Holmes and Watson, Calvin and Hobbes, Solo and Chewbacca, Fintech and Cybersecurity, what do these have in common? They are an iconic long-lasting partnership that is meant to be. Well implemented cybersecurity for financial services shows that cybersecurity partnerships are a must for maintaining consistently high levels of security.
Fintech is a disruptive technology, rapidly changing the financial environment. Incumbents can no longer keep up with newer agile players; this is creating a strain on traditional banking and finance as they consistently have to update their legacy IT infrastructure. Cybersecurity is becoming a mainstay for incumbents, and new agile fintech companies can learn from this.
Finding a cybersecurity partner should become a priority for fintech organizations. This article will explore why cybersecurity is essential for fintech and what qualities make the right cybersecurity partner.
Cybersecurity for Financial Services
Any industry that migrates to the digital space quickly realizes the new risks associated with the change. The unknown dangers arise from vulnerabilities created from digitizing physical systems. The traditional banking sector had many teething issues when they began to offer online banking to its customers, which was in response to the rise of fintech.
The issues mostly came down to the inability to effectively protect user data, and by extension, their own systems. The Equifax breach of 2017 is still in recent memory for both the financial and cybersecurity communities.
But when it comes down to the fundamentals, cybersecurity for financial services does not differ greatly from that of other industries.
Why does the Industry Need Protecting?
Simply put, fintech deals with information that is valuable to other people, whether it is business partners, customers, or bad actors. The business information system that fintech builds upon is one that is data-driven, making payment systems that are effective and useful to the customer are worth protecting.
Some examples of fintech that are primarily data-driven are:
- Stock trading apps
- Online banking
- Payment Gateways (like Stripe or Paypal)
- Cryptocurrencies
- Crowdfunding
- Mobile Payments
The information that these fintech niches store and process is its main asset. A breach or lost data can cost the business irreparable damage.
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Security Techniques
Generally speaking, the kind of security that is applicable to the fintech industry is also a technique employed by the wider digital industries. In the coming sections, we shall explore some methods appropriate to the industry and use it to evaluate potential cybersecurity partners.
Cybersecurity for financial services architecture implementation at a glance:
- Threat evaluation and threat protection
- Staff Awareness
- Compliances Services
Threat Landscape and Threat Protection (500)
Much like Holmes making up for Watson’s lack of deduction skills, a cybersecurity partner makes up for the lack of threat analysis and threat protection for a fintech organization.
Identifying and understanding the threat landscape is the main issue facing the fintech industry. In a report researched by Accenture studying cybercrime, it was found that information theft is the most expensive crime across all sectors. In the same statement, insider threats were found to cost around $243,000 and take around 50 days to rectify.
The threat landscape is diversifying quickly and keeping up with their evolution can sap valuable resources from the organization. This is where a partner steps in, and in evaluating a potential partner, their understanding of the threat specific to the industry is a must.
Because threats, specifically cybercrime, are diversifying rapidly, the identification of vulnerabilities becomes key in effective cyber protection. Some of the cybersecurity threats to the financial sector are:
Bot-nets and AI
Bot-nets and web-based attacks remain a top-level threat for fintech. Through online interfaces, attackers can often inject malicious code or use DDoS attacks as part of their repertoire. AI is emerging as a potential bad actor if misused, however, we may still be a while away from it being a major threat. However, one thing to consider is also the protective application of AI and machine learning, wherein in some cases, fintech companies, have used it to identify fraudulent activity.
Third-Party Risk
Traditional financial services are increasingly engaging with more third-party providers. As part of the third-party network, these organizations are taking fintech companies into the fold. With such wide-reaching third-party networks, regulators are beginning to put pressure on these organizations to hold third-party security standards on par with their own.
These broader networks introduce a myriad of new vulnerabilities. Partnering with a cybersecurity company, whether you’re in an existing third-party network or choose to develop your own, is a good move both for the organization and within the minds of regulators.
In the same vein, the right cybersecurity partner will understand the organization’s overall risk management framework as the company activities are, broadly speaking, digital. Risk management is a continuous process and requires careful attention, where fintech can give responsibilities to the partner.
Active Protection
After identifying the threats, much like Holmes deducing a crime scene’s aftermath, a cybersecurity partner can track the culprit and apply the necessary security. The partner can offer the active protection that the fintech industry needs but can’t provide. This is possible through open communication channels available in business partnerships.
Active cyber protection can only be realized through clear communication between both parties, each understanding the others’ needs, and solutions can be found and implemented quickly. Through proper resource allocation, a cybersecurity partner knows precisely where their attention will be needed. Combined with the dedication to advancing industry knowledge, partnerships transform passive protection to focused active protection.
