Security is definitely not a characteristic that you can just tack on at the end. One small hole in security arrangements could be very costly, leading to losing customers' trust and facing regulatory sanctions or even getting into legal wars.
In 2023, Revolut and Paytm experienced significant security breaches that exposed customer data due to inadequate application programming interface (API) protection or insufficient access control. If you are working on developing apps for the financial sector, you must not only decide on your security steps from the start but also frequently recheck the decisions.
This post covers the five principal areas to address before your fintech application is ready to be launched.
Step 1: Assess and Classify Sensitive Data
Any fintech app is a data collector, but it does not mean that all the data must be protected equally. Public data, such as Frequently Asked Questions (FAQ) or a company name, is considered to be of a low-risk category. However, confidential data (passport photos or card numbers) requires strong security measures.
You can’t secure resources that you have not identified. Incorrect labeling of data results in overexposure, greater danger, and compliance problems.
How to Determine the Sensitivity Level of Your Data
Break your data into three categories:
- Public: no harm if shared (company name, contact info, terms).
- Internal: for local use only (logs, hashed identity documents, non-personal analytics).
- Confidential: should be encrypted and accessed by a limited number of people (payment data, credentials, and Know Your Customer (KYC) info).
By understanding data classification, you can set up the proper controls and comply with the General Data Protection Regulation (GDPR) or Payment Card Industry Data Security Standard (PCI DSS).
Common Mistakes in Data Classification
Even experienced teams can make mistakes that reduce the security of the system:
- Overloading. Storing excessive data is wrong (for example, amassing full scans if only a document number suffices).
- Inappropriate labeling. If you label everything as "internal," the access rules will be very unclear, and there will be no monitoring.
- Using test data in production. Test-produced users or sandbox configurations that are not removed from live systems can easily be attacked.
- No access control. Restricting data is meaningless if the door is still open to everyone.
- Disregarding data lifecycle management. Data that is beyond its useful life must be securely erased. Retaining everything not only increases the vulnerability surface but is also responsible for higher storage and compliance costs.
- Thinking that classification is done only once. Classification should be done constantly by monitoring changes in data use, importance, and the level of risk.
- Not giving employees instructions on the classification rules. Classification policies are ineffective if the staff don’t grasp them or if they apply them in a different way.
- Violation of regulatory requirements. Not linking classification levels with the laws of the particular industry or location, like GDPR or the Health Insurance Portability and Accountability Act (HIPAA), may cause non-compliance.
Wrong decisions like these not only increase the risk of security but also make audits more difficult.
What not to do:
- Don’t store documents “just in case.”
- Don’t mark all data fields the same.
- Don’t combine unrelated data in one table without clear rules.
- Don’t skip regular audits of what you collect and why.
- Don’t rely on manual processes alone.
- Don’t forget to encrypt sensitive data, even if it’s classified correctly.
- Don’t delay updates to classification policies when business needs or threat models evolve.
Step 2: Encrypt Data at Rest and in Transit
Encryption protects users' data from thieves, no matter if the data is at rest or on the way. For fintech apps, it is important that they comply with encryption.
There are two critical states to cover:
- Data at rest (stored in databases or cloud): Use AES-256
- Data in transit (moving between systems): Use TLS 1.3
Don’t forget to protect your encryption keys as well. Once the keys are revealed, all the rest is like an open book.
Let’s say you store transaction data in a database. Without encryption, anyone with access to that database can read users’ full transaction histories. If the database is encrypted with AES-256 and access is properly restricted, even a breach won't expose usable data.
Step 3: Set Up Robust User Authentication and Access Control
Encryption is useless if anyone can get in without any restrictions. Implement stringent access controls. Initially, opt for multi-factor authentication (MFA). Employ the short message service (SMS), authenticator apps, or biometrics. Subsequently, make use of Role-Based Access Control (RBAC). RBAC is an efficient tool for preventing data leaks, limiting the sources of internal danger, and, at the same time, ensuring compliance with regulations.
The users can only access information that is necessary:
- Regular users: can only see their own account and transactions.
