Data protection and privacy came into limelight after right to privacy was recognized as a fundamental right enshrined under Article 21 of the Indian Constitution. Major data leaks such as Facebook data breach and Aadhar data leak further brought to fore concerns about protection of data, current infrastructure and state of affairs with regards to cross-border data sharing.
While the concerns regarding privacy and data protection do remain at the centre of the issue, it is needless to say that the data of the consumers provided to the fintech entities needs to be protected alongside ensuring the growth of the fintech industry.
The term fintech encompasses financial innovation enabled by technology that results in new business models, applications and processes with an associated effect on institutions, financial markets and the provision of financial services. As the name suggests, the fintech industry aims to bring technological innovations to the financial and banking sector. The fintech industry in India has seen a significant boom because of demonetization coupled with the government’s push towards increasing use of e-payments in the country. The digital payments sector with its remarkable growth is further expected to reach $700 billion by 2022.
Growth of fintech Vs data privacy and security
Data privacy and security is vital to the financial sector as it handles tons of sensitive information about individuals and enterprises. The exponential growth of FinTech has enabled easy accessibility of data in digital formats thus ensuring that the data is now readily available to generate more insights which makes it vulnerable to security breaches. Mobile banking has further compounded the problem by bringing in tremendous amounts of data related to personal, financial and health information being exposed to third parties.
With the fintech industry fuelling the growth of startups in the country and disrupting the services provided by traditional banks, there is an urgent need for upgrading the security standards in the sector. The wealth and asset management industry has undergone a revolution with algorithm-based investments, improved methods of identifying and quantifying risks and provided users with defined platforms to optimize their portfolios. All this and more has been powered by fintech firms which in turn has transformed the payments and money transfers by 'smart' contracts development and eliminating all middlemen.
In addition, increasing globalization, disposable incomes and digitization have further contributed to this evolution and growth of the industry. All this has put additional pressure to re-evaluate the security standards currently applicable to the fintech sector.
Way forward
As fintech continues to see an upward trend, cybersecurity becomes all the more important in its growth. It is not hard to anticipate the extent of damage caused by a single cybersecurity breach to any business, therefore, fintech organizations need to consider new trends in their security architectures.
With the future holding great prospects for the fintech industry, security and data privacy becomes all the more vital for its growth as the two are known to play a key role in winning over consumer confidence, catalyze innovations and boost the development of fintech.
(Jitin Bhasin is Founder & CEO, SaveIN)
