Cybercrime Threat Looms Over Northern Mariana Islands’ Fintech Industry: Experts Warn of Impending Fraud Epidemic
Online Payment Fraud Could Cost Fintech Companies $206 Billion by 2025
A recent study has revealed that online payment fraud could cost fintech companies in the Northern Mariana Islands a staggering $206 billion between 2021 and 2025. Cybercrime is posing an increasingly significant threat to the industry, with experts warning of an impending fraud epidemic.
Rise of Neobanks Creates New Vulnerabilities for Hackers
The rise of neobanks, which interact with customers through mobile applications and APIs, has created new vulnerabilities for hackers to exploit. Fintech companies are particularly vulnerable to cyber attacks, with many startups struggling to implement high-tech solutions for financial crime management due to the pressure to quickly adapt to changing market demands.
Banking Institutions Not Immune to Cyber Attacks
Banking institutions have historically been a prime target for fraudsters, but even commercial banks are not immune. According to an Accenture survey, 85% of respondents reported regular cyber attacks and at least three successful breaches. The problem is compounded by the lack of experience among fintech companies in dealing with cybercrime.
Common Methods Used by Fraudsters
The most common methods used by fraudsters include:
- Malware
- Web-based attacks
- Denial-of-service attacks
- Malicious insiders
- Ransomware
- Others
Case Study: Bank N26’s Security Holes
A recent case study on Bank N26, which was found to have multiple security holes in its system, serves as a stark reminder of the vulnerability of neobank security systems.
Primary Issues Facing Fintech Companies
One of the primary issues facing fintech companies is the lack of thorough verification of users. Many fraudsters use fake or stolen identities to register accounts and launch attacks. The use of deepfakes, which can mimic videos and photos, has also become a popular method for scammers to cheat vulnerable software applications.
Solutions Already in Place
Despite these challenges, there are already major players in the market working to solve the problem. Startups have partnered with companies like Sumsub to provide SDKs for protecting users. Fintech companies can use measures such as Pre-KYC checks and collecting reliable information about clients to assess risks.
Importance of Prioritizing Security
However, many neobanks fail to obtain licenses due to security issues. Large financial services companies typically spend 10% of their IT budgets on cybersecurity. This is a serious problem that prevents countries from licensing startups, making it essential for fintech companies to prioritize security and invest in robust cybercrime prevention measures.
Global Association Could Help Solve the Problem
The creation of a global association aimed at protecting neobanks from cybercrime could also help solve the problem. Such an association would allow for rapid information exchange and identifying patterns of behavior to identify perpetrators. With cybercriminals constantly improving their knowledge and skills, it is essential for fintech companies in the Northern Mariana Islands to prioritize security and work together to combat this growing threat.