In an email sent to advisers last week, Redtail blamed its leak on systems that inadvertently stored investors' personal information on a debug log file. These files record database operations, system processes, and errors for software developers in case they need to fix something. Redtail's debug file was publicly accessible to anyone with an internet connection.
But Redtail is hardly alone, said Alissa Knight, a senior analyst with Aite Group's cybersecurity practice. In a recent study of the security of 30 mobile apps from financial services firms in the U.S. and Europe, information stored inappropriately on a debug file that could be accessed publicly was identified as a common issue.
"Many of the apps I looked at were also mistakenly configured to log in debug mode, logging everything happening within the app, including sensitive data to log files," Ms.Knight said.
While she wouldn't disclose the name of the firms she studied, they spanned banking, retail brokerage, financial technology vendors and auto insurance, she said.
Ms. Knight concluded that there is "a systemic problem" across both financial services firms and fintech: "a widespread absence of application security controls and secure coding."
Despite the amount of sensitive data these firms handle, many are still failing to apply adequate security to apps, she said.
Ms. Knight found vulnerabilities in 29 of the 30 apps analyzed. It took her less than nine minutes to identify the issue at many of them.
Especially concerning is the application programming interfaces (APIs) that companies use to integrate data with third-parties, she said. Financial services companies and fintech vendors have a habit of hard-writing credentials and API keys into the code. Anyone who knows where to look can gain access.
And hackers know where to look.
"Hackers are beginning to shift their focus to attacking organizations and end users via their mobile apps by finding vulnerabilities in the code due to a lack of code obfuscation being employed to secure apps," Ms. Knight wrote in her report.
The increase in the number of API codes that can be seen publicly on the internet is one reason hackers are increasingly focusing there, she said. Also, it's relatively easy to learn the company's API URLs by looking at the company's mobile app source code.
If security experts know this can be a problem, why is it happening? One reason might be companies outsourcing app development offshore to save costs.
"I was talking to some of the fintech companies and asked this very thing," she said. "They tell me a lot of the time companies they outsource to will publish the code and the fintech or financial services companies aren't even involved in the process."