How Fintechs and Financial Institutions Can Demonstrate Resiliency

From managing cyberattacks to navigating outages and preparing for evolving regulations, an enterprise must be able to demonstrate strong resiliency. This is especially critical for those in highly regulated industries, including financial services. With regulations on the rise, such as the upcoming deadline for the Digital Operational Resilience Act (DORA), it’s important that the financial services industry – ranging all the way from large banks to smaller fintechs - focuses on resilience, security, and compliance to stay competitive and build trust with their customers. Operational resilience at its core is about assuming disruption is going to happen, because no matter what, every incident can’t be prevented or anticipated.

Building Strong Resilience

Enterprises need to actively prove their resiliency not only to regulators, but also to their employees and customers. But what does strong resiliency look like? One important consideration when building a resiliency plan is the current cybersecurity threat landscape. In fact, according to IBM’ X-Force Threat Intelligence Index, finance and insurance was the second most attacked industry in 2023 for the third year in a row with malware as the most common cause for incidents. For this reason, operational resilience is even more important to ensure regulators and customers know that bank statements, transactions, applications and more are protected. 

Moreover, with data residing across multiple clouds, on-prem, with SaaS providers, fintechs, and more –organizations must be intentional about where they place their workloads. As companies continue to accelerate business with an open, hybrid multicloud approach, they should look to solutions that provide visibility and protect data across different environments. It’s critical to have a holistic view across their entire security posturing so that enterprises can better position their resiliency to stakeholders and demonstrate how they’re actively preparing to face threats. 

The Importance of Options

We live in an “always on” world meaning financial institutions need to be ready to minimize the impact of disruption by having a clear response and recovery strategy. As the deadline for DORA is now only a few months away – January 17^th, 2025 – banks should have this legislation top of mind. Although DORA is a European-based regulation, due to the rapid globalization of the financial sector, any organization that is providing financial services within the EU must also take a closer look at their resiliency strategies. The legislation is designed to strengthen the operational resilience of the financial sector and prevent cases of global IT outages, but it’s not just for large banks and financial institutions. DORA must also be a top priority for fintechs who are already working in or looking to work in this sector. 

Fintechs in many ways are driving the next wave of innovation for financial services, so it’s essential that they align their practices accordingly to support resilience and business continuity. Being proactive and regularly stress-testing IT operational resiliency will be key to staying ahead of these requirements. Similarly, fintechs will also need to access their own third- and fourth-party risk management processes, ensuring their suppliers and partners are focused on IT security. By leveraging an enterprise cloud platform designed for the unique needs of this industry that includes a common set of security and compliance controls built in from the onset, enterprises can significantly lessen the burden of ensuring security and compliance within their own organizations and with their partners.  

Looking Forward

It has become clear that an organization’s resiliency strategy must be a collaborative effort. It’s up to fintechs and larger financial institutions to work together to demonstrate adherence to existing and emerging regulations such as DORA. DORA is not the first, nor will it be the last, of major requirements for the financial sector that are essential for driving secured innovation and assuring consumers and enterprises alike that their data is protected, and mission-critical operations can remain up and running at all times.