The fintech industry is growing exponentially in Saudi Arabia.
According to recent findings, the number of Saudi fintechs in the kingdom has risen from 10 in 2018 to over 200 startups in 2023, a twenty-fold increase over a period of 5 years.
In response, the Government of Saudi Arabia has established a number of laws and regulatory standards to ensure the safety of customer data and provide a safe environment for fintechs to grow and innovate.
However, the rising complexity of the regulatory requirements for early-stage fintechs has made the barriers to entry more difficult and increased competition in the industry.
Due to the sensitive nature of the industry, upgrading your fintech’s cybersecurity is key to earning trust from regulators, customers, and investors and gaining a competitive edge.
This guide explores the benefits of improving your cybersecurity posture and addresses the common regulatory and business challenges early-stage fintechs face to enter the market.
The fintech industry is one of the most favorable targets for cybercriminals. Fintech SMEs, in particular, can be very vulnerable to cyberattacks due to their limited security budgets and the large amounts of sensitive customer information they handle.
Therefore, fintech businesses in Saudi Arabia must adhere to a wide range of compliance requirements and laws to access the market and offer services to clients and customers.
Improving your cybersecurity operations and taking proactive measures to detect and eliminate threats, as well as protect critical customer data, is vital for building trust and business growth.
The benefits of cybersecurity for your fintech can be summarized in the following points:
Trust is everything in fintech.
As customers rely on your platform to perform financial transactions, a lack of trust will make them stop using your services in favor of competitors that put more effort into protecting their sensitive information.
Customers want to feel that their data is safe, and showcasing your commitment to protecting it with cybersecurity investments is the only way to establish trust with current and potential clients.
Communicating that commitment through your website, social media channels, and press releases is also important.
Investors are also aware of the security risks early-stage fintechs face, so it’s essential to provide them peace of mind by highlighting your cybersecurity and compliance initiatives and the practical steps you take to protect customer data.
Launching cybersecurity initiatives and taking practical steps to deploy them is important for your fintech to comply with regulatory standards and laws.
Directing your investments and efforts to meet these regulations ensures that your fintech is protecting sensitive financial and customer data, a key factor for gaining trust from both regulators and clients.
In the kingdom, fintechs must adhere to the cybersecurity guidelines issued by:
Additionally, fintechs are obligated to make use of SAMA’s Regulatory Sandbox and CMA’s Fintech Lab to test their financial solutions in a controlled environment before launch. It’s also important to be aware of the minimum capital balance required for specific fintech licenses to meet financial stability requirements set by regulators.
Taking positive steps towards improving your fintech’s cybersecurity directly correlates with providing a great user experience.
For example, if a user faces a security problem or find them going through tedious and outdated data safety measures, they are more likely to abandon your products and seek more user-friendly solutions that don’t compromise security.
Balancing cybersecurity with user experience enables you to retain clients and maintain their data integrity and privacy.
Data theft remains the primary motivation for cybercriminals that target fintech SMEs.For that reason, protecting your customer data must be your top priority.
Focusing on implementing data protection measures builds trust with your clients and showcases your dedication to preventing data breaches, which also helps you attract and retain customers and investors.
Proactive cybersecurity measures help protect your fintech against financial crimes such as fraud and money laundering and establish credibility.
You can minimize the risk of fraud by adhering to the following laws and regulations:
Cybersecurity is an important asset for supporting business continuity and accelerating growth. It takes one cyberattack to jeopardize your operations and lose regulator and customer trust—Early-stage fintechs with limited recognition can’t risk this happening.
Taking effective cybersecurity measures and adhering to regulatory guidelines enable you to develop new products and services and grow your fintech, without threatening your business continuity.
Early-stage fintechs often face difficulties finding, hiring, and retaining qualified security professionals. Based on recent research by Fortinet, 70% of business leaders believe that a cybersecurity skills shortage is a major contributor to the increase of cyber threats in their organizations.
Cybersecurity is a costly investment. From hiring security experts to licensing, deploying, and maintaining sophisticated cybersecurity solutions, most fintech SMBs just don’t have the required budget. Having to meet complex compliance requirements and implement security controls also add up to the costs significantly.
Typically, early-stage fintechs have limited budgets allocated to cybersecurity. At the same time, cyber threats are getting more sophisticated and severe than ever. Among the key security challenges KSA-based fintechs face include:
Malicious actors are utilizing advanced machine learning algorithms to send highly targeted and convincing phishing messages at scale, posing a significant risk to fintechs. Phishing is one of the most common attack vectors for ransomware.
IoT proliferation has expanded the attack surface for cybercriminals that target fintechs. Moreover, some businesses still rely on legacy systems with poor security and vulnerable endpoints that serve as a backdoor to their wider network.
An insider threat can be initiated by a company employee who has high-level access privileges to critical data. Insider threats are the hardest to anticipate as they come from within your business, and they can either be intentional or unintentional—like a user failing to spot a phishing email, for example.
Along with meeting international regulatory standards, such as GDPR and PCI-DSS, early-stage fintechs are also required to comply with local laws and regulations in the kingdom like SAMA and NCA guidelines. The complexity of meeting different international and local standards presents a major challenge for startup fintechs seeking to enter the market and grow.
To deploy new cybersecurity solutions, you need to have a centralized system for security software installment. Early-stage fintechs usually don’t have such a system, and building it from scratch can be very costly and time-consuming.
Early-stage fintechs in the kingdom face numerous obstacles. The SAMA compliance process, in particular, can be costly and time-consuming.
This effectively puts your fintech on hold, putting you at a competitive disadvantage and increasing business risk.
Outsourcing your cybersecurity and compliance needs to a SOC (Security Operations Center) provider allows you to focus on core operations and access the market faster. With a trusted partner, you can meet all the required compliance criteria without delay and obtain all the required SAMA and CMA licenses to get your business up and running.
A fully managed Security Operations Center (SOC) frees up your IT resources and enables you to focus on your fintech business growth initiatives. This includes everything from meeting different compliance requirements to monitoring, auditing, and incident response.
SOC Providers give you access to an entire team of top-tier security experts to handle your security and compliance challenges, without having to invest in expanding your team.
With a SOC provider, you can benefit from best-in-class security and compliance services on the go.
SOC Providers provide your business with periodic security and compliance reports that include regulatory assessments, key security insights, and recommendations.
They also support your company’s SAMA meetings to ensure that all requirements are met.
SOC providers have the capacity to scale your cybersecurity needs as your fintech grows, saving you extensive overhead costs that increase over time.
To recap, improving your cybersecurity posture is essential for you to meet regulatory requirements, build trust, and ensure business continuity for your fintech.
While adopting cybersecurity solutions can be costly, time-consuming, and risky, outsourcing to a specialized provider like COGNNA offers benefits like cost-efficiency and access to expertise.
Using our advanced threat management platform, our expert team identifies and mitigates malicious and suspicious activities across various attack vectors, including endpoints, networks, and cloud environments.
Always stay one step ahead of cyber threats with proactive mitigation. Foster regulator and client trust with COGNNA—your trusted partner!
Ready to learn more? Discover the power of COGNNA’s managed SOC solutions in action now, with a demo from our team.
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