Rapidly Growing Fintech Industry and its Challenges

Technology has swiftly evolved and disrupted the financial services industry (payments, banking, capital markets, insurance and wealth management). It has led to the rise of startups offering digital payment services that are disrupting the way old school banks offer services to customers. The increased adoption of AI, IoT and big data technologies has led to the development of enhanced techniques that help identify risks, create algorithm-based investment plans and platforms for users to optimize their banking portfolios. The rapidly evolving Fintech industry does present its fair share of threats and uncertainties. In my opinion the key security challenges to this industry are as listed below:

1. Data Security and Ownership: With the increase in the penetration of online banking services, enterprises are now able to accumulate huge volumes of customer related data. This data is available in digital formats, which makes it easier to analyze and generate insights but also makes the data more susceptible to security breaches. Also, the challenge of establishing the ownership of this data remains grave. Personal recommendation: Companies can overcome the potential threat of litigation by enforcing methods that securely dispose customer data once they have unsubscribed from the use of the said financial services.
2. Privacy: As organizations aim to provide an integrated omni channel experience to customers by extending a host of banking and payment services in a unified fashion, managing the digital identities of customers becomes challenging. Personal recommendation: While digital identities have become safer at one level, given the ubiquitous nature of their use in the evolving Fintech world, cloning of these identities can lead to greater risks. The use of mobiles as authentication devices and one time passwords can reduce the reliance on conventional authentication mechanisms such as passwords and PINs.

As increasing computing power becomes available to customers through smart devices, there is a greater need to revisit the conventional security models. The security architectures being deployed by organizations need to be modified and redesigned while taking into account these trends, as they have greater implications on the financial services sector. While security remains an integral part of Fintech solutions from the customers point of view, the liability for which lies with the service provider.

In conclusion, moving forward, security and data privacy are going to play a key role in winning consumer confidence and driving the adoption of Fintech.

Reference: https://www.pwc.in/assets/pdfs/consulting/cyber-security/banking/security-challenges-in-the-evolving-fintech-landscape.pdf