In the fintech and payments industry, companies face a set of unique cybersecurity challenges that other industries may not face. When a fintech falls victim to a cyber attack, that attack compromises clients’ trust at a much higher impact compared to other industries, like education or healthcare. Companies can take a long time and effort to rebuild their reputation and credibility.
Specific cybersecurity challenges and needs at various business growth stages
Every business has its special set of cybersecurity needs and limitations. If you are well aware of the needs and risks of your business, then you could lower the chances of encountering a cyber attack and ensure the longevity of your business. The following are the common needs and limitations that we often see from Kobalt.io’s client base:
Startup companies are usually pre-revenue to early revenue. Setting up a strong foundation and providing confidence in cybersecurity is crucial at this stage. The 3 critical elements of organizational transformation and management are people, process and technology. For startups, business leaders often put their focus on the process and technology areas to drive product development and market fit, leaving the people component untouched. Part of the reason is that startup business leaders have limited resources to hire a team to manage cybersecurity.
This is where third-party cybersecurity firms can come in. Cybersecurity firms, like Kobalt.io, provide security programs and teams as a service to make sure startups are getting the cybersecurity basics right. For example, making sure that there are secure coding practices, policies and procedures are in place and design principles are at play.
Typically, the compliance and risk management areas start to be more important at this stage. When these companies are starting to be involved with third parties like Stripe or Plaid, there would be security questionnaires that they would need to navigate and complete. If the basics of a cybersecurity program are not in place, the business would face barriers working with third parties and unable to meet clients’ requirements. Additionally, managing risks appropriately become more important. Knowing the types of attacks and threats that the company is most vulnerable to is critical to addressing and mitigating them.
These companies can be at the unicorn stage and they have the ability to hire and build internal security teams. But, they may not have in-house experts that can cover all the subdomains of cybersecurity like pentests and privacy or the budget to build a team to do 7×24 monitoring of critical security risks. These companies would as a result partner with a cybersecurity firm to solve specific problems within their IT environments. Working with third-party cybersecurity firms is also beneficial for these companies to get new perspectives on risk management and other areas of cybersecurity.
No matter the size of your fintech or payments organization, when it has a cybersecurity foundation, you could leverage it to enhance trust with clients and eventually grow your business. Cybersecurity fundamentally helps you build trust in various ways:
- Prevent a cyber incident – e.g. address low-hanging fruit risk, design security-centric infrastructure
- Meet cybersecurity standards of third-party services to expand the capability to offer a wider range of services
- Strengthen the ability to interconnect with key players and third parties in the industry
Improving confidence in the secure nature of crypto
In the past few years, the concerns of the security of crypto firms or digital currency transactions has been a hot topic. There are many crypto detractors that are questioning the security and privacy of crypto firms. At the time being, there is still a lot of room to mature the technology approaches of storing and transferring digital currencies. Industry leaders and cybersecurity professionals are actively learning about technology approaches and maturing them very quickly. The security issues of the transaction or storing of digital currencies impose are certainly solvable. Crypto companies face unique risks – not just a theft of store of value, but compromise of underlying protocols and even deficiencies in smart contract execution.
The potential downside of cybersecurity
User experience is critical to so many fintech companies – either on banking apps, payment experiences or other platforms. Cybersecurity protocols or even identity verification could introduce friction. If there is too much friction, it can harm the experience, business and limit user growth. To keep friction low, do not reinvent the wheel. Instead, leverage strong authentication tools like Google authentication, Okta, Duo, and ride on the investments that they have made in account protection and Multi-factor Authentication (MFA).
To have a smoother process of implementing cybersecurity into your business, try to educate your teams and clients on security authentication from the start, during onboarding for instance. Most of the time, it is much easier to introduce a new best practice at the beginning of a process instead of adding it later on. Using tools that your teams and clients are familiar with can help streamline the process of implementing cybersecurity best practices. Adopting widely-recognized tools or framework could also give users the impressions and confidence that your services or platforms are secure to use as well.
When running or starting a fintech or payments organization, design your business and products with cybersecurity in mind. When it is done right, cybersecurity can become your entry ticket to growing your business in the long run. Partner with cybersecurity firms to navigate the process with professional guidance. Cybersecurity firms, like Kobalt.io, can provide high quality and effective services using only a fraction of the cost of hiring an in-house cybersecurity expert.
If you would like to learn more about cybersecurity in the fintech space, listen to the discussion between Scott Hawksworth, host of the PayPod podcast, and Michael Argast, the CEO and Co-Founder of Kobalt.io, here.