Why FinTech should Care for Cybersecurity- All you need to know!

As fintech grows in sophistication, it begins to share concerns with traditional banks. The emphasis is shifting away from developing attractive customer-facing apps and toward tackling more "boring" problems. Nonetheless, it is critical in finance. Regulatory compliance, RegTech or no RegTech. That is anti-cybercrime. How concerned should fintech companies be? 

It's a significant problem for the financial services industry. It's not just incumbents. As financial services become more digital, there is a greater need for robust cybersecurity. Greater complexity in financial technology stacks necessitates more robust digital security solutions. As a result, both banks and fintech must defend their businesses. And they must assist their clients in defending themselves.

What Precisely do we Mean by "Cybersecurity?"

The situation or process of guarding against and recovering from assaults on networks, devices, and programs is referred to as cybersecurity. Cyberattacks are becoming a more serious danger to organizations, employees, and consumers. They can be used to obtain access to or remove critical information, as well as extort money. They have the ability to ruin businesses and imperil your financial and personal lives - this is especially true if you have been a victim of identity theft.

As a result, the problem is more sophisticated than just installing an anti-virus or anti-malware tool on your home or office computer. It is about protecting your company from a multitude of threats. As an individual, you must protect every aspect of your life. That's as serious as it gets.

What is the issue?

Did you know that Covid-19 marks a significant advancement in digitalization? That is fantastic!  During the outbreak, for example, six million people in the United Kingdom used an internet banking app for the first time. The popularity of digital interactions is growing. This led to some really good outcomes. Video chat services, for example, assisted us in dealing with the pandemic and lengthy lockdown hours. 

Or the simplicity with which we have been able to handle all of our banking online and using smartphone apps. The great digital push in financial services launched by fintech in recent years has escalated in the midst of the health crisis. Unfortunately, hacking and online fraud has also increased dramatically. Some kinds of fraud, most notably identity fraud, increased significantly in 2020. 

This is from a position of strength since NortonLifeLock has forecasted that one-third of customers will be victims of cybercrime in 2019. Fraudsters and evildoers are famed for their ingenuity. That's as old as the world itself. New fraud methods develop with each progress in innovation. That will not change tomorrow. We reasoned that requiring checks to be signed would eliminate fraud. 

Or that credit card with a pin number would suffice. Or, more recently, biometrics. So on and so on. There will always be individuals with unscrupulous intentions wherever there is money to be made. There is a path wherever there is malice!

It is also a worry for corporations...!

Almost no week goes by without a significant corporation getting hacked or having a data breach. Fintech Global, for example, investigated five hacks from the previous year, proving that the problem is only getting worse. Remote working has proven to be a good way for businesses to adjust to Covid-19's new normal. Working from home, on the other hand, has increased the risks. 

For example, there has been a considerable surge in cybercrime gangs targeting bank accounts on a large scale for little amounts, a practice known as "silent theft." Ransomware attacks are also getting more common. It is a sort of malware that encrypts the data of a person or a company and demands a ransom payment to decrypt it. In 2020, cyberattacks of this type surged by more than 150 percent. This is something that may happen to any company. 

Due to a ransomware attack, BancoEstado, one of Chile's major banks, was forced to temporarily halt operations in September 2020.

Cybersecurity Demand!

The demand is vast and fast-growing all across the world, not only in Western countries. Revenue for global enterprise cybersecurity solutions is expected to reach $60.9 billion by 2027, up from $22.5 billion in 2020. According to Research and Markets, this equates to a staggering 15.3 percent compound annual growth rate by then. Even governments are aware of the gravity of the situation. 

For example, the government of the United Kingdom has formed a new independent organization to promote professional standards among the country's cybersecurity enterprises. This comes at a time when people are skeptical of governments' capacity to protect their personal information. However, they should bear the majority of the blame for doing so. 

Everything about it seems strange when you think about it. This isn't to argue that fintech firms and banks shouldn't do more to strengthen cybersecurity.

a. For Fin-techs and Banks!

Data breaches are nothing new. Almost 5 billion records were revealed in 2018 alone. Other parties were frequently found to be at fault. The potential cost of a data breach is significant for banks and large enterprises. After the incident has been cleaned up and the vulnerability has been resolved. The GDPR places the frosting on the cake in the form of fines, penalties, and settlements that can amount to millions of euros. 

Furthermore, the reputational damage can persist for years and even destroy a corporation. As a result, when banks and fintech develop strategic alliances, the bank's top priority is always security. If something goes wrong, the bank will have a far higher stake than the fintech. Furthermore, the whole industry must emphasize cybersecurity strategy. This is a common complaint levied at fintech by traditional banks. Startups are economizing on cybersecurity! 

So yet, it has not been established. Numerous bank technology failures make one wonder if incumbents are investing and focusing enough on it. Time will decide who is on the right side of history. One thing is certain: the threat is growing more serious and multifaceted. To toughen up their operations and information technology, banks and fintech will need to invest in and collaborate with the proper partners.

b. For their Customers!

Financial education is crucial to the success of our clients. However, given the rising threat, aiding clients must go above and beyond. Cybersecurity must be a major priority for the financial industry. They must help their customers protect themselves. This involves everything from identifying potential scammers to providing solutions as part of their business. Fraud is a never-ending battle!

As a result, the financial services industry as a whole must continue to invest in its arsenal. Cyberattacks are becoming more sophisticated. As a result, telling customers to cover the point-of-sale keyboard with their hands while inputting their pins is no longer adequate. Banks and fintech must contend with a rise in phishing efforts and other techniques. 

The bank will save money as a result of this. Because if something goes wrong, they'll be held responsible. Especially in cases when fraudulent transactions continue despite all red flags...!