Fintech companies have always been prime targets for cybercriminals. However, with the advancement of technology and the rise of generative AI, cyberattacks have become more sophisticated than ever. This forces businesses in the sector to strengthen their fintech security. Failing to address emerging threats and implement best practices can lead to severe consequences, including significant financial losses and reputational damage.
This article outlines key cyber threats in the financial services sector today and recent real-world security incidents. It also describes practical strategies that have been tested and validated through real-world implementations by Neontri, which companies can use to stay resilient.
Key takeaways:
- Cyber attack attempts targeting the fintech sector are increasing in both frequency and sophistication, largely driven by technological advancements.
- Ransomware attacks are among the top threats, with the average cost of data recovery reaching $2 million.
- It takes financial businesses an average of seven months to detect and recover from data breaches.
- Maintaining robust fintech security requires adopting a zero-trust architecture, implementing biometric authentication, ensuring secure software development, adhering to regulatory compliance, and, most importantly, having the right expertise on board.
Key fintech security threats: Types and examples
Over 70% of industry leaders anticipate a rise in financial crime risk, primarily driven by rapid technological advancements. This trend reflects a sad reality: in 2024, 64% of global financial organizations experienced an increase in cyberattacks. Beyond just reacting, true resilience comes from mastering the art of safe acceleration, ensuring that technological advancements don’t inadvertently introduce new attack vectors.
But it’s not just the volume of threats growing—their nature is evolving, too. Below are the main fintech security concerns that businesses in the industry should keep on their radar.
Ransomware attacks
Ransomware is malware that blocks access to an organization’s systems until a payment (ransom) is made to restore it.
In 2024, over 65% of financial companies were targeted by such incidents. While not all attempts were successful—52% of efforts to compromise backups failed—they still caused substantial financial damage. Organizations in the financial services industry that fell victim reported an average cost of $2 million to recover their data.
Beyond the high cost of remediation, ransomware incidents often result in operational disruptions, reputational harm, and penalties for non-compliance with strict regulations governing the sector, further compounding the overall business impact.
Examples:
- Loan Depot, America’s second-largest non-bank lender, suffered a ransomware attack that resulted in the loss of personal and financial data for over 17 million customers. This attack cost the company nearly $27 million, and their clients were unable to access their accounts for several weeks.
- Patelco, a Dublin-based credit union company, was hit by a ransomware attack that left over half a million members without access to financial services. The company states that it did not pay a ransom but reported losses exceeding $39 million to cover financial damages to its clients following the attack.
- FBCS, a third-party debt collector, has experienced a data breach incident due to a ransomware attack. For over two weeks, an unauthorized party had access to its network and downloaded sensitive information from the organization’s systems.
Data breaches
Potential data breaches can arise from any form of unauthorized access to sensitive information or sensitive personal data such as such as biometric data, health records, or details about someone’s race or political opinions — see sensitive personal data examples for more. Common causes include system vulnerabilities, human error, inadequate data security practices, or gaps in business operations.
According to the IBM report, financial firms incurred the second-highest data breach costs in 2024, averaging $6.08 million, which is significantly higher than the global average of $4.88 million. Furthermore, it takes financial companies up to 168 days to detect a breach and another 51 days to resolve it, therefore allowing bad actors to access sensitive data for over seven months.
However, what makes data breaches especially dangerous is that they often lay the groundwork for further crimes. Stolen data may be sold on the dark web, used to commit financial fraud, and leveraged for identity theft or blackmail.
Examples:
- In 2022, Revolut, a British digital bank, experienced a data breach that exposed the names, addresses, emails, telephone numbers, and partial payment card data of more than 50,000 users. The fraudsters gained access to customer data by sending messages containing malicious links. Fortunately, the attack did not impact customer funds, and according to Revolut, no passwords, PINs, or full payment card numbers were compromised.
- TMX, a customer loan company, reported that hackers stole the financial data of over 4.8 million users, including access codes and passwords. Remarkably, nearly three months passed between the initial data breach and the actual exfiltration of the information.
- Finastra, a UK-based fintech company serving around 8,000 institutions globally, suffered a theft of sensitive information from its internal file-sharing system. Reports indicated that up to 400 gigabytes of stolen data were being offered for sale on the dark web.
