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New businesses are creating innovative financial services and banking solutions that will make the Fintech market more competitive. The Market Forecast predicts that the fintech market will grow at 23.41% annually to $324 billion by 2026.
The industry is growing steadily and fraudsters are evolving at the same time, making it difficult to provide the best tools for protecting customers and companies to financial institutions.
Digital Trust and Safety on Fintech Platform
Customers remain skeptical because financial institutions are slow to implement tools.
According to the BIS survey, May 2021, US households trust traditional banks more than Fintech for protecting their data. It is therefore crucial for the FinTech industry that they bridge the trust gap to secure people’s data.
Trust: FinTech’s Undisputed Asset
When you think of Fintech technologies, Big Data, digital ID and open banking come to mind. These tools open up new possibilities for digital transformation in financial services. To get people to test out these Fintech innovations, they must trust you.
The trust gap between users and platforms, sectors and providers of tech can also occur in digital banking. As you can see, consumers trust traditional banks more than fintech institutions. Therefore, it is important to approach Fintech solutions holistically.
Fintech: Designing your solution
Before you can design a Fintech solution, it is important to understand the emotional and rational appeal of your offering. Your technology partner will help you to signal trust if the fintech product that you offer is meaningful.
Trust is key to Fintech products that combine trust and innovation. Each stage of product development should have a trusted foundation, including user experience, critical feature, business analysis, and business analysis.
Trust is key to Fintech products that combine trust and innovation. Each stage of product development should have a trusted foundation, including user experience, critical feature, business analysis, and business analysis.
Fintech Risks for Consumers
Customers in the fintech sector face many risks. These dangers can be broken down into compromised data security and non-transparent data for regulators as well as consumers.
Undisputed are the risks of losing privacy, increasing fraud and scams, discriminatory data analytics and manipulation of consumer behavior.
These cases could lead to a lack of operational knowledge in the financial regulatory environment.
Privacy and data security breaches will pose a significant risk to consumers.
Privacy and security breaches can lead to different concerns depending on what data is being accessed, and how sensitive it is.
Banks already face data breaches because of siloed IT systems.
These activities led to the “Crime as a Service” phase, which was a playoff technology based on SaaS.
When it comes to Fintech risks, there are many other risks than cyber-insecurity. Some vulnerable consumers have also been exposed to fraud and scams. Online fraud and scams are increasing at an alarming rate. It is also easier to create fake identities online than your real identity.
What are the best ways to win consumers’ trust and provide safety on fintech platforms? Let’s see what we can do.
How to Get Trust and Safety on Fintech Platform
The fintech industry strongly opposes cybercriminals being at the centre of their attention. Fintech companies are working to create trustable foundations for customers and ensure safety on the platform with the aid of new technologies and tools.
AI Fraud Detection
Artificial Intelligence, also known as AI, is a broad branch of information technology that seeks to create intelligent machines that can perform tasks that normally require human intelligence.
AI is used in Fintech to collect data, analyze it, and secure transactions.
AI can be used for customer support, credit risk assessment and decision making. But, the most important purpose is fraud detection.
AI and ML systems use customer and business data to identify vulnerabilities and rank clients at risk.
AI is capable of analysing large volumes of transactions and can reject transactions or flag them for further investigation. An ML model can also be used to predict fraudulent behavior by analyzing all aspects of a transaction.
Visa and other FinTech leaders are moving towards AI and machine-learning strategies to prevent and control financial fraud.
Smarter Cybersecurity
Critical risks can be created by failing to prioritise cybersecurity in the Fintech sector. Fintech companies should be aware of their assets and develop a layered security strategy to ensure that any protocol that fails doesn’t affect the other. This will help build stronger cybersecurity.
This can be achieved by using cloud solutions, multifactor authentications, and IAM.
Blockchain
Blockchain is a distributed digital ledger that can be used across networks. It is a collection of immutable blocks. Blockchain allows transactions to be distributed across blocks and nodes that can’t be altered.
Unauthorized access to the Blockchain will alter the hash links and cause a mismatch between nodes. This makes the Blockchain highly secure. Blockchain offers additional security and benefits for fintech organizations.
Blockchain networks are decentralized, which eliminates unnecessary and costly workflows. Blockchain can prevent data breaches and other fraudulent activities. It also helps to reduce fraud and cyber-attacks on fintech services.
Regtech
Regtech, or Regulatory Technology, helps financial institutions comply with regulatory requirements efficiently. It uses AI and ML for routine tasks such as fraud and risk management, regulations revision, real-time reports, data analytics and decision making.
This technology is designed to make sure Fintech adheres to regulations. Regtech automates regulatory changes, monitors transactions, generates reports and alerts compliance staff about possible fraudulent transactions.
RegTech’s key characteristics include speed, agility and integration.
SASE
Secure Access Service Edge (SASE), a network architecture that transforms SD-WAN into a cloud service, is called Secure Access Service Edge. SASE combines the benefits of software-defined wide area networking (SDWAN) with security to provide them as a facility.
SASE is a simplified authentication system that simplifies the management of fintech companies.
SASE can be used in fintech to increase security and protect customer sensitive data.
Testing
Testing throughout the development process is another important aspect of developing fintech apps.
You will need to create a security testing team capable of imagining realistic scenarios of data breaches and other scams in order to test the security of the application.
The fintech security team will also conduct penetration tests to identify potential vulnerabilities. They will also perform a security audit in order to find flaws, assess regulatory compliance, and verify security measures are effective.
Final Thoughts
Fintech can be made more secure by paying attention to the circumstances that led to its adoption, avoiding outdated security transactions that do not fit its current direction, as well as being transparent about data security.
We can learn valuable lessons that will make commerce, trust, as well as the digital economy more resilient and trustworthy.
It is essential to analyze user behavior in order to prevent fraud on Fintech platforms or similar platforms. Customers should understand and consider it.
Also read: How to Start An E-commerce Business From Scratch in 2022
The Fintech Industrialist’s Challenges
Machine Learning and AI are security trends that can be used to detect fraud faster, helping you overcome the challenges faced by Fintech industrialists. You can also use Blockchain to secure data while keeping it transparent.
For safe and reliable Fintech solutions and products, don’t forget IoT.
The Fintech industry will only be able to show its true potential and gain the trust of its customers if it integrates these technologies for security.
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