Today, new Fintech solutions appear on the market every day providing a wide range of services previously unavailable to consumers. The core benefits of such solutions for consumers are convenience, on-demand availability, better user experience, and better prices. Moreover, businesses benefit from greater amounts of data generated by users helping companies to analyze it and draw better insights to stimulate the development.
However, in both cases Fintech solutions have downsides. While data abundance is good for forecasting and service improvements, it also creates threats of security breaches. The same goes for the integration of Fintech solutions with traditional financial services. Data transfer between these two entities forms the core of many business models. Nevertheless, more data means higher interests of cybercriminals.
Thus, companies face the challenges of security in Fintech, and in this article, SOLVVE will highlight the key challenges for Fintech and the ways to overcome them that are already available for companies to use.
Security challenges for the Fintech industry
Application vulnerabilities and data privacy
Many Fintech solutions come as mobile or web applications to facilitate transactions, often operating in real time and automating many tedious and routine tasks. All the user is left to do is to verify the action with a fingerprint or tap a button. To achieve this level of convenience applications need to have access to user profiles and highly-personal details, including biometric identifiers, creating weak spots for potential security breaches. The protection of digital identities is a pressing issue for many Fintech companies.
It is easy to theorize on how to minimize risks of a breach in security. Nevertheless, the problem is not only in the systems’ design. Oftentimes, human error or poor knowledge of security practices is the root cause of the problem. For example, using simple passwords like “1234” or “qwerty”, not changing passwords regularly, not using two-factor authentication, or using one password to all accounts.
Complex systems engaging third parties
Ideally, systems should be developed by one party so that a development team has a 360-degree understanding of its structure and potential vulnerabilities. However, it is not rare that systems get developed in several iterations, maybe by different developers, third parties get involved to provide certain services. Thus, the number of potential vulnerabilities grows since it becomes harder to spot weaknesses in the patchwork of integrated services and people involved in the development process.
Fintech companies rely on cloud solutions for better scalability, performance, 24/7 availability as well as costs optimization. However, the means of ensuring security for the cloud differs from traditional means of protection for networks or data centers. As data moves in the distributed environments, it becomes harder to supervise it because visibility decreases.
What can companies do today to minimize the risks related to security in Fintech? Below you will find a brief overview of solutions that SOLVVE can provide to protect your clients and business already today.
Means of ensuring security
Simply put, a token is a replacement for a piece of sensitive information, e.g. one’s credit card number. Instead of providing real data, systems can create tokens that have links to real data, but in an encrypted way so that it is impossible to reverse engineer the original data. Such tokens are often temporary and expire after a single use. This solution makes it impossible to track back sensitive data through transactions. This is a highly-recommended option for the eCommerce domain.
Making use of AI and ML
Beside tremendous improvements in automation and forecasting thanks to algorithms, AI and ML are also vital to assess the reliability of potential clients. While businesses want to reduce or circumvent the use of sensitive personal data, perpetrators might use these loopholes to abuse some of the financial systems by stealing or creating fake identities.
Among many other things, AI and ML provide reliable credit scoring and assessment of users and transactions to spot anomalies. In return, companies can save on labor costs and facilitate decision making when it comes to the provision of financial services.
Skilled cloud management
First of all, take control of the policies and settings. This is especially important for businesses utilizing multi-cloud solutions. Make sure to keep an eye on all of the services your business uses or use special tools to do it on your behalf.
This leads us to the second point – automate where possible to minimize the human error factors. It is crucial to choose tools that will manage your cloud solutions in full integrity instead of providing spot-on fixes. As we saw above, multiplying involved parties and technologies multiplies vulnerabilities. If you are feeling that your hands are full already with all these tasks, you probably need to move to the third point.
Bring in skilled DevOps specialists who understand the needs of your company and know how to consolidate all of the cloud solutions you are using for the optimal performance. If you have any questions or ideas related to security in the Fintech sector, do not hesitate to contact us. Let us make this happen!