To promote the fintech industry's growth, a balanced innovation is required that reduces the hidden risks of these services.
Fremont, CA: The fintech services have transformed, automated, and disrupted the industry for the better. But here are still some issues that need to be addressed, like the concern for data security in the implementation of fintech services in the existing banking solutions.
Here are five hidden risks that are prevailing in the fintech industry.
New Encryption Technology
With the rise of disruptive technologies, the performance of the finance industry has enhanced. But these technologies also create major issues in the industry. For instance, blockchain has opened some security concerns as it can be easily hacked. Transactions in blockchain are based on trust between two or more parties, but the trust is not often kept.
Data Integrity Risks
Today, customers can use mobile phones to access their accounts and transfer funds. But if financial firms use mobile devices without a secure encryption algorithm, integrity issues may arise.
Cloud-based Security Risks
Cloud-based solutions do not have proper security measures that can corrupt financial information. Companies with inefficient cloud-based solution partners deal with substantial data losses. Hence, it is wise to update and be wary when selecting a cloud-based service provider.
Most banks use the Society for Worldwide Interbank Financial Telecommunication system (SWIFT) to exchange crucial financial information more securely. But the advancement of hackers can be seen by a recent attack on one of the SWIFT infrastructure. As banks and financial firms have loopholes in their processes, hackers take this opportunity and launch malware attacks.
Application Security Risk
Banks used fintech apps to access real-time financial details of their customers. Still, if software applications have no comprehensive security modules and efficient codes, they instantly become vulnerable to cybercrimes. Therefore, when creating a fintech software solution, ensure that it includes all the essential features to prevent hackers from stealing customers' data.
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