As neobanks and mobile wallets revolutionize banking, they also face sophisticated cyber threats. Every new digital banking app or payment platform can become a target for hackers seeking sensitive financial data. In 2024, the number of “Trojan banker” malware attacks on smartphones jumped 196% year-over-year. Globally, Kaspersky detected over 33 million mobile malware and unwanted software attacks in 2024. Meanwhile, industry reports show the average breach in the financial sector now costs roughly $6 million.
Fintech founders can’t afford to treat protection as an afterthought. This article explains why strong cybersecurity is critical for fintech (especially neobanks and wallets) and outlines the practical measures to build trust and compliance from launch.
Why Fintech Platforms Are High-Value Targets
Digital-first banking models bring unique risk factors. Unlike legacy banks with brick-and-mortar branches, neobanks and mobile wallets exist entirely online. This means customer funds and data are stored and moved digitally, making them tempting targets. Rapid innovation and cloud-native architectures help fintechs move fast, but they also create new attack surfaces. For example, cloud and API-dependent services can introduce vulnerabilities that attackers exploit. In short, fintechs need to outpace sophisticated adversaries by building multi-layered defenses from the start.
Some factors that make digital banking inherently risky:
- All-Online Operations: No physical branches means all transactions and storage are online, so hackers focus on digital exploits (malware, account hacks).
- Mobile Dependence: Many users access neobanks via smartphones or apps. Banking Trojans and mobile malware have surged – in 2024 alone, Android banking Trojan attacks hit 1.24 million incidents, up from 420K in 2023.
- Agile Development: Fast feature rollouts (a fintech strength) can inadvertently introduce insecure code or misconfigurations if security isn’t integrated early.
- Third-Party Ecosystem: Fintechs often rely on payment processors, cloud providers, APIs, and partner apps. Any weak link in this chain (a compromised library or partner breach) can expose the whole platform.
- Regulatory Scrutiny: Fintechs face strict regulations (e.g., PCI DSS for payment data, GDPR for privacy). Failing compliance can lead to legal and financial penalties. Building to these standards is essential.
Common Cyber Threats in Fintech
Fintech platforms face a broad range of attacks. The most prevalent include:
- Banking Malware & Trojans: Malicious apps or code that steal login credentials or manipulate transactions. Kaspersky reports that Android banking Trojan attacks rose 196% in 2024. Once installed (often via deceptive SMS links or fake apps), these Trojans can silently capture passwords and 2FA codes.
- Phishing & Social Engineering: Fraudsters send fake emails, SMS, or in-app messages mimicking the fintech brand. Users might be tricked into entering credentials on look-alike sites or clicking malicious links. High-profile breaches show how cybercriminals exploit hype or urgent alerts to lure victims into scams.
- Account Takeover (ATO): If attackers obtain or guess login details (through credential stuffing or leaked passwords), they can hijack user accounts. Without strong access controls, fraudsters can initiate unauthorized payments or change account settings.
- API and Integration Exploits: Fintech services often expose APIs to partners (for KYC, payments, data feeds). Poorly secured APIs can allow attackers to query sensitive data or initiate transactions. New protocols like Open Banking amplify this risk if endpoints aren’t locked down.
- Distributed Denial of Service (DDoS): Overloading a server or app with traffic can disrupt service, causing outages. Even if money isn’t stolen, downtime erodes user trust and can have financial repercussions.
- Insider Threats: Rogue employees or contractor systems (like an infected laptop with corporate access) pose risks. Robust internal controls and monitoring are needed to detect insider abuse.
- Emerging Threats: Tools like AI are empowering both defenders and attackers. Kaspersky and others warn of AI-powered phishing and deepfake scams becoming routine. Fintechs must anticipate these sophisticated social attacks in addition to traditional exploits.
Together, these threats paint a challenging landscape. Neobanks and mobile wallets have to fight on multiple fronts: mobile-specific attacks, cloud security, social engineering, and more. The good news is that established best practices can mitigate these dangers.
Essential Security Best Practices
Fintech leaders should bake security in at every layer of the stack. Key practices include:
- End-to-End Encryption: Encrypt all sensitive data both in transit and at rest. Use TLS/SSL for network communications and strong encryption (e.g., AES-256) for stored financial data. Even if attackers intercept data, robust encryption renders it useless without keys.
- Multi-Factor Authentication (MFA): Requires more than just a password for login. Common MFA methods include one-time codes (SMS or app-generated), hardware tokens, or biometrics. This prevents password theft from immediately leading to account breaches. Security experts emphasize “layered defenses” like MFA as a first line against fraud.
- Real-Time Fraud Monitoring: Implement AI/ML-driven anomaly detection to flag unusual patterns (large withdrawals, login from a new device, rapid transactions, etc.). Soft journals note fintechs should deploy “fraud monitoring” systems that use machine learning to spot real-time threats. Alerts should trigger user verifications or automated holds to catch fraud early.
