Financial services companies deal with highly sensitive personal and business information, thus privacy protection and cybersecurity for fintech apps are a major concern. If you want to develop a fintech app, the question is how do to protect that money, and, your client’s data? The article dishes on security best practices for fintech app development, so let’s proceed.
The importance of fintech app security
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With the constant progress in fintech, hackers are coming up with new ways how to jeopardize data and perform cyber frauds. According to a report, Fintech is one of the biggest targets of fraudsters. Almost 98% of global fintech startups are vulnerable to such attacks. Financial Conduct Authority states that after 2019 there was a 480% increase in the number of cyberattacks on financial services companies from phishing, ransomware, and data leakage. Therefore, security can’t be underestimated.
Building a secure fintech app is important to overcome the following challenges:
- Systems vulnerabilities that hackers can use to access sensitive information.
- Digital identities
- Data ownership regulates who can access, create, modify, and delete data.
- Third-party service integrations can compromise the security of fintech apps.
- Cloud migration can make it difficult to manage and protect data.
- Malware attacks.
To ensure data protection software engineers not only control if the product meets legal standards e.g. General Data Protection Regulation (GDPR), but also follow the list of rules and best practices to secure fintech apps.
Tips for Fintech Security App Development
First of all, we recommend you start with a plan and a clear understanding of what fintech app security standards are. Fintech application data protection should include the following sensitive information:
- Personal details a user provides to access an app: name, address, contact numbers, SNN, and income information.
- User data and all kinds of details that are obtained from a transaction: credit card numbers, payment history, credit card purchases, and debit and credit information.
- Any information in connection with the delivery of certain financial services, e.g., a consumer report.
Here is the list of tips and best practices for developing a secure fintech app we recommend you to follow.
The code plays a vital role in application security. One of the fintech app security tips is to plan your security in advance and how to react to any possible flaws or vulnerabilities in the application.
Encrypt sensitive data
Encryption means the process of implementing algorithms that transform data into code that only can be exposed to the intended receiver. With proper encryption even if the data is hacked, unauthorized users can’t access any sensitive information without the decryption key.
Secure data transmission
Another important process that requires employing encryption algorithms. There are several industry-tested encryption algorithms you can choose from, available in the market.
- AES (Advanced Encryption Standard) is one of the safest algorithms and is resistant to cryptanalytic attacks. Is used by the US Federal Government.
- TripleDES (Triple Data Encryption Standard) mainly is used for encrypting credit card PINs and other passwords.
- RSA is optimal for a small-scale fintech company that manages limited data transfers and processing.
- Twofish is used for network applications with regular key changes and apps with no RAM and ROM involvement.
We agreed on the fact that security is an essential aspect of any business, and banking is no exception. To access mobile banking apps basic measures like a username and a password won’t be enough. Make sure the app has at least two-factor authentication that requires a step to log in: the user can use a phone number, email, id, Touch ID, and Face ID. This kind of authentication is also required to complete any transactions, no matter how much you are going to send.
Roles and Permissions
Fintech apps have different features but for security reasons, you limit some user roles to access them. There is a system for setting up roles and organizing permissions RBAC. It is quite easy to implement as it works in the way the administrators think. An alternative model is ACL (Access Control List) which lists all the operations a particular user can do.
A payment blocking feature is one of the examples of security precautions that banks often use to prevent fraud or money laundering. It works in a way that the system blocks any unusual or suspicious transaction (e.g. withdrawing a large amount of cash, accessing a banking app from an unusual location, making multiple transactions, etc). Consider implementing it as well.
Testing is a crucial part of the software development process. Thus fintech app security solutions require including quality assurance engineers and constant tests. There are a few testing phases that should be included in the process:
- The first thing that should be tested in areas that are quickly revealed to the public: are network devices, servers, and domain name systems. Also, the focus has to be on the operating system, the database, storage, and other elements that are at risk of being compromised.
- Provide internal testing to check everything from the client side. That means testing the application while running in the browser and ensuring no breach can occur.
- Server security testing is another type that has to be done to ensure that accurate frameworks and tools are used.
Information such as the card number, expiration date, and CVV is considered sensitive and should never be stored in the same database in cleartext. Making it impossible for unauthorized users to access and read the information. The process that reduces the risk of identity theft and credit card fraud is called tokenization It ensures that sensitive card information is securely stored in the database, while your app database only stores cardholder information e.g.names, addresses, etc.
API tokens play an important role in the mobile app’s security as they interact with back-end information and are also responsible for functionality and data. And one of the common practices for protecting an API is to implement an automatic API token rotation.
Regulations and Policies
Another fintech app security rule is to follow regulations for data protection in the financial services industry. Usually, they are based on a targeted market.
- GDPR is a set of rules for privacy protection in FinTech applications in the European Union.
- The Financial Conduct Authority or FCA focuses on secure protection and manages financial services in the UK.
- eIDAS or Electronic Identification and Trust Services is a regulation for cross-border electronic transactions that ensures secure transactions between FinTech companies and end-users in the EU.
- Payment Card Industry Data Security Standard forces service providers to validate, gather, process, and use credit card information with this standard.
- GPG13 focuses on cybersecurity and intrusion detection systems and refers to service providers and outsourcing companies involved with the UK’s governmental system.
- The Personal Information Protection Act regulates private data security measures in South Korea.
- The Act on the Protection of Personal Information regulates private data security in Japan.
- ISO/IEC 27001 is a set of policies and frameworks and security standards that can help organizations protect data management systems.
Discover more about the role of big data in finance!
Companies have concerns an outsourcing vendor may provide insufficient securing measures and fintech apps may increase the exposure to attacks. Thus, last but not least advice is to minimize risks by partnering with a trustworthy (ISO certified) software development company.
Consider Inoxoft as Your Reliable Partner for Protecting Your Finance Application
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While hackers are becoming more sophisticated, creating a secure fintech app isn’t an easy process. Software engineers have to protect users’ data by following the required rules.
Consider Inoxoft as your fintech development solutions provider. Our skilled teams are great at providing banking software development services. We are more than happy to enhance your business flow and make you ahead of your competitors.