Fintech
What fintech companies need to build a robust information security infrastructure
Fintech has grown at an astonishing rate in recent years. The future also looks promising as India makes steady progress towards adopting digital payments and other new-age fintech products. If the numbers are anything to go by, UPI closed fiscal year 24 on a high, setting new records in terms of transaction volume and value. In FY24, the UPI platform processed 13,115 transactions, totaling ₹199.29 lakh crore, compared to 8,376 crore transactions worth ₹139 lakh crore in FY23. During the year, the Transaction volume increased by 56.6%, while transaction value increased by 43.4%.
This astonishing growth figure shows the acceptance of fintech solutions by Indians, both in urban and rural areas, and also highlights the critical need to prioritize security in the fintech ecosystem against cyber attacks and other potential risks. Given the sensitive nature of information handled by the fintech sector, it always remains on the radar of attackers, making safeguards crucial. Furthermore, over time, cyber attacks have become increasingly sophisticated and organized, making it imperative for organizations to invest in this area.
Companies must have comprehensive cybersecurity strategies, employing advanced technological solutions to protect sensitive data and ensure the overall security of their services, operations and platforms.
Fintechs process a lot of sensitive data, including an individual’s personal details and financial data. This data serves as much-needed fuel to drive innovation and empower businesses with customized products that meet customer needs. On the other hand, it is this data that is targeted by cyber attackers and hackers, so that they can gain access to individuals’ finances.
Such incidents can cause irreparable damage to reputation and trust in the ecosystem and, in turn, lead to customer churn. Therefore, there is a need to focus on strengthening data privacy and cybersecurity in the financial landscape.
Here are some of the key points to keep in mind to ensure a robust information security infrastructure:
Assess risks and establish a robust security framework
First, it is essential to implement a comprehensive cybersecurity policy. This involves conducting a risk assessment, identifying potential vulnerabilities and implementing appropriate security controls. Second, the policy should be designed to ensure the protection of data and IT resources to prevent data breaches and should be used internally across the entire organization. Furthermore, this should be extended to suppliers, partners and other third parties. The main objectives that an enterprise must keep in mind should follow the framework of the CIA triad (confidentiality, integrity and availability). Organizations must evaluate and ensure that all security measures are in place for third-party integrations.
Fintech companies should prioritize encryption methods, multi-factor authentication, and secure coding practices to protect customer information and transactional data. The role of Chief Information Security Officers (CISOs) becomes increasingly crucial in shaping and ensuring a robust security landscape, as well as spreading it across departments.
In addition to establishing comprehensive cybersecurity measures, organizations should emphasize implementing robust information security protocols such as encryption and secure communication channels. These protocols provide a critical layer of defense against data breaches and unauthorized access attempts, ensuring the secure transmission of sensitive financial data. They should also ensure the protection of critical systems and sensitive information from threats and create a resilient infrastructure for operations.
It is important to note that risk assessment should not be a one-off activity and should be carried out from time to time to ensure that it takes care of any new vulnerabilities that may emerge. It goes without saying that relevant policies will need to be updated accordingly to ensure that fintechs offer a safe and secure environment.
Leverage artificial intelligence to improve system security
AI has served as an enabler for fintechs, driving innovation and customization across a range of products. It has also enabled cybercriminals to orchestrate cyberattacks and target sensitive data architectures. This value is only expected to increase in times to come as Gen AI and other evolved versions of AI take hold.
Fintechs must leverage AI to automate vulnerability assessments, stress tests, etc., as well as develop future-proof solutions that ensure systems and data are always protected from attacks.
Ensure regulatory compliance to mitigate legal and reputational risks
Regulatory compliance is critical for any fintech company. Here, Infosec leaders/CISOs play a critical role in ensuring that companies adhere to regulatory frameworks. Working closely with legal and regulatory teams, they ensure the organization complies with laws such as the Digital Data Protection Act and other relevant financial regulations and safeguard fintech companies from legal consequences or reputational damage. With their expertise, they ensure that fintech companies operate within legal boundaries and build trust with customers, partners and regulators, while mitigating compliance risks.
Employee training and awareness on cybersecurity
Fintech companies must build a culture that always places importance on information security. CISOs and information security leaders should lead from the front and play a crucial role in employee training and information security awareness. By developing cybersecurity training programs and conducting workshops and seminars, organizations will be able to educate employees about best practices, risks and their responsibilities in safeguarding sensitive data.
By promoting a culture of security awareness and empowering employees, they can ensure their employees are the first line of defense against cyber threats, contributing to the organization’s overall security strategy. It is also recommended to have a robust communications strategy to create awareness and reiterate the importance of ensuring the highest standards of information security. Companies should use various forms of communication: mailers, blogs, videos, etc., to educate employees and stakeholders about the importance of cybersecurity and the organization’s IT security policy.
Disaster recovery planning
In the event of a cyber attack, having a comprehensive disaster recovery plan is essential for fintechs. This will minimize downtime and ensure essential services are taken care of in the event of unexpected events.
In conclusion, at a time when the fintech sector is full of opportunities, it is essential to take every step possible to mitigate risks, build solid foundations and make the ecosystem safe and trustworthy. Fintech companies must foster a strong culture of security, implementing comprehensive strategies, policies and procedures that effectively safeguard valuable financial assets and preserve the trust of customers, partners and regulators.
By adopting advanced technologies, fostering a culture of security awareness, collaborating with industry stakeholders, and prioritizing regulatory compliance, organizations can shape a secure and resilient fintech ecosystem that instills trust among customers and strengthens the industry as a whole.
Ambuj Bhalla
Ambuj Bhalla is Head of Cyber Security at BharatPe