Importance of Cyber Security in India’s fintech sector
Financial Technology, also known as Fintech, which involves finance and the use of technology to ease & automate the process of Global market payment systems. This involvement includes mobile banking, UPI, cryptocurrency, electronic payments and automated security tradings.
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As this technological sector grows, the number of connected devices is also skyrocketing, Fintech is becoming cheaper and easy access in India before financial technology were monopolized by the banks and now it is accessible by private companies and wider audience with the reformation of Digital India movement.
This has the added boon of increasing innovation, decreasing the operational costs and improving the efficiency of financial institutions and simultaneously increasing the risks of cybersecurity because of inexperienced customers. According to 2017 “Global Fintech Report” stating 82% of financial institutions are expected to be a partner with Fintech firms within the next five years. We are encountering the same meteoric growth.
According to Financial Express :
The rapid change in digital payments in India have not only made digital transactions easy, but they have also made risk management an important focus area in the payment ecosystem.
Ramki Gaddipati, Co-founder and CTO, Zeta says, “Cyber-banking fraud is witnessing an upward trend, especially during recent times. A minor security breach affects the diligently built confidence of customers.”
The impact of COVID 19 increased the digital sector in India and according to NPCI (National Payments Corporations) UPI (Unified Payments Interface) is growing 8-10% in this situation with transactions more than billions in every month. Also, Currently, India has the highest volume of debit cards issued globally, with the approximately 816 million debit cards and more than 56 million credit cards. Hence, RBI has trying to mitigate card related frauds and other companies coming up with passwordless authentication by using 2FA (two-factor Authentication) to ensure the safety of card users. Also, banks have many awareness programmes and 24*7 customer service for its users and employees to fight against Card Scams.
Collaborating the technologies of bank and fintech startups in India have seen a huge transformation in the banking ecosystem and moving ahead for competitive perspective. The modern banking system, bank consumers started looking for value, services with security measures and convenience. This is how one of the finest fintech startup Signzy is leveraging to detect and prevent fraud by using AL and ML in real-time. Attackers coming up with new attack vectors and it is very important for Fintech companies to adapt and fightbacks from such attacks by making the machine learning algorithm continuously take feedback from humans and improving itself to become more and more accurate. Finance Sector should also adopt the blockchain technology, It doesn’t allow duplication or reversal of transactions. Also Cyber Security frameworks like NIST, RBI CyberSecurity Frameworks etc also helps institutions to reduce the internal and external risks.
The issue at PNB fraud case as Jesse Chenard (founder of MonetaGo) rightly pointed out that information and payments were relayed using two systems that were to some extent mutually exclusive, despite being related. This makes it difficult to spot fraudulent activities at first sight or quickly. If PNB’s banking systems followed the principles of blockchain and used it, there is a high chance that the scam would have been uncovered and even prevented immediately.
Source : yahoofinance
Reasons to adopt Blockchain technology :
- Blockchain is known as “Smart Contracts” with real-time transactions with the core of the bank’s records.
- Blockchain is Peer to Peer network, All activities are transparent and it doesn’t allow for Man in the Middle Attacks with a protective layer of the distributed verification system in real-time.
- Blockchain enhances machine learning algorithms to detect fraud and other features like digital signatures tampering.
One of the barriers I feel in the adoption of blockchain technology for Indian users will be accountable and responsible for their actions as we can’t reverse back the transactions. But adoption of blockchain technology in the financial sector will change, digitalize and make ease of transactions with limiting the risk factors.