What Does Data Security Mean for Fintech Companies in 2024?
Data security is a major concern for every business in every industry, fintech inclusive. For enterprises in other industries, securing data might be an afterthought, but fintech companies do not have that luxury. In this blog, we’ll go over data security and what fintech security looks like in 2024. The nature of data the financial sector handles is too delicate to handle without a proper security system. We’re talking about credit card numbers, age, addresses, bank account numbers, etc. The damage one successful data breach can cause can’t be imagined. What’s data security? Data security is the process of safeguarding data against external threats to it’s confidentiality, integrity, and accuracy. Fintechs have to consider data security to fight against the constant and ever-evolving barrage of cyber threats. Besides cyberattacks, regulatory bodies like the GDPR mandate data security as a sign of compliance. So, to be on the safer side, every fintech needs to up their security game. Fintech Security: Overview of the Landscape The condition of fintech security is dire; in the first quarter of 2024 alone, lots of fintech companies became victims of malicious actors. The reality of these statistics further worsens as the onslaught of these attacks becomes more vicious with time. Cybercriminals come up with newer and better technologies faster than the fintech industry; it’s a wonder how we have any fintech companies left. For example, consider the use of artificial intelligence. While it’s a development with plenty of benefits, cybercriminals found use for it. With AI technology, malicious actors scan the data security system of the target company and find weak links frequently. The advancement of this tech makes it easier for them to compromise the system and wreck havoc undetected for a long time. Also, there are laws established to regulate data security like the GDPR, PCI-DSS, NDPA, and so on. With these come stringent rules like the GDPR requirements. So, aside from data breaches, reputational damage, loss of consumer trust, and poor fintech security attract fines and penalties from data protection laws. Nevertheless, the financial industry constantly puts up a fight—albeit not enough—and we look forward to better data security technologies. Now, let’s move forward. What does data security mean for fintech companies in 2024? Here’s a better breakdown of the fintech security landscape. Advanced Threat Detection and Prevention Yes, cybercriminals like hackers attack with more sophisticated technologies. But fintech companies counterattack with a better principle: prevention. Now, financial institutions employ technologies like AI that allow them to monitor their systems for suspicious activities. These tools act like a smoke detector in the sense that, before a data breach occurs, they alert the organisation of its potential. This way, cyber threats like ransomware and phishing are cut short before they cause damage. Although AI is a useful tool, fintech companies need to maximise its potential. How? By developing more AI models that predict vulnerabilities in the system rather than just detecting attacks in progress. That way, they can strengthen their weaknesses and give swift responses to cyber threats. Compliance with Regulations Fintech security got tougher with the enactment of several data protection laws. Governments are clamping down on personal data protection, and there are consequences to non-compliance. For instance, in the EU, organisations answer to the General Data Protection Regulation (GDPR) and it’s stringent requirements. The law enforces a large amount of money as a fine, and that’s on a lighter note. Apart from territorial laws, each industry has its own set of regulations, and the number keeps increasing. To keep track of compliance with the many laws, the best thing to do is hire a data protection service consultancy. These are organisations that help businesses achieve maximum compliance with data protection regulations. At Johan Consults, we carry out a detailed assessment of your company’s security system, measure it against the requirements, identify your weaknesses, and provide solutions to them. Contact us now for a free 30-minute consultation. Zero Trust Architecture Like the name implies, this data security model works on a “never trust, always verify” principle. Usually, any user or device in a fintech company can access all data held, but this principle kicks against it. This new practice now insists on proper verification before data can be accessed. It’s more like having to use an ID to enter a room in a secure building. The benefits of this architecture are many. Now, each employee, user, or device can access only the data they’re allowed, and lots of data breaches have been detected. End-to-End Encryption and tokenisation Since a data breach seems unavoidable, fintech security adapted to the terrain. Now, fintech companies employ data security practices like encryption: turning data into secret codes unreadable without the key, and tokenisation: replacing characters in data with random characters, e.g., replacing digits with asterisks in credit card numbers. So even if hackers get the data, they can’t access it. These practices keep payment information and other sensitive personal data from unauthorised access. User Awareness and Education Fintech companies understand that data security goes both ways: for the company and its customers. While individuals rely on the companies to protect their data, they fail to acknowledge their contributions. In 2024, fintech companies are changing the narrative by organising programmes that teach customers how to prevent breaches. Users are educated on how to spot phishing attempts and suspicious links and reduce the risks of being hacked by using multi-factor authentication. Identity Verification and Biometrics Fintech security in 2024 is tighter than ever before with the introduction of identity verification and biometrics. Fintech companies now use more than just passwords to verify identities. There are behavioural analytics that check and record how a user interacts with the system, which makes it harder for hackers to impersonate victims. In addition, they might require a fingerprint, analyse a typing pattern, or even the way someone holds their phone. It’s all for added security, and it’s yielding the desired results. Cloud Security and Data Sovereignty Instead of physical servers, many companies opt for cloud storage for data-online storage.
