Fintech is short for Financial Technology, it comprises everything from cashless payments, to crowdfunding platforms, to robo-advisors and virtual currencies. If you have recently donated an amount to a crowdfunding campaign or if you have transferred money through Google Pay, that’s because of fintech.
Although most sectors were wrecked by the pandemic waves. On the other hand, the fintech revenue has skyrocketed. The goal of this sector is to make financial services more accessible for both businesses and individuals. In turn, storing and analyzing the financial information. However, if this data is compromised it not only threatens the brand value of the fintech company but also burgeons the loss of hard-earned money for the customer. So, with this article, let’s investigate the challenges fintech businesses face in securing their data.
1. Not Adopting the Standard Compliances
- ISO 27001
It’s a well-known international standard for data security. Moreover, this framework helps organizations establish terms and definitions, implement roles and measures to support Information Security Management System (ISMS), operate, monitor, review internal and external issues that may be aligned with the business, maintain an information security policy aligned to business objectives and continually improve on ISMS.
You can also read 4 Reasons Why Cloud Security is Important?
- SOC Report
System and Organization Controls (SOC) reports enabling enterprises to feel assured that service providers are operating ethically and in a compliant way. By completing the SOC reports, many financial institutions have become confident to transfer and store their customer’s data and major processes data to virtual entities.
- NIST
Financial institutions are growing their dependency on third-party technical service providers. Hence, the providers must gain an edge over cybersecurity standards too. One such standard is the National Institute of Standards and Technology (NIST). US-based government agency developed NIST to drive innovation and economic competitiveness among US enterprises.
2. Ignoring Multi-Factor Authentication
As a user we understand the importance of multi-factor authentication, it clearly blocks away from a data breach. However, fintech companies often ignore this step mainly because of two reasons. Their business model is competing against that of the physical financial institutions. So, fintech enterprises cannot copy their competitors’ practices. Moreover, it takes a huge amount of money to implement the authentication process. Fintech companies are still in a very nascent stage to compete against well-established financial institutions.
3. Unable to Implement Data Minimization
Data minimization is a principle of limiting the storage and process of personal data, which is directly relevant and necessary to accomplish a specific purpose. Fintech software or applications are generally equipped with a payment gateway. This makes a way for the company to store financial data and the personal information of its customers. However, fintech companies can limit the storage and processing of this data. One way to do it is by using data mining techniques to draw inferences from the limited data.
4. Weak Backup Policy
A strong backup policy represents an enterprise’s comprehensive backup strategy. Fintech innovations could improve the efficiency of financial outcomes. Hence, first, they should identify and protect critical data and systems. Second, the authorities must clarify the frequency of both full and incremental backups. Third, sketch out responsibilities for backup administrators.
A well-chalked-out backup plan is important because it acts as the last line of defense against data breaches, hardware failure, and cyber-attack.
In conclusion, fintech has disrupted the way banking institutions offer services to customers. The banking institutions have started adopting digitalization by partnering with fintech companies or starting a new subsidiary on their own. However, new technological innovations in the fintech industry are way ahead of its league. They are focussing on developing and implementing digital point-of-sale systems and real-time-payments systems. In fact, the systems are adopted by customers, thereby improving customer experience and efficiency. However, there are concerns over the presence of data ubiquity in fintech applications. It offers numerous new avenues to find security vulnerabilities and they are still unknown.