Niche Innovation
The overlooked benefit that comes with active protection through partnership, is the specialized relationship that is built between fintech and cybersecurity. Longer-term partnerships will result in both industries learning from each other, this kind of environment fosters innovation in the newly formed fintech and cyber niche.
Staff Awareness
Despite trends of incumbents and new financial players spending more on security than previous years, staff awareness training still only makes up 9 percent of the allocated security budget. However, the human layer of security remains one of the top reasons behind data breach or loss.
The risks due to lack of employee knowledge are only compounding. These factors alone should be convincing enough to apply some form of staff awareness training. But a cybersecurity partnership will offer effective, active, and tested staff training programs. These programs can be rolled out quickly, and more importantly, will be updated and scaled as your organization scales.
This tandem bike ride of a partnership will move at the pace that is necessary for the organization.
What a partnership can offer in the staff awareness sector:
- Gap analysis into employee security knowledge (compared to that of industry security knowledge)
- Consistent updates to training programs dependent on:
- Changes in the volume of staff
- Acquisition of new enterprises (that come with existing staff)
- Changes in information systems (from OS to new Apps)
- And much more.
- You have tailored training programs that are effective for your organization and the fintech industry.
- Employee outreach, so they don’t have to bother your IT department.
Partnership awareness programs offer what traditional awareness programs cannot. That is a continuous understanding of the organization’s security needs, coupled with intimate knowledge and relationships with the staff themselves.
Compliance Services
Arguably one of the most important aspects of a cybersecurity partnership is the compliance services they can offer. Fintech in its nascent phase can, and will be subject to regulatory change. There have already been many examples of this occurring with cryptocurrencies and blockchain companies going through the revolving door of the courthouse. Still as of writing this article, it is unclear as to whether bitcoin can be classified as a security (like stocks are).
This environment should give new and existing fintech companies an idea of what is to come. Just now most fintech organizations that offer some sort of payment platform have PCI DSS to comply with. And we can also guarantee that GDPR will be mentioned one time or another. A good cybersecurity company knows every data regulation under the sun, this is the kind of partner you need if you are to navigate the regulatory environment.
Not only do they know the existing regulations but a lot of them will have some insight as to what regulation is to come next, and in some special cases even help create them. It is important to be part of the conversation, ultimately regulation is not intended to hurt anyone, in fact it should be doing the opposite, but it won’t work out in your favor if you don’t have your voice heard.
This is where a cybersecurity partner is ideal, they have intimate knowledge of your business and industry, but can also work out solutions ensuring all data is processed correctly and in accordance with whatever law necessary.
So in evaluating a potential partner look for one that has extensive knowledge and experience with a wide array of regulations, but most importantly, ones that affect the fintech industry and the three main ones would be:
- PCI DSS
- GDPR and CCPA
- FINRA
Not to mention, that with corporate social responsibility being on consumers’ radar, ethical treatment of their data can also have strong marketing potential to the end-user.
Good Business Partner Qualities
Fundamentally a cybersecurity organization could have all the technical competency in the world, which is no doubt important, but if they don’t satisfy some very basic qualities there is no way they form a good partnership.
The qualities that we are talking about are ones of honor and trust. Regardless of the industry, here are some things to look for in a business partner.
Are They Trustworthy
Nobody wants a partner they can’t trust, that is just counterintuitive. The same is true for a business partner. When evaluating a potential cybersecurity partner, check to see who they have worked for, do previous clients trust their methods, has anyone left a bad review, these kinds of “social metrics” go a long way when choosing a partner and will easily determine if they are the right fit or not.
Negotiation Skills
This is an interesting one, but if the partner can negotiate well for themselves, you can be sure they would do the same for you. This can be particularly true for fintech if the cybersecurity company is negotiating with the government on a new regulation, for example.
Communication Skills
Similar to the previous two, you want a partner who can communicate thoughts, needs, and instructions well. This ensures that down the line all projects run smoothly and efficiently.
Proven Track Record
Depending on the type of partner you are looking for, in this case, a cybersecurity partner, then you will want to see that they have experience in the industry. What kind of projects have they been part of? Are they active members of the industry community? Are there noteworthy stories of prior success?
These are a few of the general qualities you will want to be looking for when evaluating potential partners.
Making RSI Security Your Partner
Selecting the right cybersecurity partner can be an involved process, but it does not have to be difficult. We advise you to refer to the qualities and sections outlined in this article as a means of evaluating a potential partner or…
Let us be your cyber Holmes to your digital Watson, become a partner today! The process is simple and when it comes to cybersecurity for financial services there are none better.