A race began between the traditional payment providers and the nonbank competition disrupting the status quo.
Long gone is the age of weekly visits to your friendly neighborhood banker, as the industry has evolved significantly over the last decade. At the heart of the shifting finance sector are innovative companies, many from outside the banking ecosystem boasting ultimate convenience, next-level agility and the ability to adapt to an increasingly mobile, on-the-go lifestyle for a frictionless society, who are already overhauling even the most traditional aspects — payments, lending, insurance and more.
Regulations like PSD/PSD2, SEPA and IFR have only added fuel to that fire. It’s imperative that cutting edge cybersecurity is not buried by efforts to create innovative and revolutionary financial technology. Apathy toward security can have detrimental results, as highlighted by the recent bitcoin hack on the South Korean cryptocurrency exchange Coinrail, which caused a 5.6% drop to the value.
Beyond offering a buzzworthy new payments app or automating exhausting mortgage applications, for example, traditional payment providers and fintechs need to ensure that their business is resilient against increasingly sophisticated cybercrime and ready for a hyperconnected world.
For traditional payment providers and fintechs to be able to tout complete agility and advancement today, they must be able to accommodate the very serious security threats of tomorrow. To help streamline their imminent arrival into the market, many fintechs partner with established, trusted firms to help bring their ideas to life. These are often mutually beneficial relationships and are effectively leveling the playing field for banks and payments companies, creating an environment where embracing technology and innovation can help them emerge in a crowded market, secure new customers and stay compliant with changing regulations.
In the near future, consumers may never have to take out their wallets to hand over cash or swipe a card. When you leave a store, the cost of the items in your basket will be automatically charged to your bank account. Amazon has already successfully tested this out.
The same goes for buying gas, paying for parking, paying bridge tolls, etc., as your connected vehicle communicates with your bank account, as well as the city infrastructure surrounding it. However, with each new endpoint comes a new opportunity to compromise security — and there will be millions. How can you ensure your fintech is implementing cybersecurity that can support our future of digital payments?
There are a few constants to keep in mind, such as identity security. From the moment of issue, identities used as authentication must have security that reflects their intrinsic value and the risk that is associated with their use.
Also, transactions must be protected in accordance both with the requirements laid out by the governing bodies and with the value of each and aggregated transactions. All personal data must be protected in accordance with both industry governance and local law.
And last but not least: Any data at rest and in motion in or into the cloud needs to be secured.