The US fintech market is projected to reach a value of $828.4 Billion by 2033, growing at a CAGR of 15.82%. While this rapid expansion is changing the financial services landscape, it has also brought significant challenges and risks associated with compliance and cybersecurity. Fintech applications share a larger volume of sensitive data making them prime targets for cyber attacks. For instance, in 2024, Evolve Bank suffered a ransomware attack exposing the personal data of at least 7.6 million people. These attacks not only impact financially, but also result in loss of trust and also brand value.
In 2024, the average cost of a single data breach was $4.88 million, a 10% increase from 2023. Above all these breaches, fintech teams struggle with regulatory compliance requirements, secure software development, third-party risks, and threat prioritization. 93% of fintech firms face compliance challenges, highlighting critical security gaps that could put them at risk of great financial and reputational losses.
For Fintech companies, the need of the hour is to proactively address security weaknesses before they impact business and reputation in order to stay ahead of competition. In this blog, we’ll highlight five critical AppSec gaps that fintech teams often overlook and practical mitigation strategies for scaling securely in a high-risk landscape.
1. Inadequate AppSec Risk Prioritization
Fintech applications process massive amounts of highly sensitive financial data, making them the prime target of cybercriminals. To manage security risks, a lot of teams still depend on regular vulnerability scans to generate thousands of alerts-and this is often done without proper prioritization leading to alert fatigue and therefore inefficient remediation.
For Example: A fintech company running daily vulnerability scans detected over 5,000 security alerts but without proper risk prioritization, these alerts got lost in noise. Later, an undetected API vulnerability resulted in a data breach.
How to address Inadequate AppSec Risk Prioritization
- Risk-Based Threat Prioritization: Evaluate vulnerabilities depending on their exploitability, business impact, and regulatory requirements rather than using a one-size-fits-all template.
- AI-Driven Security Analytics: Use AI tools to automate risk assessments, correlate alerts among disparate AppSec tools, and to cut down on false positives.
- Integrated Security Dashboard: Bring together security information from numerous sources to concentrate remediation on critical risks as opposed to chasing minor ones.
An intelligent, risk-driven security strategy will allow fintech teams to save effort, shrink response times, and preempt security failures with high impacts.
2. Weak API Security Controls
APIs serve as the backbone of modern fintech applications, helping to facilitate real-time transactions, third-party integrations, and frictionless exchanges of financial data. However, unsecured APIs introduce significant security vulnerabilities and are often exploited by cybercriminals for account takeovers, data breaches, and injection attacks.
For Example: In a major API breach, the hackers took advantage of weak authentication methods that allowed them to intrude on millions of user accounts. This resulted in fraudulent transactions, exposure of financial information, and compliance challenges in fintech due to regulatory penalties.
How to address weak API security controls
- Adopt Zero-Trust API Security: To enforce secure fintech development practices, implement strict authentication measures such as OAuth 2.0, mutual TLS, and API keys.
- Use API Gateways with Built-in Security Features: Mitigate abuse and prevent unauthorized access by deploying API security in fintech using rate limiting, bot detection, encryption, and anomaly detection.
- Risk-Based Vulnerability Management for APIs: Prioritize API threats based on business impact using AI-driven security analytics, reducing alert fatigue and focusing remediation on critical issues.
- Secure Software Development Lifecycle (SDLC) Practices: To minimize AppSec gaps in fintech and guarantee ongoing protection, integrate security checks across the fintech application security lifecycle.
Continuous API Security Testing: Regularly conduct penetration testing, scan APIs for vulnerabilities, and align with frameworks like OWASP API Security Top 10 and FFIEC cybersecurity framework for compliance.
3. Delayed Security Remediation
Fintech applications frequently have security vulnerabilities that are discovered too late, either during pre-release audits or after code has been deployed. This results in last-minute compliance breaches, delays in fixing issues, and the accumulation of unresolved security debt. A vulnerability that stays longer, poses the greater potential for exploitation and operational risk.
For Example:
A few days before a major product launch, a fintech startup discovered a highly critical vulnerability. Customer onboarding and revenue predictions were impacted by the two-week delay in release caused by the absence of automated remediation procedures and security checks early in development.
How to address delayed security remediation
- Shift Security Left with DevSecOps Integration: To identify vulnerabilities early in the software development lifecycle (SDLC), embed security controls into your CI/CD pipelines and integrate with developer tools.
- Automate Remediation Workflows: Reduce human bottlenecks and accelerate mean time to remediate (MTTR) by using automation to assign tasks, validate patches, and generate fix suggestions.
- Enable Real-Time Developer Feedback: Integrate security tools directly with IDEs and code repositories to deliver contextual risk alerts and remediation guidance during development—where fixes are fastest and most cost-effective.
- Track and Reduce Security Debt: Prioritize remediation operations according to exploitability and business effect, and set up metrics to track unsolved vulnerabilities over time.
4. Overlooking Supply Chain Security Risks
Fintech apps rely on third-party APIs, open-source packages, and commercial software to function, but many firms fail to adequately monitor these dependencies. A single component weakness can result in broad compromise, as seen by recent high-profile supply chain breaches (e.g., SolarWinds, MOVEit).
