Introduction
The financial world is currently undergoing a profound disruption caused by the emergence of innovative financial solutions offered by startups. Fintechs have grown into a significant competition for the traditional banking giants which are struggling to retain customers. That's especially true for the Millennials who are attracted to innovative banking products that match their preferences.
And traditional financial institutions have a reason to worry because fintech is on the rise. According to KPMG, the global fintech market size reached $111.8 billion in 2018 – representing a 120% increase compared to 2017.
By taking advantage of technologies such as robo-advisors or blockchain, fintech companies offer alternatives to conventional financial solutions. However, they all face one challenge: fintech security. The financial services industry is uniquely vulnerable to security breaches. Developing fintech apps means paying extra attention to that aspect.
Fintech app security and data protection are serious topics for anyone hoping to develop a successful financial app. Here's how software development teams make sure that their fintech apps offer a high level of security without compromising on performance.
1. Prepare methods for authorization, authentication, and identification
A fintech app needs to have measures in place that enable the product to make sure that users are really the people they claim to be. To confirm user identity, your app needs to include an identification and data authorization system, which is flawless. For example, you should ensure that the API restricts access to all areas that are significant in your app. Another measure worth considering is two-factor authentication. Offer users with maximum security but always balance it with minimal effort on their side (for instance, during the registration process).
2. Two-factor authentication
This method is a great option to improve your app's security. Move beyond the primary authentication method (username and password) and include two-factor authentication in your app. Many fintech apps use one-time codes that are sent to users through SMS or email. Another popular 2FA method is push notifications that allow authenticating with a single touch.
3. Security-ready code
Secure your fintech app right from the start with a security code. Note that all the sensitive data your app will be processing is going to be stored on the server and user's device. That's why it's smart to plan to security early on – and code plays a key role here. Always look for potential security gaps in your application. Pay attention to any vulnerabilities or flaws in your source code. Test everything you ship to deliver a product free of any security loopholes.
4. User roles and permissions
It's crucial for a fintech app to have a transparent scheme of authorizations and roles which define which actions users can perform and which areas they can access. Naturally, every user who accesses the app needs to pass the authorization process. Note that every user should also have a role assigned to them; it defines what access level they hold. To ensure that, your app needs a user management engine in place. Lust all the actions in your user management console. Sketch all the permissions given to access specific areas as well.
5. Keep an eye on backend network connections
Your cloud servers need to be protected against unauthorized users. Make sure that your API is secure as well to prevent any data leaks. It's also smart to create special spaces where you'll be storing all data and documents at full security. Also, don't forget about running tests to assess the vulnerability of your app to network threats. You should also apply transport layer security (TLS) to all the traffic. Consider providing additional security with the help of a virtual private network (VPN).
6. Make users come up with complex passwords
There's no harm in forcing users to use passwords that are more complex than "Password1234". Your app will be dealing with money transactions, so it needs strong authentication measures. While the username and password are ubiquitous, they can get easily stolen or lost. That's why fintech startups often force users to come up with complex passwords – and then change them every few months. Feel free to enforce passwords with an extensive character set; the security of your app is the most important factor in its success.
7. Invest in a good mobile encryption policy
If your fintech app processes data that features many variables, you need to keep a close eye on gaps – even if that data is stored only temporarily. Preventing data leaks is critical for the success and reputation of your product. Data protection by encryption is a common strategy among fintech companies. Make sure that your mobile databases are encrypted to secure locally-stored data. To ensure top security, pay attention to how you manage the encryption keys.
8. Test it, and then test it again
You may be rushing to release your app to market. But it's smarter to release a high-quality product than a buggy one, especially when it comes to fintech. That's why it pays to test your application at every stage of its development. Testing your security measures is key here. You simply need to double-check that everything is working before showing your app to the world. Look for weaknesses in areas such as authorization, authentication, session management, and data security. Make sure to check how these features perform in real-time too.
9. Take extra care about third-party components
Managing third-party components is an essential security area. And you need to start doing that as soon as possible, continuing to monitor it regularly. In recent years, we've seen many third-party components that cause serious security issues and risks. The Heartbleed bug is an excellent example of the risk that comes with third-party components. Make sure that you're using the latest versions of your components. Maintain and monitor them, check for alerts for reported vulnerabilities, and set a policy for action in case one of such problems is found in dependency of your app.
10. Be serious about logging
Log every user activity from every user, all the time. You may log data such as the action itself (for example, a transaction), as well as user ID or account, geolocation, IP address, device data, and others. Make sure that the logs are accessible during a potential post-mortem analysis' when you review an incident that has occurred from every possible angle. Logs contain plenty of valuable information for creating insightful incident post-mortem reports. Such reports usually include root cause analysis, incident details, and a timeline.
11. Monitor transactions carried out in your app
Don't forget that operating systems are a vital foundation for your infrastructural security. You can improve this layer by implementing all the system updates consistently and regularly. You can find many different services that help to automate the maintenance of your operating system – for example, Microsoft's Software Update Service or Red Hat's up2date.
12. Maintain application servers and operating systems
A fintech app needs to have measures in place that enable the product to make sure that users are really the people they claim to be. To confirm user identity, your app needs to include an identification and data authorization system, which is flawless. For example, you should ensure that the API restricts access to all areas that are significant in your app. Another measure worth considering is two-factor authentication. Offer users with maximum security but always balance it with minimal effort on their side (for instance, during the registration process).
13. Security outside of programming
Users install fintech mobile apps on their smartphones and access them on a regular basis. That's why you need to consider the security of the mobile device as well. Educate your customers to ensure that they know what to do in case they lose their phone due to theft or other reasons. If you're toying with the idea of removing the protection provided by the manufacturer, stop right there. This may compromise the security of your app. Also, recommend using only authorized app stores to your customers.
14. Protect application users on-site
Use a VPN to establish a secure connection and prevent unauthorized devices to get access to your system. They should be blocked by a system firewall, your antivirus solution, or another program. Take these additional security steps, and you'll ensure that no unauthorized user can access your application.
15. Hire developers who know how to secure fintech apps
Experienced software engineers know how to protect fintech apps and users against the dangers, risks, and threats that come with processing sensitive data. Investing in top expertise for building your fintech app is a smart move because it ensures the success of the entire project.
At Solidstudio Software House, we have plenty of experience in building fintech products and ensuring security at every stage of the application development. We know how to expand the features of your fintech application and make it more secure, never compromising on its look or performance.
Are you looking for a team of fintech experts? Get in touch with us; we help fintech companies develop applications that are free of any security issues.