Third-party vulnerabilities
Fintech companies often depend on external vendors, such as third-party software providers, to support their business operations. While many of these vendors comply with general data protection regulations, their overall security posture is typically weaker than that of financial organizations.
For example, when a fintech company uses cloud services, it entrusts a cloud provider with critical infrastructure. Even though major providers like AWS, Azure, and Google Cloud implement robust protection measures, the shared responsibility model still leaves room for potential security risks.
This distinction means that beyond the infrastructure, safeguarding sensitive user information and financial transactions largely depends on robust fintech application security protocols.
What’s worse, given the interconnected nature of fintech IT ecosystems, a single API security gap can trigger a major attack, affecting multiple systems and services.
Example:
- Latitude Financial, a leading Australian loan provider, experienced a major security incident in which millions of driver’s license numbers, passport details, loan applications, and other sensitive information were exposed. The cyberattack occurred after employee login credentials were compromised through a breach in the backend infrastructure of the company’s two vendors.
Identity-related frauds
Identity-related fraud involves manipulating or fabricating personal information to gain unauthorized access to funds or data, bypassing security controls.
Traditionally, identity-related fraud has been limited to identity theft, where bad actors steal real personal information and use it for financial gain. But as technology evolves, these schemes become more advanced, involving:
- Synthetic identities. These are fake identities created by combining real and fabricated information to access financial services, like opening credit lines or taking out loans.
- Deepfakes. These are AI-generated audio, video, or images used to impersonate real people. For example, a fraudster might mimic an executive’s voice to authorize financial transactions. Deloitte estimates AI-powered fraud losses could reach $40 billion in the US by 2027, driven by voice cloning and deepfake video attacks. As GenAI advances, identity-related frauds are becoming easier to execute yet harder to detect.
Example:
- Multiple US banks were defrauded of nearly $2 million through a scheme involving synthetic identities. The fraudsters used stolen Social Security numbers, including those belonging to children, combined with fake names and birthdates to open bank accounts and credit lines.
Best practices for advanced security in fintech
Staying ahead of evolving threats requires proactive, advanced security measures powered by the latest technologies. Below are key best practices that help prevent cyber risks, safeguard sensitive customer data, and ensure compliance with ever-tightening banking regulations.
Zero-trust architecture
Zero-trust architecture is a cybersecurity approach that assumes no user, whether internal or external, should be trusted by default, and every access request must be verified. Technically, it is implemented through:
- Role-based access control ensures that users only get the minimum level of access required to perform their tasks.
- Multi-factor authentication provides an additional verification layer, making it harder for cyber criminals to succeed when using stolen credentials.
- Network micro-segmentation limits how far an attacker can move by dividing networks into small, secure zones and isolating sensitive systems.
Modern zero-trust models also rely on real-time analytics and machine learning for advanced threat detection and automated response actions.
Adopting a zero-trust approach lays a foundation for next-level fintech security, as it reduces the risk of third-party and insider threats, blocks attackers from gaining access to the entire IT setup, and minimizes the impact of potential breaches. On top of that, it enables fintech companies meet stringent compliance requirements such as SOX, PCI DSS, and GDPR.
Biometric and behavioral biometric authentication
Biometric authentication confirms an individual’s identity based on unique physical characteristics, usually through fingerprint and facial recognition.
Mobile banking apps, such as PayPal, N26, and Chase Mobile, leverage the devices’ built-in biometric authentication features, like Touch ID and Face ID, to enhance security and user convenience. Revolut, the leading global neobank, takes it a step further by adding the Wealth Protection identification feature, which verifies user identity using selfie IDs. This extra security layer helps prevent fraud, even if a phone is stolen.
Behavioral biometrics enhance authentication security by analyzing patterns in user behavior, including scrolling preferences, typing speed, and app navigation habits. Some US banks already use this advanced threat detection technology to mitigate the growing risk of account takeovers.
Secure practices for software development and integrations
Secure software development helps fintech companies minimize vulnerabilities and business logic flaws in custom systems, reducing the risk of potential breaches. At the same time, rigorous integration protocols limit threat exposure from third-party software. These practices are implemented through:
- Secure software development lifecycle: integrating security into the development of financial technology solutions from the outset and conducting regular code reviews to identify flaws early on.
