The financial technology (fintech) sector is busier than ever. Before COVID-19, consumers were transitioning to digital banking, the fintech industry's bread and butter. The pandemic's lockdowns and business disruptions accelerated the process. Where customers go, attackers follow, leading to increasing cybersecurity threats and data theft. 

Financial companies handle massive amounts of sensitive data daily, including bank accounts, social security numbers, and other personally identifiable information. It is the company’s responsibility to keep this data safe and secure. Plus, compliance requirements mandate the safekeeping of private and sensitive information.

The first security practices to review are authentication processes. Standard multi-factor authentication (MFA) gives greater assurance that customers are who they say they are, but it doesn't provide certainty. Neither does it give insights into the customer’s security posture, which is critical for effective fraud detection. Even worse, customers dislike the friction that comes with password-based MFA so, unless it is mandated, adoption may be low and uneven. 

Read on to learn about the fintech security concerns and why stronger and frictionless authentication stops these cyberattacks before they even begin.

Data security concerns for customers

When looking at malware attacks in the fintech sector, it's helpful to differentiate them based on the type of attack. 

Account takeover fraud

Account takeover fraud describes an attack that results in the compromise of customer credentials, which are then used to log in to the application. These can be especially problematic as the attacker may have full access to the customer's financial data, or worse yet, their digital wallets.

Kaspersky found earlier this year that account takeover fraud accounts for over half of all fraud-related events in the financial services industry. It was also nearly five times more likely to occur than more "traditional" means of fraud, such as money laundering, and the number of attacks has increased dramatically in the last few years.

Statistics like the above illustrate why there's a significant and growing need for better access control techniques industry-wide.

Data breaches and leaks

While not as targeted as account takeover fraud, a data breach does equal amounts of damage, if not more. Data breaches often precede account takeover fraud—maybe not on your network but somebody else's—where a customer’s credentials are compromised.

A recent study by Verizon found that four out of every five data breaches result from compromised credentials. These password-based attacks typically fall into different categories:

Phishing and social engineering attacks

The goal of a phishing attack is to deceive the victim inside the organization into sharing confidential information, such as their login, often using elaborate schemes to trick the customer into believing the request is legit. Social engineering is a much more personalized form of phishing, where the attacker directly interacts with the victim.

The most highly successful financial fraud events are phishing attacks. And there's a reason why it's so common: it's one of the oldest fraud schemes on the internet, and it still works incredibly well for attackers.

Brute force and credential stuffing attacks

As opposed to the personal touch of phishing attacks, brute force attacks are as brutal on your authentication servers as it sounds. Here, attackers try common username and password combinations on a single server to gain access.

Credential stuffing adds some structure to the attack, using compromised credentials from other sites. If you’re not throttling connections in the event of suspicious activity, the attacker does this undetected since it will blend in with everyday credential mismatches.

With attacks coming from both inside and outside organizations, and increasing in number, financial institutions—especially fintech companies—must adapt their security approach to the changing threat landscape. MFA on its own isn't enough to secure your customer data and prevent identity theft.

We propose a passwordless approach. When combined with a thorough analysis of the customer’s security posture and authentication that is based on risk and not role, this addresses the key security challenges facing fintech organizations.

Secure sensitive data with stronger and frictionless authentication

When stepping up data security, organizations often add friction to the authentication process. Phishable MFA solutions are often the primary culprit: the customer must reach for a phone or device to enter a code, click a link, or tap a push notification. If the second device is not close by, it’s a hassle and if the code, link, or notification never arrives, they can’t log in. If the security solutions used are cumbersome, customers will try to find ways around it.

Authentication methods 

To address the unique data security needs of the fintech industry, we recommend that organizations employ the following strategies to ensure legitimate and secure transactions over their networks.

Passwordless MFA

Phishable MFA still relies on the password, but hackers can bypass the password with some work. Many passwordless MFA solutions work through on-device biometrics and a device-bound authentication token. There is minimal customer input during the authentication process—it is practically invisible from the customer’s point of view as the burden of authentication is offloaded to trusted protocols.

Risk-based authentication

Simply removing the password from the equation isn't enough. The security posture of your customer is just as important to data security. At the time of login and continuously during the customer’s  session, your authentication servers should be checking for potentially suspicious behavior with risk-based authentication.

This may come in the form of adding step-up authentication prompting a biometric verification  for high-risk activities, such as changing personal information, making large transfers, or adding a new, trusted device. However, other user and device signals, such as whether mobile devices are "jailbroken" or not, the presence of critical security updates, location, and so on also should play a role.

Beyond Identity's Secure Customers analyzes more than two dozen of these signals to make a real-time decision on whether to grant or deny access as well as dynamically prompting step-up authentication as your risk policy dictates.

Breach-proof credentials

Financial institutions need to ensure that whatever authentication mechanism they use to verify identity can’t be forged or copied in any way. In the case of Beyond Identity's products, we create and store the private key to the Trusted Platform Module (TPM) on the customer's device.

The TPM is tamper-proof, which means the private key can't be removed or copied somewhere else. With each private and public key pair cryptographically bound to a customer’s identity, Secure Customers provides immutable identity verification while at the same time eliminating friction.

Secure your fintech customers with Beyond Identity

Your customers' financial data is valuable to attackers, and your customers place their trust in their financial institution to keep it safe. However, you can't always count on your customers to be smart about the passwords they pick and you can never count on passwords to keep customer data safe.

Beyond Identity's Secure Customers eliminates the password. Our passwordless platform goes further than just providing a modern customer authentication solution: it can also monitor for signals that a connection may be suspicious and adjust the number of authentication factors on the fly. Going passwordless isn’t enough.

It's time to do away with the insecure password forever. Secure Customers is the best way to do it, and it only takes a few lines of code. Get a demo.