On a Fintech Platform, Digital Trust and Safety

The financial technology (Fintech) market is growing at a rapid pace, with new, innovative businesses improving banking and financial services like never before. According to Market Data Forecast, the fintech market will be worth $324 billion by 2026, with a compound annual growth rate of 23.41 percent.

As the industry expands, fraudsters evolve at the same rate, making it difficult for financial institutions to implement the best tools and protect their company and customers.

On a Fintech Platform, Digital Trust and Safety

Customers remain skeptical as a result of financial institutions’ slow implementation of tools.

According to the May 2021 BIS survey, US households trust traditional banking institutions more than Fintech to protect their data. As a result, it is critical for the FinTech industry to bridge the trust gap and secure people’s data.

The Indisputable Asset of FinTech

Big data, digital ID, and open banking are the first technologies that come to mind when thinking of Fintech. These tools open up new avenues for digital transformation in the financial sector. However, getting people to try out the products created with these Fintech innovations necessitates their trust.

Furthermore, trust gaps can occur at any level of the digital banking ecosystem, such as between users and platforms, platforms and sectors, or sectors and technology providers. However, as evidenced by the above-mentioned statistic, consumers trust traditional banking institutions more than fintech institutions, making it critical to approach Fintech solutions holistically.

Creating Your Fintech Solution

Before developing a solution for your Fintech company, you must first determine whether the user experience you are providing is appealing to people on both a rational and emotional level. If your fintech product is meaningful, how you ensure credibility and functionality, as added by your technology partner, will signal trust.

To incorporate trust into Fintech products, each stage of product development, such as user experience, critical feature development, business analysis, and so on, should be built on a trustworthy foundation.

Consumer Risks in Fintech

Customers face numerous risks in the fintech industry. These risks are broadly classified as compromised data security and the use of non-transparent data to both regulators and consumers.

The loss of privacy, rising fraud and scam risks, discriminatory uses of data analytics, and consumer behavior manipulation are undeniable.

In these cases, there is a risk of entering the financial regulatory space with only rudimentary operational knowledge.

One of the most significant risks for consumers will be the loss of privacy and data security

Loss of privacy and data security are inextricably linked and raise different concerns depending on the data being accessed and how sensitive the information is.

Banks are already vulnerable to data breaches as a result of siloed IT systems

The expansion of these activities ushered in the era of “Crime as a Service,” with playoff technology built on SaaS.

When it comes to Fintech risks, aside from cyber-insecurity, some vulnerable consumers have also experienced fraud and scam risks. And the rate of online scams and fraud is increasing by the day, as is the creation of fake identities online—at the moment, fake I.Ds is much easier to create online than building your own real-life identity.

So, how can fintech platforms gain consumers’ trust while also providing safety? Let us investigate.

Methods for Increasing Trust and Safety on Fintech Platforms

Despite being the target of cybercriminals, the fintech industry has been staunchly opposed. With the help of new tools and technologies, Fintech companies are working to build trusting foundations for their customers and instill safety on the platform.

Artificial Intelligence Fraud Detection

Artificial intelligence (AI) is a broad field of information technology that aims to create intelligent machines that can perform tasks that would normally require human intelligence.

In the Fintech industry, for example, AI collects data, analyzes information, and secures and facilitates transactions.

AI’s broad range of applications includes customer service, credit risk assessment, decision making, and, most importantly, fraud detection.

AI and machine learning systems analyze customer and business data to assist the Fintech industry in identifying vulnerabilities and ranking client risks.

Due to AI’s ability to analyze a large volume of transactions, it can be used to reject or flag transactions for further investigation. Furthermore, an ML model can be used to predict behavior at a granular level across all aspects of a transaction in order to detect fraudulent activity.

As a result, FinTech leaders such as Visa are moving toward AI and machine learning strategies to predict and control financial fraud.

Improved Cybersecurity

Failure to prioritize cybersecurity in the Fintech space can result in serious risks. Fintech organizations should know their assets and implement a layered security strategy so that if one protocol fails, it does not affect other protocols in order to build more robust cybersecurity.

To accomplish this, cloud solutions, multi-factor authentication, and IAM can be used (Identity and Access Management).

Blockchain

Blockchain is a network-based digitally decentralized and distributed ledger. It’s made up of immutable blocks. Blockchain is a distributed ledger that distributes transactions across different blocks or nodes that cannot be changed.

Any unauthorized access alters the hash links and causes a mismatch between the nodes, making the Blockchain extremely secure. Blockchain protects a fintech organization’s data and provides them with an added benefit.

Blockchain networks’ decentralized nature eliminates costly, unnecessary workflows and processes. Needless to say, Blockchain can prevent data breaches and other fraudulent activities in fintech services, thereby reducing fraud and cyber-attacks.

Regtech

Regtech, or Regulatory Technology, assists financial institutions in effectively meeting regulatory requirements. It uses AI and machine learning to automate routine tasks such as fraud and risk management, regulatory rewriting, real-time reporting, data analytics, and decision making.

This technology aims to keep Fintech in compliance with regulations. Regtech works by automating regulatory changes, monitoring transactions, generating reports, and alerting compliance personnel to potentially fraudulent transactions.

RegTech’s critical characteristics include speed, agility, integration, and analytics.

SASE

Secure Access Service Edge (SASE) is a network architecture that converts SD-WAN into cloud service. Simply put, SASE combines the benefits of software-defined wide-area networking (SD-WAN) with security to provide them as a service.

SASE simplifies authentication, increases scalability, supports zero-trust networking, security convergence, and simplifies management for fintech organizations.

In short, using SASE in the fintech industry can improve the security of their cloud-based infrastructure application and prevent unauthorized access or abuse of sensitive customer data.

Testing is another important factor to consider when developing fintech applications. Testing should take place throughout the development cycle.

To test the application’s security, you’ll need to assemble a security testing team capable of creating realistic scenarios of data breaches or other scams and improving the application’s security.

The fintech security testing team will also conduct penetration tests to detect potential vulnerabilities, as well as a security audit to detect flaws, verify the effectiveness of security measures, and assess regulatory compliance.

Last Thoughts

Fintech can be made safer by keeping an eye on the circumstances driving its adoption, breaking free from outdated security transactions that no longer fit its current direction, and taking a new approach to data security through transparency.

Commerce, trust, and the digital economy will be more resilient and trustworthy if we learn the right lessons.

In a crowded market, analyzing user behavior to combat fraud for Fintech or similar platforms becomes critical for the service. As a result, it should be stated as clearly as possible in order to raise customer awareness and consideration.

The Difficulties of Being a Fintech Industrialist

To overcome the challenges of Fintech industrialists, security trends such as Machine Learning and AI for faster fraud detection can be used. Furthermore, use Blockchain to keep data transparent while also secure.

Don’t forget about IoT for smarter cybersecurity in order to create safe and dependable Fintech products and solutions.

Only by integrating these security technologies will the Fintech industry be able to demonstrate its true potential across the marketplace and earn the trust of its customers.