How to Build a Perfectly Secure Fintech Application
While financial services technology is certainly disrupting traditional banks, investment firms, and even insurance companies, there is something that traditional institutions have more capacity in than fintech companies – trust.
People have always trusted that their money, valuables, and their information are safe within a brick and mortar bank. Translating that to a fully digital operation is a big leap.
Nothing will kill a fintech initiative faster than a security breach. Already, there are examples of fintech and fintech-related startups that have exploded because of cyber attacks or failures in compliance. And, the interesting thing about these cyber-attacks is that they have not been highly sophisticated – they have occurred through social engineering (psychological manipulation of people for secure information) or by exploiting some basic security weakness.
Security in fintech has to be a top priority. And if you are considering the development of a fintech application, you have to bump this up to the top.
Getting that security and trust will involve understanding the fundamentals of security as you develop a fintech startup or app, mitigating the risks, and then demonstrating your successful security as a business asset.
The Fundamentals of Fintech Security
You have to begin with an awareness, and that includes awareness on the part of your entire team.
If you are going to build a secure fintech application, everyone in-house who will have any access to it and to any data/information housed there is a part of a strong security environment. Protection of customer information and assets and compliance with legal requirements should be on everyone’s “plate”. Detailed security policies must be established.
You should determine the service architecture you need.
You will need this to communicate to the fintech developers you will eventually hire. At the minimum, you will need the following:
- Platform operations
- Server and database hosting
- Management of access
- Secure in-house communication
- Compliance requirements
- Secure and encrypted data transmission
- Payment integrations if your app involves banking transactions, lending, crowdfunding, etc.
There is a host of SaaS architectures that will provide some of these things, but discussing your needs with a reputable fintech developer/development team will provide more customization and suggestions/recommendations about things you may not have considered.
You may not know how to build a secure fintech application. But you know what you want it to do. It is up to a developer to translate that into a piece of software that includes all of the security architecture you need.
Building your cloud app from scratch will ensure that you get what you want, along with the proper testing of every element and the post-launch support you need.
Define the Data Protection Controls You Need
What are the most sensitive data assets you will house? And what protocols need to be in place to secure them? This is where, in the fintech technology stack, there will need to be functions that control:
- Managing who has access to the data and revocation of access when necessary.
- Protection measures for both workstations and mobile devices, including encryption, firewalls, screen locks, and such.
- Encryption of data, as it is housed, accessed, and transferred.
- Two-factor authentication whenever possible.
- Setup of device inventory controls along with encryption in place, should a device be discarded, lost, or stolen.
Alignment with Security Compliance Regulations Must Be a Part of Any App You Develop
Here’s the thing about a successful fintech company. It ends up being a supplier or partnering with banks, if not being outright purchased by them. If your app, in its development elements, aligns with industry standards, you have a far greater chance of becoming a supplier or AWS partner.
The security systems you have in place will determine your attractiveness. Some of these will be the protocols you have in place within your company. Others will be the security measures embedded in your software. It would be a good idea to study the ISO/IEC 27000 Standards for Security Management and ensure that your development team is aware of them as well.
Mitigating The Risks in Fintech
A large factor in how to develop a secure fintech app will be in the post-development phase. And it will involve a few things that you will need to be certain to “cover” with any developer you select.
You need to discuss how the developers engage in penetration testing. The basic idea is to have a tester that will act like a hacker and attempt to gain access to your service/data. The importance of this cannot be over-emphasized. There should be a test report shared with you that will identify any weaknesses and what will be done to mitigate them.
If you will make use of any outside vendors as a part of your company practice, what elements of your app will be developed to limit their access to your most sensitive data? What permissions will be in place to control access?
As any fintech startup scales, it will be establishing a growing number of links with systems of traditional providers. A major source of cyber vulnerability lies within the interfaces between systems. A part of ongoing development of a fintech app will be scrutiny and testing as interfaces occur. This will require an ongoing relationship with the developer/team that originally built your app.
Be certain that you will be dealing with a team that has the length of service and that understands the security issues involved with these interfaces. You need an app that can scale, and you need a development team that can accomplish that for you.
Looking for the Right Development Team
Cyber-attacks on the fintech industry have become so normal that the FBI is telling such companies that it is no longer an “if” situation but, instead, a “when” one. One of the biggest hacks in recent times was the theft of $81 million from the Central Bank of Bangladesh – a company that uses software from the SWIFT financial platform – a platform that is used quite universally. And recent attacks on startups and applications to retrieve financial data from repositories should tell anyone who wants to build a secure fintech app one thing. Getting to market rapidly is a secondary goal. The first goal must be security.
That security comes from two vantage points – the architecture of the app, along with the testing and long-term support, and what you do as a business owner to support the security that has been built for you.
As you discuss your app with potential developers, here are the key questions to ask:
- How long has the development team been developing fintech apps? Where are the references for you to contact?
- As the architecture is developed, do they review every line of code for your security requirements, as well as the features?
- While no product can claim to be 100% secure, encryption for data protection is critical. It is somewhat of a myth that encryption will slow your app down. In fact, encryption can be run on a separate server, if necessary. How will the developer ensure encryption without compromising access or speed? Encryption is easy – but make sure that there is agreement on what should be encrypted and how access to the keys is provided for. In general, every entry in your database should be encrypted.
- How are they providing security assessments? This should involve penetration testing with a skilled expert acting as a hacker.
- As you scale and perhaps develop collaboration with others, can they assess the security risks of such interfaces and address such issues?
- Can they guarantee rapid and efficient bug-fixing? Are there monitoring tools built in? And once the code is fixed, how do they re-test it?
Don’t Shirk Your Own Responsibility
Whether your fintech application is for personal finance, banking transactions, lending, crowdfunding, or something else, you must bear your part of the collaborative effort:
- Set up a regular communication schedule with the developer/team, and don’t miss those meetings.
- Ask questions when you do not understand something.
- Assign one team member to be in charge of the in-house security protocols and to contact the developers immediately when issues arise with the product. If your team is small, that person may be you.
Remember, you want to work with developers who see you as a part of the development team from start to finish and beyond. You need to be an active member of that team.
If your fintech app idea has “jelled” in your head, and you are clear on the features and security you need, it is time to talk with Romexsoft. We have been building fintech apps for over 10 years and would be happy to discuss the transforming of your idea into a great, secure product.
Written by Romexsoft on June 15, 2017