Fintech companies in India have seen rapid growth in recent years, with the industry projected to be worth $2 trillion by 2023. However, with this growth comes an increased risk of cyber attacks, making cybersecurity a crucial concern for these companies.
Cyber attacks on financial services and companies are becoming more frequent and sophisticated, with the number of cyber attacks in India increasing at an alarming rate in recent years. This highlights the need for Indian fintechs to focus on cybersecurity to protect themselves and their customers from the potential harm caused by cyber-attacks.
What are the current FinTech Cyber Security Risks and Challenges in India?
The fintech industry is constantly evolving and with this growth, there are several risks and challenges that fintech companies must address to ensure the security and integrity of their systems and services.
- Identity management: Ensuring the secure and accurate verification of customer identities is a major challenge for fintech companies. With the increasing number of online transactions, fintech companies must implement robust identity verification methods to prevent fraud and protect customers’ sensitive data.
- Cybersecurity: As the number of cyber attacks on fintech companies continues to rise, ensuring the security of online transactions and sensitive financial data is a major concern. Fintech companies must implement strong cybersecurity measures, such as encryption and regular security audits, to protect themselves and their customers from cyber threats.
- Compliance: Fintech companies must comply with various regulations, such as the Payment Card Industry Data Security Standards (PCI DSS) and the Reserve Bank of India’s (RBI) guidelines on cybersecurity. The RBI has issued guidelines for the management of technology risks in banks, which also applies to the Fintech companies. These regulations can be complex and challenging to implement, but they are essential for protecting customers’ sensitive data and maintaining the integrity of financial systems.
- Data privacy: With the increasing amount of data being collected and stored by fintech companies, ensuring the privacy and security of this data is a major challenge. Fintech companies must implement robust data privacy measures and comply with regulations such as the General Data Protection Regulation (GDPR) to protect customers’ personal data.
- Scalability: As fintech companies grow, they must ensure that their systems and services can scale to meet the demands of an increasing number of customers. This can be challenging and requires careful planning and investment in infrastructure and technology.
- Fraud: Fraud is a constant risk for fintech companies. With the increasing number of online transactions, fintech companies must implement robust fraud detection and prevention systems to protect themselves and their customers from fraud.
Reserve Bank of India (RBI) has also made it mandatory for fintech companies to store data within India, as well as to provide data access to authorities when required, to protect customers’ sensitive data and comply with regulations. The RBI also requires fintech companies to conduct regular security audits and penetration testing to ensure the integrity of their systems and protect against cyber threats.
Why hackers prefer launching cyber attacks on Financial Services?
Fintech companies in India are becoming an attractive target for hackers due to the sensitive data they store, the large amounts of financial transactions they process, and the potential lack of robust cybersecurity measures in place. Financial companies are becoming a popular target for hackers due to a number of reasons:
- Sensitive data: Fintech companies store sensitive financial data of their customers, such as personal information, financial transactions, and account details. This data is valuable to hackers, who can use it for identity theft, financial fraud, or to disrupt financial services.
- Large amounts of transaction: Fintech companies process large amounts of financial transactions, making them a prime target for hackers looking to steal money or disrupt financial services.
- Lack of security measures: Some Fintech companies may lack robust cybersecurity measures, making them more vulnerable to cyber attacks. This can happen due to lack of budget, lack of knowledge or lack of compliance with regulations, which can make it easier for hackers to gain access to sensitive data or disrupt financial services.
- Popularity: With the rise of digital payments and online banking, Fintech companies are becoming increasingly popular, which can make them more attractive targets for hackers looking to take advantage of the growing number of users and transactions.
- Return on Investment: Cybercriminals see a higher return on investment when they target financial institutions, as the monetary value of the data and access they can gain is higher.
- Lack of regulations: In some countries, Fintech companies may not be subject to the same regulations and oversight as traditional financial institutions, which can make them more vulnerable to cyber attacks.
Which are common types of cyberattacks on financial institutions?
These are some of the most common types of cyberattacks that financial institutions may face, and the list is not exhaustive. It’s important for financial institutions to stay informed about the latest threats and to implement robust security measures to protect themselves and their customers from these attacks.
There are 8 common types of cyberattacks that financial institutions, including fintech companies, may face:
- Phishing: This is a form of social engineering where hackers use email or text messages to trick victims into providing sensitive information, such as login credentials or financial information.
Why Phishing is mostly used in banking sector?
Phishing is a major cyber security problem for fintech companies, as it can lead to significant financial losses and damage to the company’s reputation.
Phishing attacks typically involve hackers using email or text messages to trick victims into providing sensitive information, such as login credentials or financial information.
Fintech companies are particularly vulnerable to phishing attacks as they often rely on online transactions and store sensitive financial data of their customers.
Phishing attacks can be very sophisticated and can be difficult to detect, making them a significant threat to fintech companies.
In a phishing attack, the cybercriminals use a variety of techniques to lure the victim into providing sensitive information, such as creating fake websites or sending emails that appear to be from legitimate companies.
Fintech companies are at a higher risk as they often handle sensitive financial information, such as bank account numbers and credit card information, which can be used for financial fraud.
Phishing attacks can also lead to account takeover, where the attackers gain access to the customer’s account and steal money or make unauthorized transactions.
The success of phishing attacks can also lead to reputational damage for the fintech company, as customers may lose trust in the company’s ability to protect their sensitive information.
To mitigate the risk of phishing attacks, fintech companies must implement robust security measures such as multi-factor authentication, regular security awareness training for employees and customers, and use of anti-phishing software.
Fintech companies should also be aware of the common phishing tactics used by cybercriminals and educate their customers to be cautious when receiving unsolicited emails or text messages requesting personal or financial information.
- Ransomware: This is software that is designed to cause harm to a computer system, such as by stealing sensitive data or disrupting services. Common types of malware include viruses, trojans, and ransomware.
Why are Ransomware Attacks a serious concern for Indian Financial Service Companies?
Ransomware attacks are a significant concern for the banking industry in India, as they can cause significant financial losses, disrupt operations and damage reputation. Banks must implement robust security measures to protect themselves from ransomware attacks and have incident response plans in place to quickly and effectively respond to an attack.
- Distributed Denial of Service (DDoS): This type of attack involves overwhelming a website or network with a large amount of traffic, making it unavailable to legitimate users.
- Advanced Persistent Threats (APT): This is a type of cyberattack where an attacker establishes a long-term presence on a target’s network, often for the purpose of stealing sensitive data or disrupting services.
- Business Email Compromise (BEC): This type of cybercrime is a financially motivated cyber-attack which usually involves social engineering tactics, the attackers try to impersonate a senior executive or a company supplier, tricking employees into making wire transfers to the attacker’s account.
- ATM Skimming: This type of cyber attack aims to steal the credit and debit card information of customers using an ATM by installing a skimming device on the machine.
- Social engineering attacks: This type of cyber attack aims to trick individuals into divulging sensitive information by using psychological manipulation techniques, it can take the form of a phone call, email, or text message.
- SQL injection: This type of cyber attack takes advantage of a vulnerability in a website’s code to gain unauthorized access to a database and steal sensitive information.