According to renowned fintech entrepreneur Michael Zetser, it is likely that fintech will continue to see emerging innovations. There is no doubt that the advancements seen in financial technologies have disrupted the whole financial services market and drastically changed the way people manage their money.
While the fintech sector has undoubtedly experienced exponential growth, the opportunities do not come without their challenges. But, Michael Zetser has not only highlighted the challenges that most fintech organizations are facing, or will face, he has also discussed solutions to help combat them.
Even though a solid security solution is vital in the fintech sector, Michael Zetser elaborates that data security has become a major challenge in this environment. It is because the system vulnerabilities are quite diverse and come with additional layers of complexity because the personal information as well as users’ money need to be covered.
Traditionally, the solutions that were used included security guards, CCTVs and vaults that were meant to keep valuables and data secure, but these cannot be used for fintech. The vulnerabilities in the banking and financial system are vulnerable to exploitation and this is evident in the rising number of hacking attacks and security breaches. Fortunately, there are tools that can be used for addressing the vulnerability problems, such as data encryption, real-time notifications, 2-factor authentication, routing data in the network, AI security, biometric identification and more.
Third-party service integrations
Modern applications usually include third-party service integrations, as they can help in delivering improved functionality and app coherence to users. But, Michael Zetser has talked about the potential security risks that come with adding third-party services to fintech solutions. Overall app security can be compromised if the third-party integrations have insufficient security and financial and banking assets may be left vulnerable.
According to research, almost 93% companies became a target of a cybersecurity breach due to third-party applications, or weakness in the supply chain. Since he is a fintech expert, Michael Zetser recommends that it is best to consult a professional for integrating third-party services safely in fintech solutions for mitigating risks.
The skills gap
One of the biggest challenges that Michael Zetser has identified for the fintech industry is the lack of talent. Most fintech companies today are struggling to find and retain talent that has the necessary expertise to work in the industry. With companies trying to achieve regional and global expansion, it is more important than ever for them to find skilled talent and this is difficult in the face of rising competition.
To resolve this issue, fintech companies have the option of outsourcing the work that requires technical expertise. This gives them the opportunity to recruit qualified professionals and they will be able to start working immediately and offer their expertise.
This encompasses the roles and responsibilities for maintaining data in the banking and fintech industries. Michael Zetser points out that this means the data can also be manipulated. The regulatory system is aimed at creating, accessing, modifying and deleting data. The only way to manage the risk is to come up with proper security roles that can help in determining data ownership where fintech software solutions are concerned.
This can be helpful in managing access levels and credentials and can also be helpful in keeping the risks of reputational and financial damage, along with third-party breaches, to a minimum.
According to Michael Zetser, the digital IDs that have become so popular in the fintech sector need to have some key features for ensuring safety. Their purpose is to prevent financial crime and money laundering and the abuse of personal data of customers. Digital ID solutions have become an integral part of contactless payments and smartphone apps. These are undoubtedly game-changing developments, but they pose significant challenges and risks for customer data.
Therefore, digital ID solutions should be encrypted for maximum data protection. They should also be portable, similar to physical documents and they also need to be verified and trusted, which means they need to have regulatory approval. Likewise, they should also be incorporated with features that can protect against corruption, loss and theft.
One of the major challenges that fintech organizations face is that of malware attacks because they are capable of crippling it entirely. Michael Zetser explains that while malware attacks are not limited to fintech only, the sector is the top target of cybercriminals because of the high reward potential. He explains that a ransomware attack can result in reputational, financial and organizational damage due to which the risk needs to be minimized.
Fintech companies should make it a priority to back up data regularly, keep all software up-to-date and also provide training to their employees and stay vigilant at all times. This can go a long way in protecting the trust and financial stability of their customers.