The digital revolution has changed how we handle our money and the steps we take to make secure financial transactions. From online banking to digital payments, a digital-first approach combined with technology has made banking easier and more accessible than ever before.
However, the financial services industry is still under immense pressure to innovate, scale, and serve customers more quickly. Yes, cloud computing can offer all these things but this type of digital transformation does not come without risk.
As banks, investment firms, and fintech platforms move to the cloud, they’re faced with a generation of new threats, including third-party and supply chain vulnerabilities, cloud outages, vendor lock-in, and insider threats.
This blog unpacks the core cloud security risks facing financial institutions and offers best practices to secure transactions in a high-stakes, cloud-native world.
Why Finance Is a Prime Target in the Cloud?
The answer to this question is straightforward, but things do tend to get complicated.
Financial services handle a large amount of sensitive data from Personally Identifiable Information (PII) to real-time transaction records and investments.
Yes, banks adhere to a high security standard, which means no information can be given or action taken until an individual answers the relevant security questions correctly.
But the questions asked by these so-called ‘highly secure’ banks are easy to obtain. Things such as Date Of Birth (DOB), line of address, direct debits that you have with the bank, bills that you pay, approximate balance on a given account or a transaction that has been made in the last seven days. My point is that as long as these criminals can answer at least 2 of the 4 questions correctly, they will be given access to the account (Debit, Credit and Business Accounts).
Furthermore, if these cybercriminals get hold of other sensitive information, such as a PIN and Password, then real damage is bound to happen, as money can be moved between different external accounts, and large payments are likely to be processed.
So my question to you is….
How strong are these clouds, and can they protect you from criminals gaining access to your sensitive information?
Critical Cloud Security Risks That Impact Transactions in a Digital-First World.
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Third-Party and Supply Chain Vulnerabilities
Financial Institutions and banks do not operate in isolation. They rely on third-party vendors, cloud service providers and fintech partners to process transactions and store sensitive data. While these partnerships improve efficiency, they also introduce security risks where attackers can exploit weak links in the supply chain. It’s like a loophole for hackers.
Weak API Security – The Digital Gateways to Bank Data
APIs (Application Programming Interfaces) allow different systems to communicate.
In banking, APIs are used to:
- Process payments between customers and merchants (PayPal, Stripe).
- Connect banking apps with third-party services (budgeting apps, investment platforms).
- Enable Open Banking, where customers can link their bank accounts to other financial services.
However, weak API security can allow attackers to:
- Bypass authentication and gain unauthorised access to banking data.
- Steal and manipulate financial transactions.
- Launch Distributed Denial-of-Service (DDoS) attacks that overwhelm banking services, causing downtime.
Experian, a major credit bureau was derailed for exposing sensitive financial data due to a flawed API that lacked proper authentication. No verification was required so attackers were able to gain access to credit scores and personal data of many consumers just by providing a name and mailing address.
Hence, banks need to strengthen their API security by:
- Using strong authentication & encryption to prevent unauthorised access.
- Regularly test APIs for vulnerabilities before deploying them in production.
- Monitor API traffic for anomalies, such as unusual access patterns
- Limit API permissions, ensuring third parties can only access necessary data.
2. Vendor Lock-In
Vendor lock-in occurs when banks and financial institutions rely too heavily on a single cloud provider. Switching can be difficult and expensive. Essentially, you are stuck and forced to continue using that cloud provider’s services.
It can suck! The reason is that there is limited flexibility. Let me explain…
Let’s say your bank relies only on Amazon Web Services (AWS) as a vendor, and AWS suffers from a critical outage, the entire bank will go dark instantly. There is no magic switch.
Even if AWS goes down due to a misconfigured update, internal error, or a large-scale Distributed Denial of Service (DDoS) attack. (A DDoS attack is when an attacker floods a server with internet traffic to prevent users from accessing connected online services and sites.) The bank’s entire infrastructure will go offline.
This includes:
- Core banking systems (Account Access, Transactions)
- Customer-facing apps (Mobile banking, Web Portals)
- Back-office operations (Loan processing, CRM, Risk Systems)
- APIs and integrations (Payment Gateways)
In cybersecurity terms, this is called a ‘single point of failure’ when there is no alternate path for recovery or continuity, as everything is dominated by one cloud.
Real World Impacts
- Customer Transactions are Stopped: Users can’t deposit, withdraw, or transfer funds.
- Payment Systems Break: Merchants can’t process card transactions.
- Trading Systems Crash: Financial markets, depending on real-time data feeds, are disrupted.
- Reputation Damage: Clients lose trust, especially if access to their money is blocked.
Ultimately, one cloud outage can crash the whole economy. Hence, without a multi-cloud or failover strategy, you’re gambling your uptime, compliance standing, and most of all, customer trust.
Quick Tips on How To Avoid Cloud Outages
- Multi-Cloud Architecture: Spread critical workloads across AWS, Azure, and GCP to reduce dependency.
- Geo-Redundancy: Deploy services across multiple AWS regions and availability zones.
- Disaster Recovery Plan (DRP): Simulate cloud outages and have auto-failover systems in place. In other words, a plan B.
- Hybrid Cloud Setup: Keep mission-critical systems on-premises or in private clouds as a backup. This will reduce the risk of losing sensitive information.
Insider Threats or Human Error?
In a digital-first financial ecosystem, we often imagine threats as external: nation-state hackers, ransomware gangs, or shadowy figures exploiting zero-day vulnerabilities. But in reality, some of the most significant security incidents start much closer to home.
When your transactions rely on interconnected cloud services, APIs, and real-time data flows, even a small human mistake can have massive downstream effects. Misconfiguring access settings, clicking on a phishing email, or using a weak password can all lead to unauthorised access, which compromises the integrity of your digital transaction environment.
