The Cybersecurity Challenges in Fintech and Neo-Banking

The Equifax cybersecurity disaster impacted over 147 million customers. A few terrible cybersecurity practices led to to a breach that was easy for cybercriminals to pull off. One of the major reasons was that a leading company in the fintech industry failed to patch a well-known vulnerability in its system. The patch that would have allowed the company to address the vulnerability had been available for over six months.

Equifax also failed to segment its ecosystem, which gave hackers easy access to multiple servers. Usernames and passwords were also available in plain text, which made the system even more vulnerable. Equifax also failed to renew an encryption certificate for one of its internal tools, which enabled hackers to exfiltrate undetected data for months.

Similarly, Capital One became a victim of a cyberattack because of vulnerabilities in its system. The cyber attacker was able to steal 100 million credit card applications by accessing the company’s AWS servers. The attacker posted the stolen data on Github, mocking the company’s security and bragging about the breach on social media.

The primary cause of the attack was the company’s failure to secure its cloud storage with an attack surface monitoring solution. Apart from that, there was a misconfigured web application firewall that also contributed to the data breach.

Similar attacks have been reported at JP Morgan Chase, Flagstar Bank, Westpac Banking Corporation, The First American Financial Corporation, and many other companies.

Impact of Cybersecurity Challenges by the Numbers

Over 300,000 Android users have downloaded Trojan banking apps via the Google Play Store. Because of setting permissions on the application, Trojan actors are misusing the process for data breaches and infecting users’ smartphones.

The average total cost of recovery from a ransomware attack is nearly $2 million. Data also suggests that in 2020 only 8% of businesses that paid their ransom get their data back. Ransomware is one of the most malicious ways in which hackers exploit the vulnerabilities of fintech applications.

JP Morgan Chase, a leading company in the financial sector, has set aside a budget of $600 million to invest in cybersecurity. It employs over 3,000 employees in its cybersecurity department to ensure that its systems are protected on all fronts from hackers and cybercriminals.

Top Cybersecurity Challenges in Fintech

The growth of fintech and neobanking has also resulted in the rise of cyberattacks. While the advantages of fintechs and neobanks are many, security is one of their primary concerns, which many still feel skeptical about using their services.

Today, cybersecurity challenges in neobanking are prevalent. While some attribute it to the absence of intermediaries, it might have more to do with the design and infrastructure of the solutions.

Here are the top cybersecurity challenges that fintech and neobanks face.

Unpreparedness for Ransomware

One of the major challenges for neobanking apps face is their unpreparedness to handle ransomware attacks. They do not have the IT capabilities to make themselves secure from the malicious threats of ransomware. Hackers can send junk network traffic that stops service delivery to actual users, allowing criminals to extort money from financial companies. Ransomware is one of the most common and critical challenges that cybersecurity experts are trying to resolve in the modern business world.

Limited Cybersecurity Budget

Another one of the challenges of cybersecurity that fintech and neobanking companies face is limited cybersecurity budgets. Because most of these banks are startups, they do not have the money required to secure each and every step of the process. They are smaller than traditional banking systems, which discourages them from investing money in cybersecurity. Most companies rely on third-party software product engineering consulting companies and vendors to save money on security.

Integration Loopholes

A technical cybersecurity challenge for fintech companies is integration loopholes. Integrating banks with their platforms requires multiple custom APIs, which increase security risks in a system. Without careful attention and testing, criminals can exploit several loopholes in a system. Furthermore, neobanks often fail to conduct regular testing to ensure that API endpoints are secure from any vulnerabilities and threats. Even a slight patch could help them solve a major security challenge.

Apart from these three, fintech also faces the challenges of phishing, DDoS attacks, malware, and other threats that can expose a system and cause data breaches. With the introduction of AI, cybercriminals have become much more sophisticated in identifying vulnerabilities. However, companies need to use AI to their advantage and utilize it for fraud protection.

Conclusion

Fintech and neobanking apps are one of the most common targets of cybercriminals. Companies like Tntra provide fintech solutions to players in the industry to protect them from cyber threats. These vulnerabilities, if left open, can cause major issues in a system and cost  companies a lot of money. Companies need to stay ahead of cyber attackers and be prepared by having a dedicated cybersecurity team that can assess situations and fixes problems whenever they arise.

Tntra is at the forefront of the fintech revolution. If you are a BFSI company looking to digitize your operations, Tntra is here to help.