The future of fintech is stronger than ever in 2017. According to The Pulse of Fintech Q1 2017, KPMG determined global investment activity in the financial technology space reached $3.2 billion in the first quarter alone. Whether your business falls within peer-to-peer lending, personal investment, or even payment processing, your drive for technology provides greater flexibility and delivery of traditional financial offerings to both old and new clients alike.
You’re under constant pressure to rapidly deploy applications, but the speed that your business requires makes it harder to manage the security of your technology. Vulnerabilities can arise anywhere from initial app development, to the ongoing dev testing processes and even third party integration. It’s essential to fully understand the security and compliance challenges associated with your business considering the newness of fintech to traditional financial regulations. The need to protect your customer data is more important than ever. Exposing your customer base to potential threats will not only hurt your business, but affect the overall adoption rate of future fintech solutions within the industry.
Here are some security and compliance challenges your fintech company needs to address:
Combatting the “First to Market” urge
New market entrants are increasing rapidly with global investment across 260 fintech deals in Q1 2017 according to KPMG. With so many companies in the space, your business is pushing to get to market as quickly as possible, but cannot do so without taking the time to implement the proper regulatory and security controls in place. Security must be inherently built into the frameworks and policies, without inhibiting engineering progress.
Growth discrepancy between technology and regulation
It’s obvious that fintech innovation is moving at a faster rate than the pace in regulatory changes and your business may see the regulatory frameworks as a hindrance to meet core objectives and deliverable dates. The issue of this gap may be within the gap in communication with regulators rather than the framework itself. Having an open dialogue can demonstrate an effort to better integrate within the financial space while fine tuning your business goals to meet those mandates.
Interfacing with banks without proper protection
Many new fintech companies are now interconnected within the banking ecosystem through interfaces in their applications. Larger institutions push the level of control down on fintech providers, creating a constant battle to maintain enterprise banking levels of control with limited staff and resources. Without the proper knowledge of safeguarding your applications, hackers will be more inclined to attacking your environment, seeing an open door to access associated financial services. “Newly banked” entrants will increase the overall cyber security risk if not properly educated on their own application security.
Understanding the sensitivity of consumer data
It’s important for your business to understand the implications of mishandled customer data. Tishin Donkersley from TechCo writes about why security needs to fit within the fintech framework. She emphasizes the importance of “security within the DNA of startups”, stating the personal and financial data represents individual retirement funds, investment plans, and bank accounts. Any breach or leak of information could not only jeopardize your company, but affect the entire fintech landscape for future regulatory adoption.
In order to combat these challenges, proactive security needs to be ingrained within all business-critical applications…
Here are recommendations to maintain a proactive security posture:
Switch to security-centric approach
Before you dive straight into development, it’s important for your business to consider security best practices for your IT infrastructure. When developing innovative technology in the financial sector, having a security strategy from the start can help avoid hitting roadblocks in future vulnerabilities and noncompliance issues that will directly affect your consumer risk level.
Understand compliance mandates within the industry
It can sometimes feel like there is a gray area within fintech regulations. Your business may feel like it may not have the fixed mandates traditional banks need to adhere to but this is not the case. Starting an open communication with industry regulators can ensure you understand the necessary requirements your business needs to follow prior to any development.
Gain visibility into entire infrastructure stack
Ensuring security involves complete visibility of your IT environment. Visibility starts with asset prioritizing, based on both company value and value potential attackers see. Next piece includes assessing your environment for misconfigurations and vulnerabilities to better understand which doors are susceptible to intruders. If third party integration is a core component to your business, insight into their vulnerabilities is also a factor. The point is that proactive security can only be achieved by understanding what you are securing and which areas need attention the most. Complete visibility gives you the awareness to catch any potential exposures before potential attackers do.
Integrate technology and expertise to meet the constant flow of threats
The pressure to secure your applications is stronger than ever before. Attackers are strongly attracted to the fintech space, knowing the increasing rate of “new bankers” in the industry who are not as well versed in security technology. As your company continues to grow, having an adequate solution backed by security experts to pinpoint real threats can help your business save time and money on securing what matters most (read more on better threat detection). You want to pay for outcomes, not tools; integrating security with 24×7 security experts strengthens your security posture even further, giving you continuous monitoring of your environment as well as actionable insights to the incidents that can harm your business.
Talk to an Alert Logic specialist now about your fintech security needs.