spam emails and download malicious attachments or enter confidential information into fake websites to which they are redirected. So this is important for all Fin tech Startups to  raise awareness of cyber criminal risks and educate the newly banked on digital and financial literacy to teach them best practices to ensure security when engaging in financial transactions online.

LACK OF COMPLIANCE REGULATIONS RELATED TO CYBER SECURITY

Rapid growth in happening fast in Fin Tech firms. Fin Tech start-ups are flexible enough to change and adapt to evolve alongside consumer demands, rapidly.They are flexible and quick partly because there are not the same regulatory rules as traditional financial services for them. However, there are no regulations are controlling the way start-ups conduct their business. This is making the Fin Tech firms vulnerable because, they can sacrifice cyber security in order to capture the market as fast as possible.

Fin Tech Companies are collecting and storing personal information, so they needs to safeguard customer data. Further the challenge of is the way they protect this data. Many of Fin Tech firms have adopted bank-level security measures and fine-tuned them for their digital platforms.

Use of secure applications , regular vulnerability assessments on networks and applications , patching the applications on time, using Secure socket Layer(SSL) encryption while transferring the data is the must for enhancing cyber security. Fintech can opt for ISO 27001:2013 (ISMS) for overall cyber security.

There is need of some strong regulation, which would inspire start-ups to invest some of that venture capital money into their security.  As the Fin Tech industry grows, so will their defense against breaches.

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CYBER SECURITY CHALLENGES FACED BY FINTECH START-UPS

startups are easy targets. Startup world is filled with examples of data theft and how a beautiful idea just came down thrashing. Startups have a very narrow financial funnel and Startups are weaker targets, in case of any cyber attacks they are unable to handle legal implications and die. Most important is Planning, cybersecurity threats in today’s times can not be ignored. Startups are more vulnerable and this will increase day by day.

• Startups are Easy target or more easily vulnerable  – Large organizations already have procedures or have good infra & spending power to mitigate these threats, but small companies or startups are not so lucky. Cyber crime is increasing day by day and these startup’s are easy targets for them. Basic concern is protecting customer data. It’s all about protecting your digital assets, one of the ways is to use tools for Vulnerable Management.

• Tarnish Reputation  – Basically startups have to be more vigilant  about their reputation, only a single incident in news can tarnish their reputation. Startups business are like planes taking off from the runway, it’s very important to be very vigilant while taking off. Once startups have enough customer base or good investments, then it’s easy to handle.

• Dependency upon Third Party API’s – Most of the startups initially take support of third party API’s due to the fact that it’s impossible to develop API from scratch or the business model is not financially viable hence, third party API’s are the only source, using API means dependency and data exchange and we never know how this is taking place. Recommendation is that some legal documentation should be done before going for this arrangements.

• Less Spending upon IT Infra & Technology  – It’s very important that you select the best IT infra and technology solutions, we are living  in an advanced era, although there are many IT infra solutions available these days which offer services on the basis of bandwidth usage, this actually means Pay as you use. Ie: AWS , Google Storage’s etc These tools have actually made life easier because we are getting the same quality which larger setups are getting and are actually paying on the basis of usage, these advantages were actually not available even a few years back.

• Testing & Performance  – Most of the startups ignore this process called “Testing & Performance”. Although it’s a very important department, in case there is a financial crunch, startups can go for freelancers available at low cost and high quality.

• Lack of Legal know how – We all know startups are betting on new ideas or playing on new technology which might disrupt the market, and it’s not possible that a legal journey would be so simple for the company, hence just starting on mere ideas is not the only important. Analyzing the legal aspect would be a very wise decision. It’s recommended to hire a Cyber laws expert before going forward, this will not only help the company get a second opinion.

• Startups are Less Likely to fight back – Most of the startups have very small small financial backbone or narrow funnel for finances, In incidents like data thefts or legal notices, many startups haven’t even planned these financial aspects or we can say they have not planned for this situations, these incidents actually lose focus on the actual technology which they are working and leave the focus on what the actual idea was resulting in shutting down of startups or moving in wrong direction.

• Less due diligence  – Duedelegence for the idea is very important, a startup team should spend more and more time on this, Managing their resources, Technology aspects, research, IPR, demographic, usage, bandwidth, People, taste etc.   There are the most important aspects in understanding businesses. It’s also important to understand the Cyber Laws, although the world is becoming borderless, the internet has no boundaries, but these cyber laws would be acting as borders for different communities. Hence it’s very important for IT startups to design their  software in a way that is easily configurable according to the change in laws. Scalability not only refers to the tech infra, but also refers to how immediately you change your policies and how easily it is configurable in your software.

Recommendation

Get your Idea Patented 

The Most important aspect of an idea is to get that registered, you again need some attorney and get to read some local or national laws just going to get your idea registered. Although it’s difficult and time consuming but people have come up with innovative ideas to get it mark in the history that they thought for the idea first and small small efforts they did in this direction could save them from losing their idea. 

Cyber Risk Analysis 

Cyber Risk Analysis is the best due diligence which you can start initially, this report will basically touch endpoints where cyber risks are involved. Moreover this gives more insights before taking steps.

Before going for full scalability, have a cyber laws lawyer on your panel.

It’s very important, startups need to have cyber security & Legal advisors on their panel, this will help them analyse local laws and understand the legal implications before taking any steps. This will help companies to do due diligence before going further. 

Keep a cyber security plan always ready in case of emergency response.

In case of data breach or cyberattacks, always be ready with Plan B and try to minimize the risk to customers data, because that will be the only way to safeguard, once this risk is mitigated all other risks seem secondary and will automatically be secured. 

Always be in touch with the regulators or authorities regarding any thefts which you think would be in advance addressed to policy makers.

If you think your product is new and is somewhat governance is needed with public authorities or regulators, always get connected via events with the regulators of industry. You never know  whom you need to connect at the time of crisis.

 Before releasing any version of your product always keep your Terms & conditions, and disclaimer updated and enforced.

The most important part is the disclaimer policy, most of the court cases have fought and won or loose on the basis of Terms & Conditions of usage and Disclaimer. It is strongly recommended that always keep your Policies Updates and keep it reviewed with your legal consultant every time. 

Be proactive in addressing issues with your users. 

Let’s assume, your system is attacked in past months, and you want users to change their passwords asap, don’t hesitate to this announcement, It’s a responsible step, we have seen any automobile companies recalling cars for some defective part, it’s similar to that, you are becoming responsible company trying to save your customers and their data.

Hence by becoming a proactive founder dont let your Startups become  Easy target and vulnerable. SAVE YOUR STARTUP

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CYBER SECURITY CHALLENGES FACED BY FINTECH START-UPS