Why is technology implementation required to curb cybersecurity frauds in the Fintech sector?
By Praveen Paulose
Personal security is paramount in an industry like Fintech that relies heavily on user information. To customers, security comes in the form of maintaining privacy and ensuring data safety. Companies in the Fintech industry handle their customers’ sensitive information daily, making it crucial for them to safeguard it with all they can. This data encompasses many things, including government identification details, financial transactions, spending histories, etc.
A breach in user data can have severe consequences for customers, given the sensitivity of the information that Fintech companies acquire and store with them. Affected customers can be faced with huge financial losses. Adding to this, customers become highly susceptible to identity theft. This can lead to the opening of fraudulent accounts, unauthorized transactions, and so on by cybercriminals. These are a few ways that customers are affected.
However, the damage isn’t restricted only to the customers. The company’s reputation takes a significant hit in case of any security breaches, and harsh backlash is expected regarding finances. Fintech companies can face substantial financial losses attributed to costs invested in investigating cyber criminal activities and regulating legal lawsuits with affected customers, among other activities that Fintech companies would be required to undertake. Such incidents can badly erode a customer’s trust in them entirely. Even after cyber breaches are resolved, customer groups can continue to be wary of the brand, which will have long-term implications for the brand’s business.
Security against cyber frauds:
Fintech brands should ensure that cybersecurity is their top priority among company operations to mitigate the severity of such fallen consequences. This starts with an understanding of the different types of cyber frauds that can take place to exploit vulnerabilities in the technological/ system-bound infrastructure of various financial organizations. Consequently, brands must use the correct technological tools to batten their hatches against cybercriminal activity.
Securing threads of crucial data with tech:
Technology is the key to detecting, responding, and preventing cybersecurity fraud in the Fintech industry. With the help of a wide range of algorithms, technology can analyze large volumes of data to identify any patterns and anomalies that may indicate any suspicious activity. Any deviation from usual practices in financial transactions can trigger alerts to companies that will subsequently initiate investigations.
Technology also allows for implementing robust authentication methods beyond just the single step of traditional passwords. Today, many advanced tools have come about to improve authentication, such as fingerprints, facial recognition, and so on. Moreover, encryption can be achieved via technology that protects sensitive customer data when transmitted or stored.
Another excellent attribute of technology is its real-time monitoring capabilities. Monitoring can occur for transactions, accounts, and user activities to detect abnormal movements. This can allow brands to collect and study threat data from various sources to inform Fintech companies of vulnerabilities that could take shape in the future and prepare strategies accordingly.
With newer technologies such as Artificial Intelligence being utilized across industries, including Fintech, companies can automate different actions to counter cybersecurity fraud. Activities that can be automated include freezing accounts upon detecting that they may have been hacked, blocking transitions when unauthorized users try to launder money, alerting customers upon recognizing a suspicious user trying to log into the account, and more. Specific tools can carry the regular security audits to identify vulnerabilities in systems much before cybercriminals can exploit them.
Technology can also be used in an educative manner, teaching customers about essential things they should know for their data safety, such as the best practices they should carry out to keep their information safe.
Future outlook & approach:
As the Fintech landscape grows and changes, technology must be adapted accordingly to protect the interests of both companies and consumers. Technological tools will have to become increasingly predictive, ensuring that problems can be quashed before they affect customers. This also requires proactive intervention to prevent fraud before it occurs.
With increasingly automated processes, technology can use smart algorithms to make real-time decisions. These real-time decisions would facilitate fast responses to stay protected from cyber attacks. Tools such as blockchain that have emerged more recently can also enhance security by reducing the risks of data theft, manipulation, and doctoring risks while preventing unauthorized access to critical data. Another tool, the Internet Of Things, can ensure the security of machine-to-machine communication that involves transmitting highly private information.
As technology advances with newer tools, more accurate risk assessment models can come into the foray. Fintech companies will undoubtedly benefit from implementing numerous tools to ensure optimal protection of their customer data and, by extension, themselves. Embracing technology with an open mind can help develop the Fintech industry into a safe environment for everyone.
(The author is Mr Praveen Paulose, MD & CEO, Celusion Technologies, and the views expressed in this article are his own)
