How Fintech Companies Are Dealing with New Data Security Challenges

The lockdowns and the dread of going to crowded places have taken a toll on most of us, but not fintech companies. Europe, for example, has witnessed a 72% boost in fintech use. However, such a blessing can come with unwanted curses - the biggest one being new security challenges.

The COVID-19 era is a complicated one, and not all of its problems can be solved by wearing a mask and coughing into your elbow. Cybercrime is more sophisticated than ever and a new attack occurs every 39 seconds - unfortunately, fintech companies are some of hackers’ favorite targets.

This shouldn’t come as a surprise - people are relying on digital money management more, which is why fintech companies have more valuable data to secure than ever before. Because of this, even big, reputable institutions like national credit bureaus and the top forex brokers have data leaks from time to time, as is the case with Pepperstone - a top-tier Australian brokerage that had its client data stolen in August 2020.

How Companies Protect Themselves from Data Leaks

If a company gets hacked and loses its user data, the customers are in danger, or their money is, to be more precise. That’s why a breach is a big deal - a company can lose its reputation of being secure after suffering a cyberattack.

To defend their customers’ privacy, companies are using tools like cryptograms, which track the data they received to see if it’s actually coming from the client. But even this is not enough to cover all bases - any imperfection in the code of the company’s platform can be exploited.

That’s why businesses use AI fuzzing - this is essentially an AI implemented to find and abuse holes in the company’s software. This machine learning solution helps the company’s IT department patch up these holes before cybercriminals discover them.

Naturally, hackers use the same AI fuzzing. This is why they are in an endless race with the companies they’re trying to break - whoever finds the exploit first, wins everything. Moreover, you need security experts to manage this process, and they are not cheap - expanding a team brings many expenses and new enterprises are having a hard time dealing with this.

Even bigger companies are having issues, mainly with managing the sheer amount of new data. Let’s say your client data doubles in a matter of months. You would have to buy more servers and secure them or just cloud storage from a big player like Amazon - both options are very hard on the pocket.

This is why new security challenges are such a headache. If you do everything by the book, it will cost you an arm and a leg - but if you economize when it comes to security, some hacker will pounce on your exposed data and your company is in trouble.

Brand-new 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 the real-deal human.

This technology is a concern for multiple 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.

This technology can even impersonate the CEO of a company - 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.

Obviously, a good deep fake can do a lot of damage. This is why companies have to be vigilant and use deep fake-detection programs, basically fighting AI with other, more advanced AI. But deep fakes are still an upcoming threat - the established, rudimentary hacking schemes are the real danger in the here and now. 

A new wave of phishing incidents is taking the internet by storm, and it makes sense - fintech company employees communicate through chatting apps. Checking if someone really sent you an email nowadays is harder than facing the adjacent office and yelling their name. 

Criminals know that stealing money physically is a health risk, so they naturally opted for sending fake emails to trick victims into giving them their login data and credit card numbers. These schemes are pointed towards individuals and companies alike - even brokers and VPNs have been under attack lately.

The Bright Side

Not everything is all that bad, though - not by a long shot. The techies of the world anticipated this hacking onslaught and they prepared their companies’ defenses. So much so that the number of data breaches in the first half of 2020 was actually 33% lower than the year before.

Moreover, far-sighted businesses that invested in cybersecurity on time have seen benefits - 40% of them have profited and earned back the money they spent on upgrading their systems 2-3 times over. This might mean that improving security is very profitable for fintech companies - especially in this day and age.

All in all, tech enterprises are fighting back. They are using new technologies to defend against the adaptive and creative hackers of the world. Perhaps this struggle will lead to an even safer cyberspace than ever before - but whatever happens, it seems the companies that invest in protection will come out on top.