COVID has undoubtedly damaged business growth across the globe, but there is one particular industry that has experienced a boom – the fintech industry. According to research published by deVere Group, the pandemic drove an astounding 72% rise in the use of fintech apps across Europe, with significant surges in fintech usage also seen in the Middle East. With everyone transitioning to remote working and relying on digital platforms for everyday activities, the fintech industry is in a position to become the number one banking option for customers in a post-COVID era. However, there is one key threat that may jeopardise fintech’s growth trajectory – cybersecurity. Here are some of the top cybersecurity challenges we believe are currently most threatening to the fintech industry:
Vulnerable digital identities
The success of fintech firms is grounded in the way they share, use and store data – all of which are highly vulnerable to being exploited by hackers. A BCG report revealed that financial service firms are 300 times as likely as other companies to be targeted by a cyberattack. Never before has such a huge amount of confidential data been within reach of cyberattackers as our data increasingly enters the digital sphere post-COVID. While this confidential data is essential to providing a seamless, customised banking experience for customers, cyberattacks threaten to expose the digital identities of millions of customers and damage their encrypted assets. With remote working and online transactions likely to continue for the rest of the year and into the foreseeable future, cyber-attacks are only likely to increase.
Unprecedented technological transformation
The rate of technological transformation due to COVID has meant that hackers are exploiting fintech firms with outdated technologies. Many fintech start-ups with less revenue will likely take a risk with their investment in cybersecurity in favour or more attractive investments in a post-COVID era, which may seriously damage their growth in the long-run. Research carried out by ImmuniWeb revealed that 98% of the top 100 global fintech startups are vulnerable to serious cyberattacks. Attackers are always praying on outdated technologies that they can exploit and breach, and if one system is accessed then what follows is a chain effect that can damage the entire fintech network.
An underdeveloped regulatory framework
As the digital innovation landscape evolves at an exponential rate, fintech firms will need to adhere to basic levels of security protocols to protect both their own company and the entire financial network. It only takes one effective hacking attack to a fintech platform before a whole supply chain is potentially compromised. Fortunately, organisations such as the World Economic Forum’s FinTech Cybersecurity Consortium have provided recommendations for a common approach to cybersecurity controls, helping fintech firms work collaboratively to ensure the industry can thrive and gain the upper-hand against cyber threats.
Fighting the fintech cyber threat
So what are fintech firms doing to address these challenges and protect themselves in a post-COVID digital environment?
Fintech companies are increasingly resorting to modern technologies such as cloud computing, artificial intelligence (AI) and machine learning to implement important protective measures, including data backup and disaster recovery services. Unfortunately, not all fintech firms are using these technologies to their full advantage. A report by Accenture showed that only a third of companies are implementing technologies such as machine learning or AI, with only 24% using cyber analytics and user behaviour analysis to their maximum potential.
Another way fintech firms are protecting themselves against cyber threats is partnering with a managed security service provider or introducing an in-house cybersecurity team. Introducing a more controlled form of data sharing with improved mechanisms for seeking consumer consent will also be critical.
At Geidea we have recognised the fundamental importance of addressing cyber threats from the ground up, working externally with regulatory frameworks and internally to ensure full security protection. Geidea is PCI certified and works under the extremely comprehensive SAMA security framework, which covers everything from tech and third parties to risk and compliance issues. Geidea also carries out internal training sessions on cybersecurity to promote company-wide awareness of cyber threats, equipping employees and the tech team with the skills and certifications they need to stay updated with the latest updates in the sector. This two-pronged approach to cybersecurity will be vital for all fintech firms in the years ahead.
In the final quarter of 2020 it is crucial that fintech firms boost their investments in cybersecurity measures and manage the threat of cyberattacks collaboratively to ensure customers are benefitting from the advantages they offer against traditional banks. Over time, fintech firms will need to evolve and expand their cybersecurity protection to meet the demands of new technologies and the increasingly complex danger posed by fraudsters in a post-COVID era.
