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What it takes for fintech firms to build a robust information security infrastructure
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Fintech has grown at an astounding pace over the last few years. The future also seems promising as India makes steady progress towards the adoption of digital payments and other new-age fintech products. If numbers are anything to go by, UPI ended FY24 on a high, setting new records in terms of volume and value of transactions. In FY24, the UPI platform processed 13,115 transactions, aggregating to ₹199.29 lakh crore, compared with 8,376 crore transactions worth ₹139 lakh crore in FY23. During the year, the volume of transactions was up 56.6 percent, whereas the value of transactions was 43.4 percent higher.
This astounding growth figure shows the acceptance of fintech solutions by Indians, across urban as well as rural India, and also underscores the critical need to prioritize security across the fintech ecosystem against cyberattacks and other potential risks. Given the sensitive nature of the information handled by the fintech industry, it always remains on the radar of attackers, making safeguarding measures crucial. Also, over time, cyberattacks have become increasingly sophisticated and organized, making it imperative for organizations to invest in this domain.
Firms need to have comprehensive cybersecurity strategies in place, employing advanced tech solutions to protect sensitive data and ensure the overall security and safety of their services, operations, and platforms.
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Fintechs deal with a lot of sensitive data, including personal details of an individual as well as financial data. This data acts as the much-needed fuel to drive innovation and empower businesses with customized products that cater to the requirements of the customers. On the other hand, it is this data that is targeted by cyber attackers and hackers, so they could get access to the finances of individuals.
Such incidents can cause irreparable damage to the reputation and trust in the ecosystem and, in turn, lead to customer churn. Hence, there is a need to focus on fortifying data privacy and cybersecurity across the financial landscape.
Here are some of the key points to keep in mind to ensure a robust information security infrastructure in place:
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Assess risks and establish a robust security framework
Firstly, implementing a comprehensive cybersecurity policy is essential. This involves conducting risk assessment, identifying potential vulnerabilities, and implementing appropriate security controls. Secondly, 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. Additionally, this should be extended to vendors, partners, and other third parties. The core objectives that an enterprise needs to keep top of mind should follow the framework of the CIA triad (Confidentiality, Integrity, and Availability). Organizations need to assess and ensure that all security measures are in place for third-party integrations.
Fintech firms 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 driving this across departments.
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In addition to establishing comprehensive cybersecurity measures, organizations should emphasize the implementation of 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 against 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 done from time to time to ensure that it takes care of any new vulnerabilities that may come up. Needless to say, the relevant policies will have to be updated accordingly to ensure that the fintechs are offering a safe and secure environment.
Leveraging Artificial Intelligence for enhancing system security
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AI has served as an enabler for fintechs, aiding innovation and personalization across a range of products. It has also empowered cybercriminals to orchestrate cyberattacks and target sensitive data architectures. This is only expected to increase in the times to come as Gen AI and other evolved versions of AI gain steam.
Fintechs need to leverage AI to automate vulnerability assessment, stress testing, etc., as well as to develop future-proof solutions that ensure the systems and the data are protected from attacks at all times.
Ensuring regulatory compliance to mitigate legal, reputational risks
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Regulatory compliance is critical for any fintech firm. Here, Infosec leaders/CISOs play a vital role by ensuring the firms adhere to regulatory frameworks. By working closely with legal and regulatory teams, they ensure that the organization follows laws like the Digital Data Protection Act and other relevant financial regulations and safeguard fintech firms against legal consequences or reputational damages. With their expertise, they ensure that fintech companies operate within legal boundaries and build trust with customers, partners, and regulators while mitigating compliance risks.
Training employees and raising awareness of cybersecurity
Fintech firms need to build a culture that gives importance to information security at all times. CISOs and Information Security leaders should lead from the front and play a crucial role in training employees and raising awareness of information security. By developing cybersecurity training programs, conducting workshops and seminars, organizations will be able to educate employees on best practices, risks, and their responsibilities in safeguarding sensitive data.
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By fostering a culture of security consciousness and empowering employees, they can ensure that their employees are the first line of defense against cyber threats, contributing to the overall security posture of the organization. It is also recommended to have a robust Communication strategy to create awareness and reiterate the importance of ensuring the highest standards in 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 cyberattack, having a comprehensive disaster recovery plan is crucial for fintechs. This will minimize downtime and ensure essential services are taken care of in case of an unforeseen event.
To conclude, at a time when the fintech industry is brimming with opportunities, it is essential to take every step possible to mitigate risks, build a strong foundation, and make the ecosystem secure and trustworthy. Fintech firms need to 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](https://assets.techcircle.in/uploads/author-image/2024/05/images/1014-31839-ambuj-bhalla-ciso-bharatpe.png)
Ambuj Bhalla
Ambuj Bhalla is Chief Information Security Officer at BharatPe