What are the security vulnerabilities faced by Fintech Applications?

Traditional financial services have undergone a rapid and comprehensive transformation in the last few years with the adoption of fintech applications. These have brought convenience, better usability, and time and cost savings for the users. Consequently, instead of visiting the banks or financial institutions, users are able to carry out a series of transactions through the apps operable from their smartphones. These include paying utility bills, transferring funds, lending and personal finance, booking tickets for airlines, railways, movies, buying online groceries, among others.

However, notwithstanding the steady adoption of fintech applications by banking customers, there are several cybersecurity loopholes necessitating fintech application testing. Importantly, the integration of fintech applications with banking solutions has raised issues of data security. Further, the rapid growth of digital platforms such as devices, operating systems, and networks has introduced the possibilities for vulnerabilities in the whole system. These digital platforms face potential risks from various threat actors and can be exploited for financial gain.

Cybersecurity loopholes in Fintech applications

Given that fintech applications deal with banking transactions, they are increasingly targeted by threat actors using a host of techniques or malware. According to a BCG report, financial services firms are likely to be attacked 300 times more compared to other companies by cyber threat actors. Again, as per ImmuniWeb, the research firm, around 98% of the best fintech start-ups in the world face the risk of major cyberattacks. In such attacks, the various attack vectors used by cybercriminals include Distributed Denial of Service (DDoS) attacks, ransomware, and social engineering to gain access to critical and confidential data. The cybersecurity loopholes faced by fintech applications are:

Sharing of data: One of the major aspects of fintech applications involves sharing of data between traditional financial enterprises and modern digitally transformed organizations. This transmission of data between two entities following different business models and security protocols can be a source of cybersecurity issues to be exploited by threat actors. Hence, financial application testing should be a mandatory part of the build process wherein loopholes in integrations can be identified and fixed. In fact, fintech testing should check if the data accessed by the application throughout the SDLC is encrypted or not.

Integration with third-party APIs: The more integrations a fintech application has with third-party systems like payment gateways or digital wallets, the more it is likely to be exposed to threats. Since various systems are designed and developed differently, there may be compatibility issues during integration. This calls for stringent fintech app testing to ensure the total integration of third-party APIs and prevention of any compatibility issues.

Cross-platform malware infection: Fintech applications may use various digital platforms such as cloud services, smartphones, or websites from different vendors. This may allow threat actors to infect a platform with malware and propagate it to the other thereby creating a chain of cybersecurity risks. Further, since different platforms maintain different levels of cybersecurity measures and comply with different regulatory protocols, they may act as a conduit for malware.

Cloud-based risks: Cloud services have become ubiquitous with various digital services using them to ensure better accessibility, scalability, speed, security, and availability of services. These digital services comprising digital wallets, mobile apps, websites, and payment gateways may use cheap or inefficient cloud services. With stringent QA testing in fintech, the security of cloud services and their interactions with digital services can be verified and validated.

Digital identities: To provide an omnichannel experience to the customers, fintech applications are increasingly using biometric sensors such as fingerprint or iris scanners to authenticate users. In addition to biometrics, such apps use One Time Passwords (OTPs) for user authentication, which are better secured than screen patterns, PINs, or passwords. Even though digital identities have helped to strengthen the security of such apps they have become unwieldy and difficult to manage. Think of thousands of OTPs that need to be generated and stored in the system for authentication. Should these identities get stolen, cybercriminals can use them to get access to confidential data and financial information of customers. Hence, testing financial apps should leverage automation and advanced technologies like AI & ML to identify any outlier or missing pattern and prevent threat actors from acting.

Compliance failures: Fintech applications should comply with all regulatory requirements such as PCI DSS, PSD2, and hold licenses such as Electronic Money Institution and Payment Institution, etc. Financial services application testing can verify if the apps comply with industry mandated security standards, and in the process, prevent censure, penalties, and lawsuits.

Conclusion

In the fast-paced digital environment, fintech applications are released with frequent regularity. However, since these have integrations with banking services, the need for implementing better security protocols like encryption or the use of biometrics becomes critical. Fintech testing of such applications can garner better trust from customers and other stakeholders and prevent threat actors from exploiting the vulnerabilities.