When exploring such broad concepts like cybersecurity in the financial sector, there is quite a lot to mention and reflect upon. This is especially true as we come into the second decade of the 21st century where, especially in the last year or so, most essential human transactions have transitioned to cyberspace. Cyberspace -or simply the internet – has always been a double-edged sword. Only recently is the world coming to grips with the fact that we literally cannot function without this network that binds us together. With such a revolutionary tool, there are also always dangers threatening to disrupt it. For the internet, the danger is the threat of constant cybercrime, lack of knowledge, awareness, and education in the industry as well as political tension between nations. Major laws and regulations have had to be passed to control the influx of problems related to our relationship with the internet. All of these factor into the question of whether the internet is safe anymore, reaching as far as the morality and ethics of fundamental human rights such as our safety, and privacy online.
We have come to a point where we entrust our existence to the internet with fundamental things like our entertainment, well-being, and of course our finances. The finance industry is much more widespread and developed than it ever was, with the advent of digital currency and instant transactions being the norm today. With this in mind, cybersecurity is also an integral part of the finance industry. It is therefore important to consider the relationship between finance and cybersecurity, as well as look at the current and upcoming trends related to this area to arrive at some useful conclusions on the ongoing debate concerning fintech trends.
What is Fintech?
Financial technology, or Fintech as it is called, is a term that describes technology development in the finance industry. These developments, or innovations, are factors such as how financial services are delivered, their automation, and the management of financial operations for both individuals and businesses. Fintech refers to technologies that facilitate these elements such as the software and algorithms applied to computers and smartphones. Fintech is a rather modern term and has taken hold as financial technologies now apply to consumers globally. It has allowed for the proliferation of personal finance on computers and smartphones, for example. With that, many industries and sectors such as the fundraising sector, retail banking, and even education benefit from various fintech applications. For example, cryptocurrency is a division of Fintech. Industry experts believe that innovations and research will lead to a distancing from traditional financial practices.
What Does Cybersecurity Mean?
Cybersecurity is a combination of the words ‘cyber’ deriving from ‘cyberspace’ and security. It relates to the protection of devices in the digital realm. This can broadly mean the protection of networks, software, systems, and anything related to connected devices. Cybersecurity solutions, for example, mean the services, tools, technologies, training surrounding the protection of connected systems. Cybersecurity solutions that we use today range from antivirus, antimalware and anonymization tools like Virtual Private Networks, or VPNs. With a risky internet landscape like today that is filled with cybercrime, cybersecurity is there to protect businesses and individuals from scams, fraud, cybercriminal attacks as well as introduce training and awareness relating to general online safety.
Cybersecurity Trends in Fintech
Financial technology, or Fintech has risen in use and importance following the Covid-19 global pandemic. Due to isolation and physical distance requirements, individuals and the business landscape have had to quickly adapt to new financial practices. After 2020, statistics revealed a large uptick in the use of touchless and remote payments all over the world. The number of transactions utilizing Fintech is only growing more each day and is forecasted to keep doing so.
According to further research by Statista, 66.7% of global bank executives believe Fintech “will impact wallets and mobile payments globally”. Furthermore, over 65% of the U.S. population will transfer to digital banking by 2022, and 38% of their loans will be handled by Fintech businesses. Most senior banking executives also firmly believe that “collaborating with Fintechs and Bigtechs to create new services was an important opportunity for banks”.
Fintech, especially during the pandemic now allows;
- Contactless ways of financial transaction
- Remote payment services all over the world
- The use of smartphones to conduct financial transactions
- Increased security for financial transactions due to encryption
- Instant payments and transfers via financial apps and platforms
Cybersecurity and Fintech
Fintech trends show that the industry will increasingly rely on technologies such as Artificial Intelligence and cloud storage as we transition into a Fintech 3.5+. This 3.5+ tier refers to how the technology has now advanced to incorporate changes in consumer behavior and how the developing world is accessing the technology. These factors will require a large amount of cybersecurity around them. Fields such as insurance, banking, personal loans, wealth management, and electronic payments have all transitioned to Fintech solutions in some shape or form.
In the future, since Fintech will make more and more use of big data (refers to the vast amount of data being analyzed by AI), that is where cybersecurity will come in. Machine learning (ML) and artificial intelligence (AI) are an enormous part of the future of Fintech, as well as countless other disruptive industries. The proposed cybersecurity solutions for Fintech in the future are the following;
- DevSecOps meaning development security operations where cybersecurity is included in all stages of Fintech product planning to ensure better efficiency and safety
- Continuity Planning, a process where a company will undergo recovery and prevention management to avoid cyber-attacks and natural disasters
- The implementation of cybersecurity roles such as CISOs, or Chief Information Security Officer positions will benefit cybersecurity strategy
- The use of AI and ML to analyze humanly impossible amounts of data that will benefit the cybersecurity prevention programs in the digital finance world
Cybersecurity will be essential in the future as we give birth to more and more disruptive, revolutionary technologies. Unlike before, cybersecurity now has a solid strategic presence to fend off everything from advanced ransomware attacks and to place awareness on employee training leveraged towards a quicker, more complex world. Fintech will need cybersecurity as much as it needs artificial intelligence and machine learning to become something truly great.
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