The Criticality of Data Security for Financial Services in India
Read Time- 5 mins

The Criticality of Data Security for Financial Services in India
Read Time- 5 mins

To combat loss of valuable financial data and users’ money due to such frauds, financial services organisations and apps should ensure user security is a top priority. For that, it is imperative for the sector and the active organisations to identify the risks and find appropriate solutions.

Back in August 2018, a Kolkata-based man lost INR 65,000 to an e-wallet fraud by installing and entering his personal and financial details on an unknown app that promised to get his refund processed on fast track mode. In a similar incident, a New-Delhi based young working professional witnessed her bank account get wiped off within minutes of sharing her bank details with an unauthorised agent claiming to be a bank representative. The designs of fraudsters keep on changing. In an yet another incident, the fraudster in the guise of good Samaritan ensured the transfer of money from the victim’s bank account under the pretext the victim’s family member met with an accident , was hospitalised and the money was towards the hospital expenses. These are a classic example of phishing/vishing. Hyperlinks to websites are sent as part of messages to dupe people of their money. Unfortunately, such incidents are common today across the globe and are a microcosm of a much larger problem in the financial services and mobile apps space.

According to recent RBI report, India achieved significant growth on the path towards a cashless economy. During the financial year 2018-19, retail electronic payment transactions increased by 59 per cent to 23.3 billion from 14.6 billion in the previous year. FinTech and digitalisation emerged as new growth drivers. The policy of Government and RBI is to balance the expansion of the digital economy with the minimisation of risks associated so that public confidence and trust is sustained, and the efficiency and soundness of the payment and settlement system is ensured.

It should however be noted this mammoth growth of digitisation in the financial sector has a flip side to it as well. Hackers are able to access users’ personal financial information through free offers, gifts etc. Technology is being used to implement the sinister designs of fraudsters. Since financial apps are integrated and directly associated with the finances of users, it makes them extremely vulnerable to cyber threats.

The financial services fraud ecosystem

A recent report by an information technology survey company reveals that data of about 1.6 lakh people was compromised due to fake banking apps. With the growth in mobile banking transactions – we have witnessed a significant increase in the fraud numbers in that segment as well. Apart from fake apps, users’ personal information is stolen through malicious network connections etc.

To combat loss of valuable financial data and users’ money due to such frauds, financial services organisations and apps should ensure user security is a top priority. For that, it is imperative for the sector and the active organisations to identify the risks and find appropriate solutions.

Security flaws in financial apps and strategies to avoid them

Given the sheer number of stakeholders involved in the process of enabling a user to access an app, it is crucial to cover all bases when it comes to data security. Organisations operating in the fintech sector need to make sure all transactions that are secure by adapting best security practices. A few examples of such practices are – safe app hosting, leak-proof data storage, using firewalls and encrypting communication channels, access control, and other such mechanisms which ensure users’ data is not compromised due to technical errors.

User and Policy intervention

Along with corporates, the government is also proactively working to mitigate these risks at policy levels. With an aim to develop a digitally secure nation, the Government of India was contemplating the Data Protection Bill during this year which is expected to protect user data with data-breach reporting mechanisms, huge penalty for non-violation etc.

While enterprises and the government are doing their bit, it is imperative on the part of consumers to be alert while using mobile banking or other mobile apps by following personal security measures. A few best practices to follow are – downloading apps from reliable and verified sources, not clicking unverified links, not share personal financial data with anyone, not to get lured with freebies, not using financial apps on unverified network, securing the handset with password, scrub out all information in the old handset while changing the handset, setting of a robust password for applications and doing transactions only through second factor authentication, among others.

A stitch in time saves nine

All you need to do is just to be attentive while using mobile banking to mitigate digital risks and save your hard-earned money. While it is imperative on the provider to facilitate secured environment, there is a responsibility on the part of user as well to adopt security practices, few of them, were told earlier. This approach will make threat a thing of the past and protect fintech from becoming a victim of fraud while keeping their customers – and their money completely safe.

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