- Analysts: can only see anonymized, aggregate data.
Step 4: Secure Your APIs and Third-Party Integrations
APIs connect your app to banks, payment providers, and analytics tools, making them a prime target for attackers. If not secured properly, a single exposed endpoint can open the door to data breaches, fraud, or service disruptions.
To protect your API, always require authentication. Use OAuth 2.0 for secure token-based access or generate time-limited API keys with scoped permissions. Never expose public endpoints without a way to verify who’s calling them.
Add rate limiting to prevent brute-force attacks and throttle abusive behavior. Input validation is equally important; never trust incoming data. Sanitize requests and check formats before processing to prevent injection attacks and system crashes.
Common mistakes to avoid:
- Public APIs with no authentication
- Hardcoded API keys or secrets in frontend code
- No limit on failed requests or login attempts
- Skipping input sanitization
- Forgetting to log or monitor API activity
APIs should be treated like entry doors: lock them, watch them, and question everything that tries to come through. Secure coding, regular audits, and layered protection are not optional — they're baseline requirements. A weak API isn’t just a dev mistake; it’s a business risk.
Step 5: Prevent Real-Time Threats
Once your app is live, threats don’t wait. You need systems that detect and respond in real time. Set up Distributed Denial of Service (DDoS) protection to block traffic floods. Use fraud detection tools like machine learning models that can flag suspicious patterns quickly.
Incident Response Plan: Roles, Actions, and Communication
An incident may not always be a case of a hacker who has broken in; it could be payment fraud, a permissions error, or a file that was accidentally shared with the wrong person. In any case, your team definitely needs a clear and ready-made response plan to be used immediately.
First, begin by outlining the roles. Who is in charge of the response? Typically, a security lead is the one who coordinates, but you will still need a product owner to evaluate the impact and a support lead to handle customer communication. No one should find out their task when the incident occurs; everyone should know it beforehand.
Then, define the steps to be taken. The first step is containment: stop the suspicious activity, isolate the affected accounts or systems, and save the logs. Don’t erase anything. The second step is notification: inform the legal department, executives, and anyone who might be affected. The third step is documentation: record the incident, the way in which you have responded, and what changes you are going to make.
Additionally, decide on your communication channels. Slack is used for internal updates, email for reports to stakeholders, and monitoring tools like PagerDuty for alerts. Also, be sure to prepare templates in your internal docs so you don’t have to write from scratch in a stressful situation.
The most significant thing here is to be quick but still have structure. When everyone knows their roles, the situation does not get out of control. An untimely or disorganized reaction not only costs more money but also trust and time. Having a detailed plan ensures that your team can respond quickly, remain calm, and solve the problem without creating a bigger one.
Step 6: Test, Monitor, and Comply
Security isn’t one-and-done — it's an ongoing task. Before launch, run penetration tests and automated scans to find weak spots. Use tools like Snyk or Dependabot to check for vulnerable dependencies in your codebase.
Set up:
- Real-time monitoring for logins, transactions, and failed access attempts
- Alerts for suspicious activity or service failures
- Audit logs for traceability
Final Checklist Before Launch
Use this list to confirm your app is secure, tested, and ready to ship. You can copy it into Notion, Jira, or any task manager.
- MFA is enabled for all user accounts
- All sensitive data is classified and encrypted
- APIs require authentication, and rate limits are in place
- Role-Based Access Control is implemented
- Real-time monitoring and alerts are active
- Penetration testing is completed
- Dependency scans show no critical issues
- Incident response plan is documented and assigned
- Access permissions have been audited
- User onboarding includes basic security instructions
Security Summary: What You’ve Done and What’s Next
You’ve covered the essentials: classified your data, encrypted it, secured user access, locked down APIs, set up threat detection, and tested the system. That’s a solid launch foundation.
But security doesn’t stop at launch. New threats show up all the time, and your team needs to keep up with regular updates, audits, and improvements.
Think of security as a habit. It’s better to spend a week preparing than a year cleaning up after a breach.
