2 Challenges FinTech startups Face and How to Solve Them
3 min
Existing and Emerging Security Standards and Regulations
Companies today face not only threats from cybercriminals when security protocols aren’t up to par, but also financial penalties from regulatory bodies. The increasing number of regulations reflects a society where more of our lives are lived online and large amounts of personal data are collected and exchanged.
Standards and regulations create benchmarks for organizations to protect themselves from being compromised and exposing users’ personal information.
The GDPR, which came into effect in 2018, forced companies across industries to evaluate their processes, routines, and even entire business models. Its purpose is to ensure and extend the privacy rights of all EU/EEA citizens by specifying how personal data can be collected, managed, and stored.
Failure to comply with GDPR can result in fines of up to 20 million Euros or 4% of total worldwide annual turnover from the previous year.
Another important security standard in the FinTech industry is PCI DSS (Payment Card Industry Data Security Standard), which outlines information security requirements for organizations that handle cardholder data and includes twelve requirements grouped into six areas: building and maintaining secure networks and systems, protecting cardholder data, maintaining a vulnerability management program, implementing strong access control measures, regularly monitoring and testing networks, and maintaining an information security policy.
Failure to comply with PCI DSS can result in fines of up to $100,000 per month and severe damage to brand reputation.
Data Security and Cyber Attacks
Regulations such as GDPR and PCI DSS, along with major data privacy scandals like Facebook’s mishandling of personal data, have increased public awareness around data privacy. Customers expect companies to handle their data securely.
This is especially critical for FinTech companies, as they manage highly sensitive information such as payment card data. In the event of a cyber attack or data breach, the consequences can be severe—both financially and reputationally.
Cyber attacks can expose sensitive financial data and put businesses at significant risk. Therefore, it is essential for FinTech companies to adopt a “security by design” and “privacy by design” approach when developing their applications. Transparency is also crucial when handling sensitive data.
How to Overcome Security Challenges
What can FinTech startups do to meet regulations, improve data security, and minimize cyber risks? Here are four key steps:
Make Security a Priority
Security must be driven from the top. Management teams need to prioritize data protection and ensure that company objectives reflect the importance of safeguarding customer information.
Follow Industry Best Practices
Stay up to date with regulations and assess your compliance levels regularly. Identify risks, analyze gaps, and implement the most effective measures to protect your most valuable asset, your customers’ data and trust.
Integrate Information Security Specialists
IT teams and security experts play a crucial role in mitigating cyber threats. Regular security testing is essential. Secure code reviews help identify vulnerabilities in your code, and penetration testing evaluates how far an attacker could penetrate your systems
Bringing in security professionals can significantly strengthen your defenses.
Consider Using PCI DSS Certified Hosting
Managing security requirements internally can be complex and costly. Partnering with a PCI DSS-certified hosting provider can help reduce the burden, ensure compliance, and provide expert support while staying within budget.