- Software composition analysis: analyzing open-source components and third-party libraries within the system to ensure security, license compliance, and the absence of vulnerabilities.
- Data encryption: using strong encryption for both data at rest (e.g., in databases) and data in transit (e.g., during API communication).
- Security-focused vendor management: performing thorough security assessments of all vendors and including compliance obligations in agreements.
- API security: using API gateways with rate limiting, logging, and threat detection to ensure only legitimate, rate-controlled, and monitored traffic reaches the company’s infrastructure.
- Security solutions: implementing advanced security tools like firewalls and intrusion detection systems to prevent cyber attacks.
- Cloud security monitoring: having security teams regularly audit cloud infrastructure for misconfigurations and vulnerabilities.
- Dynamic application security testing: simulating real-world outside attacks on a running app to uncover potential weaknesses before they are exploited by malicious actors.
In addition to technical measures, it’s essential to raise cybersecurity awareness across both development and business teams. This can be achieved through regular security training for employees. When working with an external tech team, it’s equally important to choose a reliable partner who specializes in fintech development and understands the industry’s strict security standards.
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Regulatory compliance
By adhering to standard security protocols and data privacy laws, fintech companies can greatly reduce the risk of breaches and protect customer rights. The main industry regulations include:
- PCI DSS—a global standard for securing payment card data.
- GDPR—an EU regulation that governs the protection of personal data.
- PSD2—an EU directive that enforces strong customer authentication and other security measures in digital banking.
SOX—a US law focused on financial reporting and internal control requirements. - GLBA and FFIEC guidelines—US regulations aimed at safeguarding consumer financial information and ensuring cybersecurity compliance.
Fintech security regulations are not just theoretical—they mandate specific technical safeguards, such as access management rules, data encryption, and audit logging, to protect sensitive information.
In addition to preventive measures, fintech companies must have a clear incident response plan that outlines how they respond to and recover from security breaches.
Key trends in fintech security
As cyber attacks grow in technical complexity, fintech security measures are evolving just as rapidly. Below are the key trends organizations are adopting to better protect their data, operations, and customers.
The rise of AI in fintech security
Artificial intelligence (AI) is increasingly used to enhance security in fintech, particularly in the fight against financial fraud. One example is Mastercard, which uses it to analyze one trillion data points and the relationships between transactions to spot potential risks. With AI-powered capabilities, they’ve boosted fraud detection rates by 20%.
Future-ready finance starts with insight—read the article AI in Fintech: Harnessing Intelligent Technologies for Smarter Finance
Liveliness detection
Liveness detection is a technology that verifies whether a person is real by analyzing factors such as eye movement, blink rate, and light reflections. An increasing number of fintech companies are integrating it into their Know Your Customer (KYC) systems to combat identity-related fraud. For instance, iCard, an innovative payment company, uses Regula Face SDK in its security system. This SDK, among other features, performs liveliness detection and face-matching.
Predictive analytics
By employing predictive analytics, fintech companies can shift from reactive to proactive security measures. For example, Citibank has integrated predictive models into its threat detection systems to identify potential fraud risks before they occur. These models focus on detecting abnormal behavior, such as unexpected account activity or transactions originating from unusual locations, helping anticipate and prevent financial crimes.
Partner with Neontri to strengthen your fintech security posture
In an era where cyber threats evolve daily and regulatory requirements grow increasingly complex, partnering with the right technology expert is a make-or-break decision.
At Neontri, we help fintech companies build secure, future-ready infrastructures designed to withstand today’s threats and adapt to tomorrow’s challenges. Our team brings hands-on experience in implementing security frameworks that not only address technical hurdles but also meet strict industry compliance standards, without compromising performance or user experience.
We don’t bolt security on as an afterthought—it’s built into every line of code from day one. Our software development service includes comprehensive threat modeling, regular security audits, and dynamic application security testing at every stage.
Final thoughts
New technologies are transforming the financial industry, but cyber threats are evolving just as fast, posing serious security challenges. From ransomware attacks and data breaches to third-party vulnerabilities and identity fraud, risks are increasing in both number and complexity.
To stay ahead, fintech companies must implement strong security measures. Zero-trust architecture, biometric authentication, secure software development, and regulatory compliance are just a few of the many best practices to consider.
