How DORA Impacts Fintech Cybersecurity

ByNeil Richardson
Card machine

Fintech companies are very common targets for cybercriminals.

For pretty obvious reasons…

With billions of pounds and sensitive information flowing through digital channels every day, the industry presents endless opportunities for data theft and fraud.

As a result, companies who accept payments online (rightly) face a great deal of pressure to step-up and protect their clients’ personal information. 

‘Protect sensitive information’ is simple. But it’s not easy.

Cyber threats evolve at a relentless pace, often outstripping current cybersecurity “best practices”. 

To tackle this, the European Union has introduced the Digital Operational Resilience Act (DORA) to set a higher, more up-to-date standard for cybersecurity across the financial sector. 

Staying compliant with DORA is necessary, not just to avoid hefty fines, but to protect your business from data disasters and uncomfortable conversations with customers.

So, What is DORA? 

DORA, or the Digital Operational Resilience Act, is a regulation established by the European Union to improve the digital resilience of financial services against cyber attacks. 

Effective from January 2023, it applies to banks, payment processors, insurance firms, and Fintech companies.

The core objective of DORA is to ensure financial entities can “withstand, respond to, and recover from all types of ICT-related disruptions and threats.”

In short, it focuses on both preventive measures and operational stability during a cyber crisis.

Now, let’s look at the 4 main ways DORA impacts Fintech cybersecurity. 

1. Stricter Risk Management Requirements

DORA is all about proactive risk management.

It pushes companies to step up their cybersecurity and keep their systems secure. 

For Fintech businesses, that means taking smart steps to protect sensitive data and reduce risks.

Here’s how:

  • Regular Risk Assessments. Keep checking your systems for weak spots so you can fix them before they become a problem.
  • Preventive Security Controls. Use strong defences like firewalls, multi-factor authentication (MFA), encryption, and strict access controls to keep hackers out.
  • Layered Security Measures. Think of it like stacking several defences, if one fails, others still have your back.
  • Continuous Monitoring Tools. Set up tools that keep an eye on your systems 24/7, so you can catch anything suspicious as it happens.
  • Incident Response Plans. Have a clear action plan ready in case something goes wrong, so you can react fast and keep damage to a minimum.

Good risk management prevents security breaches by catching issues early.

Without it, businesses could face major data leaks, financial hits, and damage to their reputation.

2. Vendor Management

Many Fintech companies rely on third-party vendors for payment gateways, cloud services, or data storage. 

DORA wants you to stop assuming those vendors are bulletproof.

Here’s what you need to do:

  • Vet third-party vendors. Assess their security protocols, past compliance records, and ability to handle sensitive financial data securely. No blind trust. Review their track record.
  • Include security clauses in contracts. Spell out cybersecurity expectations and consequences clearly.
  • Continuously monitor vendor compliance. Yes, regular check-ups are necessary

Important Note: If your vendor messes up, guess who regulators will still hold responsible? 

It’s gonna be you.

Basically, even if a breach originates from a third-party service, the primary business remains accountable for the fallout. 

For example, if a payment processor’s cloud service suffers a breach, your business could still face penalties for insufficient oversight.

3. Incident Reporting Obligations

DORA isn’t just about prevention, it also requires honesty when things go sideways

The regulation gives clear protocols for cyber incident reporting. 

Businesses must: 

  • Develop a clear incident response plan. Create step-by-step procedures for reporting and communication during cyber incidents.
  • Notify regulators and affected parties within 72 hours of discovering a significant breach, “without undue delay”
  • Keep records of all cyber incidents for future audits.

For example:  If a breach exposes customer payment data, regulators, stakeholders and affected customers all need to be notified within the 72 hours. 

A failure to promptly disclose an incident could lead to increased fines and reputational damage. If customer payment data is exposed, delaying disclosure might escalate the impact and regulatory scrutiny.

4. Continuous Testing 

If cyber attacks evolve constantly, shouldn’t your defences do the same? 

DORA requires businesses to have ongoing validation of cybersecurity. It’s not enough to rely on the results of an outdated penetration test.

Continuous testing is a great way to stay up-to-date with the latest threats. 

You will need: 

  • Vulnerability Scanning. Employ tools to continuously detect and address security gaps in real time. (If you can, automate this!)
  • Penetration Testing. Simulate cyberattacks to identify weaknesses in the system.
  • Employee Training Programs. Plan regular security education and threat simulation exercises. Make sure to update the content too…
  • Periodic Security Reviews. Conduct quarterly evaluations to ensure new threats are addressed.

External testing is often the smartest approach. It eliminates bias and ensures an objective evaluation of your defenses.

At Cyber Alchemy, we help businesses stay secure with a variety of testing services, including cloud, external infrastructure, and web application penetration testing.

Visit our site to learn how we can strengthen your security.

Consequences of Non-Compliance:

As of now, there haven’t been any fines issued under the Digital Operational Resilience Act (DORA), as it will become fully enforceable on January 17, 2025.

However, financial institutions must prepare now to avoid severe consequences, such as: 

  • Fines
  • Reputation damage
  • Operational disruption
  • Increased insurance premiums. 

For Fintech business owners, staying DORA-compliant can mean avoiding these painful headaches altogether. 

By focusing on things like risk management, incident reporting, and ongoing testing, all while keeping an eye on third-party vendors, you’ll protect your operations and keep customer data safe.

At Cyber Alchemy, we help businesses navigate complex regulations like DORA with less stress. 

Our services include:

Don’t wait for a breach to learn the hard way. Contact Cyber Alchemy today and let us help you secure your financial operations – it’s time to become proactive.

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