As the fintech industry continues expanding, businesses are prime targets for cyberattacks. According to Gartner, by 2023, 75% of companies intend to adopt new solutions that combat the growing global cybersecurity issue caused by new technology challenges. How to do this without compromising user experience is critical. Delivering innovative and efficient security software is vital for fintech’s future.
According to Global FinTech Market 2021, the fintech industry was valued at around $7 billion in 2020 and could reach over $31 billion by 2026. Fintech and technology leaders are focused on strengthening their business from the increasing risk of cyberattacks.
Over the last few years, the typical, conventional business has transformed. As a hybrid working environment becomes the norm, all companies must remain vigilant of the potentially elevated risks of working remotely and in a more disconnected environment.
A study by IBM highlights the reputational loss resulting from leaking sensitive data and how it can significantly damage a business and its customers. It could result in further financial implications, aside from the cost of recovery.
While the value of the fintech industry is growing significantly, financial crime remains a trillion-dollar industry, despite the considerable investment allocated towards fraud detection and prevention. The financial implications for fintech start-ups can be huge, and they might never recover from an attack due to a lack of security systems and controls. Cybercrime can result in significant damage to data, customers losing money and impact employee productivity. The disruption leading after a cyberattack can be massive. It requires many resources to restore and recover hacked systems.
Cybercriminals are becoming very sophisticated with what technology they use for financial crimes and how to exploit and leverage emerging technology to generate multi-layered transactions that are extremely difficult to trace. When exploring the most critical trends in fintech, KPMG consultants highlight cybersecurity as a priority. The explosion in the digitalisation of financial services has amplified the problem. As a result, financial services businesses are becoming more knowledgeable about protection and expecting something from vendors that provides complete protection.
With political tensions rising in various regions, technology and fintech businesses are exploring new cyber solutions and establishing partnerships to strengthen their systems against possible online attacks. Analysts believe that some of the main reasons for this increase in vulnerability are a lack of available cyber talent and the significant rise in businesses shifting their workforce to a remote environment. The increased financial expense of cyberattacks, the sophistication of these incidents, and the migration to the cloud, have accelerated the problem further.
According to research by the think tank EndPoint Ecosystem, the general behaviour of finance employees in the current working world plays a big part in the increase in cyber threats. The study suggests that a little over 50% of finance workers believe security policies restrict the way they work, and 49% confess to finding a way to work around their security policies. A combination of poor password management, restrictive security policies and a lack of general security training are factors impacting possible cyber threats. Fintech professionals are, however, considered some of the most cyber aware compared to other industries. Companies are ramping up their cybersecurity efforts by implementing new and more innovative ID solutions. The current situation will not improve until users alter the behaviours that leave them vulnerable to possible cyberattacks. Cyber threats and investing in the security required to overcome them are now a top priority, but the solutions cannot impact the simplicity and efficiency of service. Facial biometrics have already proven to be a success and give some idea of the future of cybersecurity.
As global payment systems become less dependent on cash, the value of digital transactions will increase. This rise creates a growing opportunity for businesses to develop cybersecurity products and services. Companies are exploring new and more advanced technology to combat this rising threat.
Cyberattacks have become more sophisticated due to AI and self-learning software. Aside from protecting customer data, fintech providers need an effective cybersecurity strategy for their services. Many fintech businesses have shifted attention towards AI-powered technologies, such as biometrics, to ensure customers remain protected and continue delivering an efficient experience. Voice biometrics use intelligent algorithms to measure more than 1,000 voice characteristics. This technology can include analysing anything from pronunciation to the shape of the nasal passage to determine the authenticity of an individual. Behavioural biometrics measures even more specific details, such as how the customer holds their device or how they type. Both products can confirm the exact identity of someone instantly based on how they sound. Studies suggest that biometric engines need only a second to authenticate and personalise customer engagement. Businesses can identify a customer and personalise their interaction. Biometrics enables fintech businesses to strengthen their security plans, and customers won’t necessarily need to remember something specific. Instead, biometrics allows companies to validate an identity through unique, natural features.
Fintech companies are critical to enhancing the financial services industry, enabling value creation and reducing our reliance on central finance institutions. Fintech businesses must focus on protecting themselves, their customer data and money to ensure they can continue influencing the future of finance.