Types of Data Breaches Common in The Fintech Industry

The fintech industry has made it easier for us to manage our money. Mobile wallets, digital lending, investment, or purchasing on EMIs are now faster and more accessible.

But what about data breaches? Data breaches are frequent in the fintech industry. We call it a data breach whenever sensitive information is accessed, stolen, or exposed. Even the tiniest data breaches can lead to massive losses for FinTech companies because people trust FinTech platforms with their confidential financial information. So, when there is a data breach, you don’t just lose money but trust.

Why Is The Fintech Industry The Prime Target?

Fintech companies usually deal with large amounts of personal and financial consumer data, making the platforms attractive to hackers. Moreover, fintech companies heavily depend on technology, including cloud storage, mobile apps, APIs, third-party services, etc. So, even if one part of the loop is not secure, it can create a potential entry point for attackers.

A Few Common Types Of Data Breaches In Fintech

Phishing Attacks

Phishing is still the most prevalent threat in fintech and financial services. Cybercriminals create deceptive emails or messages similar to legitimate websites or institutions and trick users into revealing sensitive information like login credentials for financial details. Then, they use this data to steal money from the user’s account.

API Vulnerabilities

APIs (Application Programming Interfaces) are significant to fintech operations because they ensure seamless integration and data exchange. However, securing APIs is crucial. Or they might expose platforms to unauthorized access. Some common issues that can raise risks are improper authentication and excessive data exposure.

Credential Stuffing

Attackers often use stolen pairs of usernames and passwords from previous data breaches for unauthorized access to user accounts. Many users apply the same passwords across multiple platforms. Hence, it is advisable to use a unique password for every platform. Multi-factor authentication can help fintech apps curb this issue. 

Malware and Ransomware

It has been a cyberattack for many years. Malware, or ransomware, is a malicious software application that infiltrates systems, encrypts data, and demands a ransom to restore the data. You primarily receive them through phishing emails or websites with low security. However, identifying malware can be challenging, compromising your sensitive information.

Cloud Misconfigurations

Since fintech companies increasingly rely on cloud services, misconfigurations might lead to unintended data exposures. For instance, hackers can exploit publicly accessible storage buckets or improper access control to access sensitive information.

Third-party vendor breaches

Many fintech companies collaborate with third-party applications for various services. However, these partnerships can make platforms vulnerable to attacks from third-party apps lacking robust security measures.

How can fintech companies protect themselves?

So, these are a few common data breaches in the fintech industry. But the question is, how do firms protect themselves? We’ve answered that below:

• Start by enabling multi-factor authentication. It adds an extra layer of security apart from just usernames and passwords.

• Secure all APIs and properly authenticate. Regular testing and encryption are essential.

• Carry out regular security audits and fix vulnerabilities immediately.

• Train employees on cybersecurity topics like phishing, secure data handling, and social engineering.

• Use strong encryption at rest and in transit to protect consumer data.

Finally, you know about the common fintech data breaches, but we have also guided you with possible solutions. Thus, we hope this blog allows you to be safe, aware, and peaceful. What do you say?