2018 was a good year for financial services firms and fintech. Through the first half of the year alone, global fintech investments reached nearly $58 billion. While incumbent companies have long been criticized for innovating slowly, companies of all sizes and maturity levels are now capitalizing on opportunities to transform financial services.
But all of that opportunity comes at a steep security price. In fact, concerns over fintech security have grown so significant that the World Economic Forum created a cybersecurity consortium to increase collaboration as the industry searches for long-term answers to constantly evolving threats.
The growth of mainstream fintech has been a boon for innovators. However, the result has been an ever-growing attack surface that fraudsters and more advanced actors are taking advantage of.
One study found that the volume of data breaches in the financial services industry tripled between 2013 and 2016. And with the cost per record lost/stolen at $206 compared to the $148 global average, fintech companies can’t afford to leave security to chance.
That’s why it’s so important to design a multi-layered security strategy that maximizes both business continuity and efficiency. However, overcoming critical fintech security challenges is often easier said than done.
Four Security Challenges For Modern Financial Services Firms
Banks, brokerage houses, insurance companies, and all other types of financial services firms face the same connectivity dilemma. New digital technology must empower customers and increase business efficiencies while remaining secure and reliable.
As you try to balance fintech demands, you’re faced with challenges such as:
Increased attacker attention. The financial services industry has always been a prime target for cyber attacks. Customer data is becoming increasingly valuable, leading fraudsters to constantly find new ways to steal from the transactions you process. Financial records are highly-coveted on the dark web, giving attackers plenty of incentive to exploit fintech vulnerabilities. The more attacks you must defend against, the more likely one will get through sub-par security solutions.
Compliance and data security. Regulatory compliance is a fact of life for financial services firms. Missteps like the 2016 Tesco Bank data breach can result in millions of dollars in fines (in addition to other incident response costs.) However, data security compliance doesn’t necessarily mean you’re safe from breaches. While regulations give you a loose set of guidelines for securing data, following the minimum requirements isn’t enough. Financial services firms must balance the time and resources necessary to guarantee compliance while also maximizing protection against attacks.
High costs of data breaches. The direct costs of lost/stolen records and regulatory fines aren’t the only financial implications of a data breach. Diminished brand reputation, legal fees, incident response costs, and the investment necessary to improve security posture all factor into data breach expenses. All in all, cybercrime cost the average financial services firm $18.28 million in 2017. And that number continues to rise every year.
The remote workforce. Remote access is becoming the norm even in the financial services industry. The mobile workforce, combined with the rise of BYOD policies and global branch offices, creates a larger attack surface. While remote access can significantly increase workforce productivity, maintaining security is essential.
These fintech security challenges are less about specific malware and more about larger trends to which financial services firms must constantly adapt. There’s no one-size-fits-all solution, but there are a few key principles that any successful security strategy will include.
Designing A Multi-Layered Security Strategy
Fintech companies must walk a fine line when it comes to cybersecurity. It’s not enough to invest in a few security appliances and meet the minimum requirements of your regulatory guidelines. If you don’t find the right mix of security solutions, you risk business disruptions, data breaches, and diminished long-term revenue.
There are countless security applications and appliances to choose from on the market, which makes it challenging to find the optimal combination that balances data protection and business efficiency.
Effective multi-layered security strategies in the fintech industry should include:
- Built-in data encryption for all applications.
- Seamless integration between third-party security solutions, networking components, storage hardware, and business software.
- Flexible access management to address rapidly-evolving employee demands across the network.
- Endpoint security that includes remote browser isolation to protect users from web-borne threats.
- Clientless, browser-based access to secure application access without disrupting workforce productivity.
As fintech solutions continue to go mainstream, the days of security rooted in anti-virus and basic firewalls are over. Aligning security with business goals requires a multi-layered approach that allows for business continuity and maximizes efficiency.
Don’t settle for disparate security solutions that create silos in your organization. Fintech solutions require agile, efficient business processes — and seamlessly building multi-layered endpoint security into those processes is a major factor for success.
Ilan Paretsky is the CMO of Ericom Software.
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