Fintech Security Challenges: Addressing Rising Third-Party Vulnerabilities and Strengthening Controls

| Editorial Team On 29 May, 2025

Fintech Industry Faces Growing Third-Party Security Risks Despite Strong Internal Controls

A new SecurityScorecard report reveals that 41.8% of fintech security breaches and vulnerabilities in banking systems stem from third-party vendors, highlighting a critical vulnerability in the financial technology sector. The comprehensive analysis of 250 leading fintech organizations shows a stark contrast between robust internal security measures and external supply chain threats.

While fintech companies demonstrate superior security practices with a median score of 90 and 55.6% achieving an "A" rating, the industry faces significant challenges from managing external partnerships and supplier relationships. This disconnect emphasizes the growing importance of supply chain security in the financial technology sector.

Rising Third-Party Vulnerabilities

The study exposes concerning trends in breach patterns:

18.4% of analyzed fintech companies experienced publicly reported breaches
28.2% suffered multiple security incidents
Fourth-party vulnerabilities contributed an additional 11.9% of breaches
Technology products and services accounted for 63.9% of third-party breaches

"Cloud platforms and file transfer software represent the most frequent points of compromise," according to the report findings. These vulnerabilities significantly exceed global industry averages for third-party related incidents.

Technical Weaknesses and Security Gaps

Implementation of comprehensive cybersecurity measures for businesses remains crucial, as Application Security and DNS Health emerged as the most prominent weak points in fintech security infrastructure. The report indicates that 46.4% of organizations received their lowest scores in application security, highlighting a critical area requiring immediate attention.

This vulnerability becomes particularly concerning given the industry's heavy reliance on external technology partners and cloud services. The high percentage of technology-related third-party breaches suggests a need for enhanced vendor assessment protocols and more robust security requirements for technology partners.

Strengthening Security Measures

Organizations should focus on implementing comprehensive vendor risk assessment programs for financial technology partnerships. According to the NIST Cybersecurity Framework, prioritizing application security testing and DNS health monitoring is essential for maintaining robust security posture.

Additionally, developing incident response plans that specifically address third-party security breaches has become increasingly important. This analysis serves as a crucial wake-up call for fintech organizations to strengthen their third-party risk management practices while maintaining their strong internal security posture. The findings underscore the importance of treating vendor security as an extension of internal security controls.