Why Insider Threats Matter in Transaction Security
Every financial transaction, whether it’s a loan disbursement, crypto trade, or mobile payment, depends on three pillars:
- Confidentiality: The transaction details are private.
- Integrity: The transaction hasn’t been altered.
- Availability: The transaction can happen without interruption.
Insider threats put all three at risk.
Take this, for example: an employee mistakenly shares elevated access credentials with a third-party vendor. That vendor is then compromised, and within hours, attackers are intercepting and redirecting real-time transactions before detection even begins.
In a world where transactions are expected to be instant, seamless, and secure, even the slightest internal misstep can erode customer trust and regulatory compliance.
How Can This Be Fixed?
- Be Disciplined: Don’t assume, always verify.
- Train your cloud workforce on transaction systems.
- Run simulated phishing attacks to boost email vigilance.
- Educate teams on how attackers exploit insider access to reroute or spoof financial transactions. This will help employees look for signs of possible attacks that may occur.
Nonetheless, human error is inevitable, but insecure transactions shouldn’t be!
As financial services become increasingly digital, the line between operational efficiency and security risk gets thinner.
But securing transactions in this new landscape doesn’t just mean blocking external threats. It means recognising that every person in your institution, from customer support to DevOps, holds a key to transaction security.
By embedding Zero Trust principles, fostering cloud-specific awareness, and enabling AI-based behaviour monitoring, banks and FinTech’s can build a secure transaction ecosystem, resilient to both the outside hacker and the inside mistake.
What are Banks Doing to Secure Transactions in a Digital-First World
Biometric Security:
Your body is your password. Banks are moving away from passwords (because, let’s face it, most of us reuse them) and embracing biometrics, such as fingerprint scans, facial recognition, and even voice authentication. These methods are nearly impossible to replicate, making it much harder for bad actors to impersonate a user.
With mobile banking becoming the norm, biometric login is now built into apps, which adds another security layer to make transactions safer.
Multi-Factor Authentication (MFA):
Again, MFA adds a second (or third) checkpoint to verify your identity. For example, logging in might require a password plus a code sent to your phone or approval via an authenticator app. Even if someone has your login credentials, they’re not getting through without that second layer.
Banks are also exploring adaptive MFA, which uses AI to decide when additional verification is needed based on things like location or device behaviour. It’s smart, and it keeps friction low for legitimate users.
Encryption:
Encryption scrambles your data into unreadable code that can only be deciphered with the right key. Whether you’re transferring money, submitting a loan application, or checking your balance, banks are using end-to-end encryption to ensure no one else can see what’s happening.
Modern encryption standards like TLS 1.3 and AES-256 are industry benchmarks, used across everything from mobile banking to cloud-hosted financial platforms.
Tokenisation:
Ever wonder how Apple Pay or Google Pay works without actually sharing your card number?
That’s tokenisation in action.
Instead of storing or transmitting real account numbers, banks convert sensitive data into “tokens,” randomised codes that are useless if intercepted. So even if a cybercriminal hacks a payment system, all they’ll get is a bunch of meaningless tokens.
Beyond Tech:
Of course, it’s not just about tools. Banks are also investing in:
- AI-powered fraud detection to catch unusual behaviour in real-time
- Real-time transaction monitoring systems with automated alerts
- Cloud-native security with access controls and anomaly detection
- Customer education to build awareness about phishing, scams, and account safety. I see this as the most important, as education will allow banks and customers to work together towards making fewer insecure transactions and more secure transactions
Final Thoughts…
The truth is, no magic shield makes the cloud bulletproof, but there is a smarter way to build trust into every transaction.
Yes, the cloud is fast, scalable, and packed with innovation. But it’s also a shared space, and in finance, where stakes are sky-high, that shared space comes with high-risk neighbours: APIs left unlocked, third-party cracks, single-vendor dependencies, and even well-meaning employees making honest mistakes.
So, how do we protect financial transactions in this brave new digital world?
It starts with a mindset, not just tech.
Security has to be built in, not bolted on.
We’re talking about Zero-Trust models in which no access is given without verification, no matter how “internal” someone seems.
We’re talking about multi-cloud strategies that give institutions options when one system fails, and AI-powered monitoring that sees strange behaviour before humans even blink.
It also means acknowledging that people are often the weakest link and that training, awareness, and clear policies aren’t optional anymore. Education is just as critical as encryption.
Lastly, banks and fintech must remember that their customers are not just using their services; they’re trusting you with their money, their data, and their livelihoods.
Every transaction is a relationship. And every relationship needs protection.
So yes, the risks are real.
But so are the tools, the frameworks, and the strategies to fight back.
In this fast-paced, cloud-native finance landscape, securing digital transactions isn’t just a technical necessity; it’s a business imperative.
References:
External:
CheckPoint. (n.d.). What is DDoS. Check Point Software. https://www.checkpoint.com/cyber-hub/cyber-security/what-is-ddos/
Cloudflare. (2024). What Is Vendor Lock-In? | Vendor Lock-In and Cloud Computing | Cloudflare UK. Cloudflare. https://www.cloudflare.com/en-gb/learning/cloud/what-is-vendor-lock-in/
Hall, P. (2024, August 7). Securing Financial Transactions in the Digital Age – Secarma Website. Secarma Ltd. https://secarma.com/securing-financial-transactions-in-the-digital-age
Malins, A. (2024, May 1). The Rise of Digital Banking: a Paradigm Shift in Fintech. Forbes. https://www.forbes.com/councils/forbestechcouncil/2024/05/01/the-rise-of-digital-banking-a-paradigm-shift-in-fintech/
Internal:
Fortifi. (2022, June 8). Passwords Passwords Passwords | Fortifi. Fortifi. https://www.forti.fi/blog/passwords-passwords-passwords/