Fintech companies are witnessing major growth nowadays because they are disrupting traditional banking services. People can now get banking services just from their smartphones and there is no need to visit a physical bank. The recent coronavirus outbreak has also forced people to adopt the digital method for payment/transactions.
People can now shop, book rides, and do many things with the help of fintech services. They also have access to their financial records more than ever due to fintech companies. The risk of hacking & fraud is also associated with fintech services and fintech players have to ensure that they secure their user’s transactions.
Let us how fintech ensures the security of transactions.
How does Fintech Work?
Fintech services can be availed via smartphone. One can download the mobile application through which fintech services are provided. Each fintech user has a unique ID and bar code. By using the two-factor authentication system, one can make payments to others. Some fintech applications also use Bluetooth for connectivity.
In the case of online bank transfers, the transferred money is encoded in multiple layers before it goes on the internet, and when it is received by the recipient’s bank, the information is decoded and is deposited in the receiver’s bank as currency. Fintech also provides online insurance and loan facilities.
Technologies like artificial intelligence, machine learning have helped in collecting the financial data of any user and analyzing it. Once you apply for a loan online, your credit history & credit score will be checked via smart back-end algorithms and if you are eligible, your loan request will be passed.
The online transfers also provide confirmation mails & calls on the successful transfer of money to notify both the parties i.e. the receiver & the sender. Many independent agencies like Automated Clearing House (ACH) also help in securing financial data transmission via online medium.
Security Measures in Fintech Services
The security measures adopted by fintech companies to secure the transactions are as follows:
- Data encryption is a key feature in fintech services. They encrypt data using symmetric or asymmetric means of encryption and it is decoded at the receiver’s end. If somehow some hacker/fraud tries to access the data in between transactions, the hard encryption makes it impossible to access sensitive information like account number, banking password, etc. The most used encryption techniques by fintech firms are the Advanced Encryption Standard (AES), Rivest-Shamir-Adleman (RSA), Triple Data Encryption Standard (TripleDES), Twofish, etc.
- Management of third-party services is very necessary to enhance the security of transactions. For example, one can book a cab using some fintech application and the payment will be automatically deducted from your e-wallet on the completion of your ride. The firm needs to have a strong interface so that third-party services are secure. The interface and architecture must be very secure.
- Fintech firms use pair programming to ensure quality coded mobile applications. A messy and buggy code is very easy to hack.
- Secure identity verification & authentication is ensured by fintech firms. They use various approaches like Role-based Access Control (RBAC), Password Expiration, Session Timeout system, etc.
- Meaningful data is turned into random strings via tokenization which helps in increasing the security of data. It is an important process used by fintech firms to secure their users’ data.
If you are thinking to start a Fintech career, you must be aware of the security processes because security is the main aspect of fintech services. The sensitive information of clients should be preserved in all circumstances. This was all about the security measures in fintech services.