4 Security Issues Fintech Firms are Facing
By James (Jiaqi) Wang, 28 June 2021
With the rapid development of fintech and related industries in recent years, a number of security issues such as cloud-based security risks and data security have arisen along with it. Therefore, many fintech companies need to pay high attention to these security issues, so that they can continue to develop sustainably and customers will have more trust in them. Here are 4 security issues fintech firms are facing frequently.
#1 Surging Traffic
In Europe alone, fintech app usage is up 72% since the start of the Covid-19. That means more data to manage, more opportunities for man-in-the-middle attacks, and more storage locations that must be protected. That last factor, data storage, is a bigger security issue than it might seem. Either the fintech firms need to manage more servers themselves — which require physical, as well as digital, protection — or they need to rely on a cloud storage provider, such as Amazon Web Services. Additionally, consumers also have a role in it. Antivirus solutions, device updates, and situational awareness are important, but they’re not enough. Fintech companies must take the lead in keeping customers’ data safe.
Source: Fintech News
#2 Money Laundering Risk
Fintech-driven banks often use cryptocurrency for conducting financial transactions. These cryptocurrencies are an integral part of the fintech world, and they are not formally regulated by any set of standards and global regulations. Moreover, the frequent use of non-regulated currencies results in illegal money laundering and even in terrorist funding. Since identifying the beneficiary in any fintech-enabled transactions is hard due to fintech’s pseudonymous nature, the money laundering operations get enough support from the fintech services. Thus, for fintech companies, there is a need to minimize the occurrence of illegal activities such as money laundering by employing a range of technical measures.
#3 Cloud-based Security Risks
Cloud-based solutions are one of the significant aspects of the fintech sector. From payment gateways and digital wallets to secure online payments, cloud computing services offer everything in the fintech ecosystem. Maintaining the confidentiality and security of financial data is important to banks and financial institutions. Even though cloud-based services are considered a secure means of storing data, a lack of adequate security measures could result in your sensitive financial information being stolen or compromised. There are instances when the company partners with an inefficient, cloud-based solution provider and then deals with significant data losses. Therefore, stay updated and be wise while selecting your cloud-based service partner.
#4 AI Hacking Schemes Are Here
Generally speaking, new AI developments are scary, but deep fakes take the cake when it comes to how unnerving AI can be. These programs have gotten so good that they can copy a person’s face and voice, making an AI-generated person seem like a real-deal human. This technology is a concern for a few reasons, but more than all else, they make client verification very difficult, if not impossible. Opening financial accounts and drawing large amounts of money requires verification - the fintech company’s agents can be fooled when talking with an AI-generated doppelganger of their client. Moreover, this technology even enables malign users to impersonate the CEO of a company, for example, cybercriminals can direct the said company’s billing department to send a payment to an offshore account or something similar. The employees could obey their “boss” without question to avoid getting on their bad side - this can be done with a well-done fake phone call. To conclude, for fintech firms, it's important to be extra vigilant about AI-based scams.
Planning to start your career in Financial Technology? Here at IMC, we offer many different courses related to Fintech. These courses will not only provide you with the most cutting-edge academic knowledge, but will also make you more competitive in your future career.
Looking to kickstart your career in Financial Technology? Click the button to check out some Fintech-related courses.