- Regular Penetration Testing & Vulnerability Scans: Conduct professional security assessments on a schedule (at least annually) and after major updates. Pen testing simulates attacks on your networks and apps, revealing gaps. A PaymentJournal analysis stresses that neobanks must perform vulnerability assessments and penetration tests yearly, along with reviewing all endpoints for weaknesses. Address findings promptly.
- Secure Development (DevSecOps): Integrate security checks into the software development lifecycle. Use static code analysis, automated scanners, and peer code reviews to catch flaws before deployment. Hashcodex and industry experts advise “security by design” – building privacy and protection into every feature. Maintain a culture where developers treat security as a continuous requirement, not an afterthought.
- Strict Access Controls: Apply the principle of least privilege. Employees or systems should only have the permissions they need. Use role-based access controls and rotate credentials. Implement granular authorization so that a single compromised account cannot expose all data.
- Incident Response Planning: Even with precautions, breaches can occur. Prepare an incident response plan: have a team, run drills, and define how to notify authorities and customers. Quick detection and response limit damage and regulatory fines..
- Compliance and Standards: Ensure full adherence to relevant regulations. For example, PCI DSS compliance is mandatory for any app handling card payments. This means encryption, firewall rules, logging, and access controls as dictated by PCI guidelines. Other frameworks (ISO 27001, SOC 2, GDPR, PSD2/DORA in Europe, etc.) provide roadmaps for security. Building to these standards not only defends data but also builds customer and regulator trust.
- User and Staff Education: Teach developers and employees about phishing, social engineering, and secure coding practices. Similarly, educate your customers: provide tips on recognizing scams and encourage secure habits (e.g., verifying sender authenticity, using app stores to download your app). Softjourn emphasizes that fintechs must “educate users on best practices for account safety” to close the last mile of defense.
By combining these measures, encryption, MFA, monitoring, testing, and culture, fintech platforms create a resilient security posture. Think of security as a series of back-up plans: if one layer fails, the next still protects the user’s money and data.
Fintech vs. Traditional Banks: Security Trade-offs
Fintech firms often invite comparison with legacy banks. Are neobanks safer or riskier than big banks? The answer is nuanced. Traditional banks have decades of experience and heavy regulation behind them, and consumers often perceive them as safer. In fact, a recent survey found 42% of consumers still believe traditional banks are safer for long-term savings, even if they use fintech for everyday transactions. This is partly due to visible safeguards: bankers are seen behind thick walls and identity-protected vaults, whereas fintech’s protections (encryption, monitoring) are invisible to most users.
However, fintechs excel in cutting-edge defenses. Modern neobanks use AI-driven fraud detection, behavioral biometrics, and zero-trust architectures – tools that some old banks have yet to fully adopt. Moreover, fintechs are now being held to the same strict regulations as banks. Laws like the EU’s DORA and Singapore’s Payment Services Act are extending bank-level cybersecurity requirements to fintechs. By 2025, fintech platforms offering banking services will face compliance nearly identical to traditional banks. This leveling of the playing field means fintech developers must implement the same rigorous controls as their legacy counterparts.
In summary, fintechs and banks each have pros and cons. Banks inherit institutional trust and long-standing controls, while fintechs leverage new tech and agility. The key for fintech leaders is to combine the best of both worlds: bring innovation but ground it with institutional-grade security. As one analyst notes, partnerships between fintechs and banks (e.g., co-branded services) often yield strong outcomes – fintech creativity powered by bank stability.
Conclusion: Building Trust with Security
The bottom line is clear: In fintech, security is non-negotiable. Neobanks and mobile wallets handle life-or-death data – account balances, payment credentials, personal information. Consumers will only entrust new platforms if they believe their money is safe. By adopting the best practices outlined above (encryption, MFA, fraud detection, testing, compliance, etc.), fintech teams can show customers they take security seriously.
Industry data backs this up. The financial sector now faces the highest breach costs of any industry. Trust and continuity depend on preventing such incidents before they happen. If you’re a fintech founder or tech lead, make cybersecurity a strategic priority, not an afterthought.
And when you need expert help, DigiEx Group’s 20+ years of global fintech and AI-powered software development expertise means we know how to engineer robust, compliant platforms from the ground up.
In an era of rising digital threats, partnering with a dedicated team like DigiEx ensures your neobank or wallet is designed securely from day one, keeping customer data and your reputation safe.
Ready to build a secure fintech platform? Reach out to DigiEx Group to learn how our offshore development teams can integrate best-in-class security into your next digital banking project.
About DigiEx Group
DigiEx Group is a leading Tech Talent Hub and AI-driven Software Development company in Vietnam, backed by over 20 years of global IT experience. Our team, with 2 Tech Development Centers, 150 in-house engineers, and a network of 50+ domain experts, tailors every engagement to your unique roadmap with a suite of services:
- Tech Talent Services: Rapid access to Vietnam’s top 2,000+ pre-vetted engineers via our Talent Hub platform.
- Custom Software Development: End-to-end product delivery for web, mobile, SaaS, and enterprise systems.
- AI Consulting & Development: Design and implementation of AI Agents and automation solutions.
- Neobank & Fintech Solutions: Cutting-edge digital banking and payment platforms.
