If a FinTech app fails to protect customer data, it may lead to severe

consequences such as:

Financial losses to customers

Identity theft

Misuse of customer data to perform phishing and other cyber crimes

Loss of trust as a brand

Legal implications as per compliances such as GDPR and PCI DSS

Increased risk of phishing and other subsequent attacks

Key challenges of FinTech app security

• Identity Management
Seamless sharing of data is an essential attribute of FinTech. Since financial organizations gather
loads of sensitive data, it creates concerns like data ownership and digital identity management.
FinTech businesses must adhere to all necessary compliances to collect, manage, and store
critical customer data to ensure maximum protection for customers’ data.
• Regional FinTech Security Protocols
FinTech applications should adhere to KYC (Know Your Customer) protocols as well as regional
data protection regulations. For example, businesses that offer financial services in the
European Union and the European Economic Area must abide by GDPR (General Data Protection
Regulation). Non-adherence to these regulations can result in cyberattacks and huge fines from
local governing bodies for non-compliance and exposing the data of users to non-reliable
sources.
• Data Security
Hackers can exploit system weaknesses of FinTech apps and access critical data such as credit
information, contacts, personal data, etc., and use it for financial fraud and data theft. Data
security in FinTech should be of the top concern since it has been identified as the top concern
for 70% of banks consulted during the Sixth Annual Bank Survey.
Common FinTech data protection regulations
• General Data Protection Regulations (GDPR):
GDPR is essential compliance for businesses that offer financial services in the European
Union and the European Economic Area. FinTech apps should comply with GDPR to
ensure secure data storage for EU residents.

• India's Personal Data Protection Bill (PDPB)

The PDPB looks set to be one of the strictest and most comprehensive data privacy laws
in the world. In fact, it's stricter in some areas than the EU General Data Protection
Regulation (GDPR) and the California Consumer Privacy Protection Act (CCPA).
 The PDPB will impose obligations on practically all businesses operating in India. It will
require you to reassess all of your company's data processing practices, policies, and
safeguards.
To help you prepare for the passing of the PDBD, we've created a summary of the
law's most important sections, including practical guidance on how to adapt to India's
new privacy regime.
• Payment Card Industry Data Security Standard (PCI DSS):
Data protection and compliance for businesses that manage credit card information.
FinTech businesses should ensure their app is compliant with PCI DSS as it will optimize
the security of credit, debit, and cash transactions and protect app users against any
misuse of personal information.
• Second Payment Services Directive (PSD2):
Regulation for electronic payments and cross-border transactions in Europe. FinTech
apps compliant with PSD2 regulations can benefit from the security against cyber
threats for processing electronic payments and safeguarding consumers’ financial data.
• Regulation on Electronic Identification and Trust Services (eIDAS):
Provides a legal platform for transitions between FinTech organizations, businesses,
government bodies, and citizens in the EU. eIDAS-compliant Fintech apps provide a
consistent and legal framework for accepting electronic identities and signatures.
• Financial Conduct Authority (FCA):
Data protection regulations for FinTech firms providing services in the United Kingdom.
Since FCA is a renowned compliance body, FinTech app companies should consider FCA
compliance to increase customer confidence and trust.
• Act on the Protection of Personal Information (APPI):
Essential regulation for FinTech businesses managing data of Japanese residents. Apps
compliant with APPI mean that the apps have enabled necessary cybersecurity
measures that will secure the personal information of the app users.
• Personal Information Protection Act (PIPA):
Essential regulation for FinTech businesses managing data of South Korean residents.
PIPA compliance requires the data controllers and collectors to integrate technical,
administrative, and physical measures for securing customers’ data against loss, theft,
alteration, or damage.
How to ensure FinTech apps security

• Implement multi-factor authentication:

Considering the sophistication and ability of cyber attackers, FinTech businesses cannot
solely rely on passwords to protect their customers. When building a FinTech app, it is
advised to implement multi-factor authentication where users prove their identity by
making two or more claims.
• Use code obfuscation:
Cybercriminals can clone a FinTech app in order to collect personal user data disguise.
FinTech businesses should consider code obfuscation to prevent app cloning. Code
obfuscation includes encrypting the code, removing revealing metadata, naming classes
and variables with meaningless labels, or adding unused or meaningless code to an
application binary.
• Data encryption:
Encryption is the scrambling of data in order to hide critical information from
unauthorized users. Cryptographic tools such as cryptographic hash functions may be
leveraged to convert plaintext to ciphertext. Businesses should use encryption when
releasing a FinTech app to protect critical customer data at rest or in transition.
• Secure APIs:
Creating, testing, and integrating APIs is a part of building FinTech apps. Organizations
design, develop, and consume APIs as part of building a FinTech app. Cyber-attackers
often target APIs to breach the system and steal critical finance data. FinTech businesses
can secure their app APIs by implementing the following methods:
- Implement the OAuth 2.0 standard
- Use authentication tokens
- Encrypt your data and use digital signatures
- Proactively identify and address API vulnerabilities
- Use quotas, throttling, and API gateways

• Perform Penetration Testing

Penetration testing refers to performing false intrusive attacks on the app to identify
any threats or vulnerabilities before the actual hackers do. Penetration testing reveals
the security vulnerabilities so that necessary enhancements can be made to improve the
overall app security.
Different approaches to Pen Testing

Phases of Penetration Testing

Important Penetration Testing Tools

SQLMap:

It is an open-source tool used in penetration testing to detect flaws with an SQL Injection into an
application. It automates the process of penetration testing and this tool supports many platforms like
Windows, Linux, Mac, etc.

W3af:

The web application attack and audit framework (W3af) are used to find any weaknesses or
vulnerabilities in web-based applications. It is used to remove threats such as DNS, cache poisoning,
cookie handling, proxy support, etc.
Wireshark:

This is an open-source tool and is available for many operating systems such as Windows, Solaris, Linux,
etc. With this tool, the pen tester one can easily capture and interpret network packets. This tool
provides both offline analysis and live-capture options.

Metasploit:

It is one of the most commonly used penetration testing tools in the world. It is an open-source tool that
allows the user to verify and manage security assessments, helps in identifying flaws, setting up a
defense, etc.

NMAP:

It is also called network mapper and is used to find the gaps or issues in the network environment of the
organization. This tool is also used for auditing purposes.

Nessus:

It is one of the most trusted pen testing tools by many companies across the world. It helps in scanning
IP addresses, websites, and completing sensitive data searches.
John the Ripper Password Cracker:

It is an open-source software which is used to detect vulnerabilities in passwords. This tool

automatically identifies different password hashes and finds issues with the passwords within the
database. Its pro version is available for Mac, Linux, Hash Suite, and Hash Suite Droid.