For Example: A breach in a digital payments company occurred through a popular open-source logging library. Though the Common Vulnerabilities and Exposures identifier was known, the organization lacked real-time Software Composition Analysis (SCA) to detect it before exposing the organization’s consumers’ data.
How to address supply chain security risks
- Implement Continuous SCA Monitoring: Real-time detection of outdated, unpatched, or vulnerable third-party components by using Software Composition Analysis tools. Automate alerts for CVEs and license violations.
- Conduct Vendor Security Assessments: Evaluate the security posture of all third-party service providers, including APIs and cloud platforms, before integration. Ensure SLAs include breach disclosure, patch timelines, and compliance guarantees.
- Adopt Secure Dependency Management: To guarantee that only secure versions of dependencies are installed, make use of trusted package registries, lockfile scanning, and auto-patching tools.
- Generate and Maintain SBOMs: To increase visibility and traceability, keep a Software Bill of Materials (SBOM) for every application. This is essential for detecting supply chain risks and maintaining compliance with laws such as the FFIEC and SEBI CSCRF.
5. Compliance-Only Security Mindset
It is common for many fintech teams to view security through the lens of compliance—i.e. ticking off checkboxes to see to it that PCI DSS, SOC 2, GDPR, and the rest of the industry regulations are met. Compliance is important but does not equal protection in real life against the evolving fintech cyber-security threat, namely, zero-day vulnerabilities, API breaches, and insider threats.
For Example: A fintech company, fully compliant with PCI DSS, suffered a major data breach because it lacked continuous monitoring and proactive threat management. An unpatched vulnerability in a third-party service provider was responsible for financial data leaks and reputational damage.
How to Address the Pitfalls of a Compliance-Only Security Approach
- Go Beyond Compliance with Continuous Monitoring: Use threat prioritization and AI-driven security analytics in fintech to identify and respond to emerging threats in real time.
- Conduct Red Teaming and Threat Simulations: Proactively test security defenses by simulating real-world cyberattacks. This approach validates security readiness beyond regulatory audits and finds hidden vulnerabilities.
- Adopt a Risk-Based Approach to Security: Prioritize financial data protection based on business impact, exploitability, and regulatory risk, ensuring resources are allocated effectively.
- Leverage DevSecOps in Financial Services: Incorporate security into the Secure Software Development Lifecycle (SDLC) to enforce security best practices from code development to deployment.
- Align Security Strategies with Business Goals: Security should be a competitive advantage that fosters consumer trust and fosters innovation, and not merely a means of avoiding fines.
What U.S. Federal Regulators Expect from Fintech
Beyond application security best practices, fintech organizations must address an increasingly stringent landscape of U.S. regulatory frameworks. Failing to meet these compliance mandates not only exposes organizations to cybersecurity risks, but also to millions in regulatory fines and reputational loss.
Here are some key compliance standards fintech teams must account for in their AppSec strategy:
NYDFS Cybersecurity Regulation (23 NYCRR 500): Enforced by the New York Department of Financial Services, this mandates robust cybersecurity programs, third-party risk policies, and incident response plans. Non-compliance can result in severe penalties for financial entities operating in New York.
CFPB Enforcement Actions: Consumer Financial Protection Bureau increasingly targets fintechs for data protection failures. Even a single incident involving consumer data loss can trigger investigations, enforcement, and fines.
FINRA Rule 4370 (Business Continuity): This regulation requires financial institutions to maintain plans to address business disruptions including those triggered by cyberattacks. Weak AppSec practices that compromise application availability may be deemed a violation.
FINRA Rule 3110 (Supervision): Requires supervisory controls over automated technologies, such as AI/ML models used in decision-making. Fintechs must ensure their security controls extend across these technologies to remain compliant.
Gramm-Leach-Bliley Safeguards Rule: Federal Trade Commission holds organizations accountable for security failures including poor AppSec hygiene and weak supply chain controls. In recent cases, FTC investigations have led to multimillion-dollar settlements due to avoidable software security lapses.
SEC Cybersecurity Rules (2023): Public companies must now disclose material cyber incidents within four business days and outline their risk management strategy in annual filings. Inadequate software security or delayed disclosures can result in legal scrutiny and shareholder lawsuits.
Fintechs that include compliance into their secure software development lifecycle (SDLC) not only avoid regulatory risk but also strengthen their overall security posture. Implementing continuous security testing, secure vendor management, and data-driven remediation strategies can help ensure adherence while building long-term trust with customers and regulators.
Eliminate AppSec Gaps Before They Become Threat
Fintech growth comes with heightened responsibility. Overlooking gaps in application security, whether in threat prioritization, API security, or third-party risk management, can leave even the most innovative companies vulnerable to breaches and regulatory setbacks.
OpsMx helps fintech teams proactively fix what is critical. From real-time SBOM generation and continuous risk analysis to automated remediation and compliance reporting, OpsMx Delivery Shield empowers you to build security into every step of your software lifecycle, without slowing innovation. It supports industry-leading security frameworks such as NIST 800-53, OWASP, MITRE ATT&CK, and CIS Benchmarks, helping fintech teams align with best practices for secure software development. Whether you’re working toward compliance or aiming to strengthen your security posture, these frameworks provide structure and OpsMx helps you put them into action with automation, visibility, and real-time enforcement.
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