BackFintechs must brace for rising cybersecurity challenges
Globally, fintech firms saw 2.5 times more attacks in Q1 2022 than in the same quarter the previous year. This figure highlights the need to safeguard sensitive financial data to prevent fraud and ensure confidentiality.
PremiumIn the digital era, how we choose to pay for services and goods has undergone a profound transformation. The rise of digital payment ecosystems has created an increasingly interconnected world where money and capital flow seamlessly within and across borders. This has made it easier for businesses and consumers to make payments, but it has also left them more vulnerable to cybercrime.
Cybersecurity plays a critical role in the success of this ecosystem, which is why companies worldwide are spending over $70 bn on cybersecurity R&D. Globally, fintech firms saw 2.5 times more attacks in Q1 2022 than in the same quarter the previous year. This figure highlights the need to safeguard sensitive financial data to prevent fraud and ensure confidentiality.
Aware of the threat, the Indian government has stepped up its cybersecurity efforts. In February this year, to improve the country’s cybersecurity infrastructure, the Ministry of Electronics and Information Technology (MeitY) was allocated a sum of ₹625 crore. This fund will also be allocated to cybersecurity projects and be used by the cyber security response team: the Indian Computer Emergency Response Team (CERT-In). The sum allocated signals India's commitment to building a robust cybersecurity infrastructure.
Ironically enough, while the threat posed by cybercriminals is real, for cybersecurity experts, it presents an opportunity.
An Opportunity Ahead
The expansion of the digital economy has created a $2 trillion market opportunity for cybersecurity technology and service providers. This opportunity arises from the increasing adoption of technologies such as encryption, multi-factor authentication, biometrics, and artificial intelligence.
According to Canalys’ latest cybersecurity forecast, cybersecurity investments will grow by 13% in 2023. In 2023, small and large organizations feel compelled to broaden and deepen their cybersecurity defences, expand detection capabilities, and improve incident response to guard against digital crime.
For cybersecurity experts in India, this drive to improve cybersecurity is an opportunity. Cybersecurity will also play a vital role in helping India retain its position as a leading digital economy.
Cybersecurity: Vital to Indian Fintech and Future
Cybersecurity is vital to India’s fintech sector and the country’s future as a digital power. The Economic Survey 2023 has revealed that Indian consumers are rapidly adopting fintech products. Quoting the latest Global FinTech Adoption Index, the report states that 87% of Indians have adopted fintech, while the global average is 64%.
Fintech companies that have a robust cybersecurity framework and a trusted platform, can provide huge social and economic benefits, contribute to financial inclusion, and help small businesses grow. These companies are using AI and machine learning to accelerate financial inclusion by automating most processes. For instance, fintech firms, by bringing small businesses to their platforms and letting AI analyse such firms’ creditworthiness, are rapidly disbursing loans to creditworthy businesses. Ironclad cybersecurity plays an important role in ensuring that such disbursals are free from fraud.
Technologies like AI and machine learning are also helping spot default cases quickly and preventing the disbursal of capital to flagged individuals - all without human intervention. To ensure such decisions are free from bias, they're backed by strong and transparent algorithms. With AI-backed monitoring, those who use fintech platforms enjoy a hassle-free experience, resulting in greater financial inclusion in India.
For India to retain its position as a key player in the digital economy, the country must place greater emphasis than before on threat mitigation and vulnerability patching. Doing so will ensure the resilience of payment systems.
Despite the advances made, the need to bolster cybersecurity has never been greater.
Fintech Must Rise to Cybercrimes’ Challenges
A 2019 report revealed that almost 100% of fintech companies had issues related to privacy, security, and compliance, owing to APIs, subdomains, and abandoned web applications. In 2023, these threats are much more sophisticated and dangerous for a company. Neglecting security measures has debilitating effects on a company, its staff, and its clients1.
Recent data from the Indian Computer Emergency Response Team (CERT-In) highlights that India encountered many cybersecurity incidents in 2022. In that year a total of 13.91 lakh cases were reported. With increased digitisation, both the number and sophistication of such attacks will grow.
Also, cybercrime is growing in sophistication. Compounding the threat of cybercrime is the fact that by the end of 2023, India will face a shortage of around three million cybersecurity personnel. This shortage poses a severe challenge for organizations. Businesses and firms will find it harder to effectively manage their cyber security posture and respond to emerging threats promptly3.
These are strong reasons for companies to protect data and networks, and use encryption, security protocols, risk identification, and risk management to avoid data breaches, identity theft, monetary loss, and so on.
The author is the Chief Information Security Office (CISO) of PayU India
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