How Emerging Financial Services Regulations Impact Mobile App Security

The financial services landscape in the EU is evolving rapidly, with new regulations introducing stricter compliance requirements for mobile apps handling payments, crypto-assets, and digital financial services.

For financial service providers operating in or expanding to the EU, understanding these regulations is essential. Compliance is now directly tied to mobile app security, and failing to meet these standards could limit market access and erode user trust.

This blog breaks down three critical regulations every financial app developer should know, PSD3, MiCA, and DORA, and explains why built-in mobile app security is essential for both compliance and protection.

PSD3: Modernizing payments and strengthening open banking

What is PSD3?

The payment services directive 3 (PSD3) updates and enhances the EU’s legal framework for digital payments. Building on PSD2, it strengthens consumer protection, standardizes open banking requirements, and enhances payment security across banking, payment, and wallet apps.

Who is impacted?

PSD3 applies to a wide range of mobile apps, including:

• banking apps offering account access and open banking features
• payment apps facilitating peer-to-peer, merchant, and bill payments
• digital wallets supporting digital transactions

Key security requirements under PSD3

To comply with PSD3, mobile apps must implement:

• strong customer authentication (SCA) with multi-factor verification
• real-time fraud monitoring to detect and block suspicious transactions
• secure open banking apis with end-to-end encryption and strong identity verification
• incident reporting processes to quickly notify regulators of security incidents
• regular operational resilience testing, including simulated cyberattacks
• secure software development practices, embedding security and privacy from the first line of code

MiCA: Regulating the crypto-asset ecosystem

What is MiCA?

The markets in crypto-assets regulation (MiCA) introduces a harmonized regulatory framework for crypto-assets across the EU. It covers both crypto-asset issuers and crypto-asset service providers (CASPs), such as exchanges, trading platforms, and custodial wallet providers.

Who is impacted?

Mobile apps offering crypto services fall under MiCA, including:

• Wallet apps that manage users’ crypto-assets
• Crypto trading apps enabling buying, selling, and exchanging assets

Key security requirements under MiCA

To comply with MiCA, apps must adopt:

• Secure custody controls, including strong encryption of private keys and multi-signature verification
• Operational resilience testing, such as regular cybersecurity drills and attack simulations
• Know-Your-Customer (KYC) and Anti-Money-Laundering (AML) processes to verify user identities and monitor transactions
• Incident reporting requirements for disclosing security incidents to regulators

DORA: Ensuring digital resilience for financial services

What is DORA?

The digital operational resilience act (DORA) creates a standardized ICT risk management framework for financial institutions across the EU. It ensures that financial firms can withstand, respond to, and recover from cyberattacks and operational disruptions.

Who is impacted?

DORA applies to all EU financial institutions and their Information and Communications Technology, which we believe includes the scope of the mobile applications or SDKs that power their services Examples of mobile apps in this field include:

• banking apps providing account and payment access
• investment apps offering trading and portfolio management
• insurance apps handling policies, claims, and customer interactions
• payment apps processing transactions between users and merchants

Key security requirements under DORA

Under DORA, Financial services provided with ICT services, which can include mobile apps, must demonstrate:

• secure development and deployment processes, including secure coding, pre-launch testing, and continuous monitoring
• comprehensive ICT risk management throughout the app’s lifecycle
• real-time threat detection and incident response, with automated alerts for abnormal activity
• mandatory incident reporting, with short timeframes for notifying regulators
• operational resilience testing, including penetration testing and red teaming
• third-party risk management, with security oversight of external technology providers
• secure external interfaces, using encryption and monitoring for all integrations with banking systems, trading platforms, and payment gateways

Mobile app security plays a vital role for security, resilience and protection of financial services

While PSD3, MiCA, and DORA each target different parts of the financial ecosystem, they all require one thing in common: robust financial app security. Financial apps without built-in security put themselves at risk for:

• compliance violations resulting in fines or market exclusion
• data breaches exposing customer information
• service disruptions that damage reputation and trust
• financial fraud enabled by weak authentication or monitoring

To align with these regulations, financial apps need multi-layered protection, including:

• code obfuscation to prevent reverse engineering
• runtime application self-protection (RASP) to detect real-time threats like tampering or injection of Malware

At Guardsquare, we help financial services organizations build secure mobile apps that meet regulatory requirements without compromising performance or user experience. Guardsquare’s solutions protect your app’s code, runtime, and sensitive data, not only by providing a multi-layered protection but also by using a unique polymorfic approach. With polymorphic protection, security configurations automatically change with every app release, forcing threat actors to restart their analysis and attacks from scratch. This significantly slows down and complicates any attack, dramatically improving your app’s resilience.

Want to learn how? Contact Guardsquare’s mobile security experts today.