Over the past decade, we have witnessed several technological advancements, from more straightforward banking solutions with mobile banking to relatively simple transactions, investment, and borrowing solutions. On the rise of the day, there is something new for everyone to explore digitally. Among everyday errands, ‘FinTech,’ also known as Financial Technology, makes numerous things easier to manage. While the industry has existed for such an extended period, some significant issues like cybersecurity remain unresolved because people still find FinTech relatively new and are new to its functioning. However, if not addressed, these problems could lead to major mishaps in the future.
Numerous thefts and hacks occur due to data breaches, and the primary reason behind these is the lack of adequate security levels. Accelerating in-house protection is required by law for banks, but FinTech businesses are relatively free from these requirements. As a result, companies like Razor pay have lost INR 7.38 Crore, as a hacker was able to access the data, and several instances like this make it difficult for Indian users to trust their banking applications.
How does the lack of cybersecurity affect India’s FinTech businesses?
Establishing trust is crucial for every business, and where the involvement of money is at a big stage, a company is in itself bound to serve accountably. As essential as FinTech services are globally, so is cybersecurity for the FinTech industry. With improved security, it will be possible to win over people who are hesitant to use digital solutions when their money is on edge. India is a dynamic market rapidly evolving in terms of digitalisation; FinTech businesses cater to the requirements of over 8 million consumers, and this number only seems to be increasing daily.
In the recent light of events, it is clear that Indians have welcomed several payment gateways, including the country’s one-of-a-kind United Payments Interface (UPI). India was also ranked second-highest in FinTech adoption rate amongst 20 global markets, wherein 52% of the target audience willingly uses online software and platforms. If these many people remain unsure of using FinTech services, it will directly create a barrier in the country’s digital revolution.
Crucial regulations for FinTech businesses in India
In addition to the importance of one-time passwords and UPI pins for digital transactions, the industry, and the RBI inform people about the dangers of revealing these numbers to strangers or unauthorised parties. The government has also included the concept of tokenisation as an additional security measure, but this seems to be insufficient. Therefore, General Data Protection Regulations (GDPR) are imposed to eliminate such issues in the future, and a ‘Compliance Approach’ is implemented by the RBI, wherein companies will prepare working group reports with the stakeholders’ consultation for time-to-time monitoring.
If situations worsen, the company is liable to pay for damages if they fail to follow the protocols and protect the data for any reason as per Section 43A of the Indian IT Act 2000. With such regulations, the RBI ensures that the public’s trust is well-maintained in all circumstances and that India’s FinTech industry significantly booms with the evolution of technology.
India tackles data breach with improvised security levels
These days, all crucial and quintessential data is encrypted and secured in a relatively more challenging format for the hacker to procure. Additionally, companies establish different cyber strategies during the early development stage of the software and make sure to adopt a role-based access control (RBAC) system, through which not all employees can access the data, tightening both the internal and external security. Rest assured, with compatible laws, companies even draw third-party vendor agreements with strict rules that make data breaches impossible in commercial partnerships.
FinTech is one such sector that requires establishing faith amongst the audience to sustain itself in the long run. It is not only a pillar of support to the finance sector but is also an essential consideration for the technology sector. The use of digital banking platforms will increase with properly maintained security measures, which will also protect the neat reputation of FinTech service providers. With established trust, adequate data protection, and smooth functioning, it is definite that the FinTech industry will have stable growth in the country.
Views expressed by Amit Nigam, Executive Director and COO, Bankit.