Out of everything technology has improved in our lives, security remains the industry most improved. VPNs, firewalls, proxies, antivirus programs: all of these keep us secure in our day-to-day lives whenever we’re online.
And while I can go on and sing the praises of security software, some people worry that our reliance on technology is a bad thing; specifically, institutions such as banks and credit unions.
But how could a reliance on security software hurt us? Well, it’s complicated. Overreliance can definitely hurt these institutions, though it’s not as if it’s an avoidable problem. As technology evolves, new problems manifest to replace old problems. This situation is no different.
Fintech firms are becoming increasingly common. Now, when I say fintech, you may not think you know what I’m talking about, but you definitely do; fintech is just a fancy name for services like PayPal, Venmo and even cryptocurrencies.
We use these fintech products all the time, and the financial industry has been affected by it. But, out of all problems facing the financial industry, perhaps the biggest risk is cybersecurity.
Like I mentioned at the beginning of this article, new problems arise as technology evolves, and the fintech industry is no exception. However, many of us use fintech on a regular basis, so yes, we are a bit over-reliant.
But why is this such a bad thing? Is it really overreliance, or is it just us adapting to what we’re given?
If you searched for data breaches of traditional banks, you will find a lot of news stories. Traditional banks do not hold a reputation of being good with user data; in fact, I’d say it’s the opposite.
However, fintech companies aren’t exactly innocent of security issues either. If you want an example, take a look at the Equifax breach in 2017, where 143 million accounts were compromised.
Despite both having issues, fintech companies will come out on top when it comes to security issues. Sure, fintech companies being based online can hurt security, but there’s a tradeoff: adaptation.
See, there’s an upside to being online-based, and it’s that the program or company can adapt to security issues or concerns quicker than a traditional bank. Once a fintech company gets a whiff of suspicious activity, they can quickly send out a patch or hotfix and call it a day.
Though, an online-based system remains vulnerable to security threats, so how can fintech companies improve their security without foregoing the convenience they offer?
If fintech companies want to avoid becoming the next Equifax or Capital One, they’re going to need to make some upgrades, mostly in the application sector.
Most fintechs use apps to rope in a userbase since apps are more convenient than logging in through a browser. However, applications, if not tightly secured, become magnets for cybercriminals.
Fintech companies must ensure that their applications–and software in general–remain secure, which, besides a few incidents, they’ve been pretty good about.
Cloud security is also becoming a major talking point in the fintech circle since fintechs rely on cloud services to store data and increase the performance of their servers. However, a cloud is an amazing access point for a cybercriminal, so this is one major area in which fintechs must pay attention to.
Other than these two, all fintechs can do is keep up with cybersecurity, which again, they do a pretty good job of. If they want to do better though, it’d be wise to incorporate security software such as VPNs and antivirus software, just to name a couple.
As the world transitions to fintech companies over the traditional bank system, it’s natural that there will be a few kinks to work out, and security is no exception. However, as time goes on, I’m confident that fintechs will become shining stars in the future of finances.