Cybersecurity is paramount when developing a fintech app. The trust between the company and customers is key to building stable and long-lasting partnerships. A fintech, who bridges the gap between customers and conventional banking, must protect its customer’s data to avoid data breaches. If a customer’s data is jeopardized, the security consequences can be drastic.
Fintech companies have to prove their commitment to safeguarding their user’s data and do all it takes to avoid security threats like malware attacks, phishing, and identity theft. There are three components of Data Security otherwise known as CIA TRIAD that all companies should adhere to. They are;
- •Confidentiality: This guarantees that only authorized users, with appropriate credentials, have access to company data.
- •Integrity: This ensures that all data is accurate, trustworthy, and not prone to unjustified changes.
- •Availability: This ensures that data is accessible and available for ongoing business needs in a timely and secure manner.
There are control measures that have to be followed for securing data and avoiding data breaches. They include Access Control, Authentication Backups, Disaster Recovery, Data Erasure, Data Masking, Data Resilience, and Encryption.
Data is a valuable asset that generates, acquires, saves, and aids exchanges by any fintech company. Protecting it from internal or external corruption and illegal access protects fintech companies from financial loss, reputational harm, consumer trust degradation, and brand erosion. Here are the implications of data breaches to fintech companies.
Increased unregulated admission past the fintech monitoring structures: If a data leak were to occur, any person can gain access to the company’s data system which will increase cyber-attacks through malicious software aimed to either undermine computer systems or steal data mostly known malware. Each type of malware has a different purpose, e.g., ransomware hijacks sensitive input and encrypts it, making it inaccessible to the initial owner. The owner usually has to pay to gain control of the information again. It also increases Phishing, one of the most popular and effective scans that nudge unsuspecting victims to share confidential information with cybercriminals disguised as legitimate sources.
Loss of credibility: When it comes to how and who handles finance, trust is vital. In the event of a data breach, customers’ data are out there in the open. This automatically causes customers and the entire public to lose trust in the startup which could be very damaging for the said fintech. Fintech loses its reputation and may have to shut down permanently if it cannot handle the situation properly.
Violation of the Nigerian Data Protection Regulation: The NDPR is currently Nigeria’s most comprehensive law on data protection. It contains various provisions regulating the collection and processing of data in Nigeria. According to the NDPR, when a data breach occurs, the company should report the incident immediately to the regulation board for further investigation. If the data controller/ company is found guilty, they are liable to pay a fine of 1% of the annual gross revenue of the preceding year or payment of the sum of N2,000,000 In the situation where the data controller deals with less than 10,000 data subject. On the other hand, where it is a controller of more than 10,000 data subjects, they are liable to a fine of 2% of the annual gross revenue of the preceding year or payment of the sum of N10,000,000.
Financial losses: In the aftermath of a data breach, companies often face a slew of immediate financial consequences. An additional fine may be imposed by regulatory authorities and card network brands, depending on the circumstances. Businesses that suffer a data breach may have to pay for credit monitoring for consumers whose information has been exposed. Remediation activities have to be done, which include card replacement costs, identity theft repair, and more compliance requirements. Hence, the importance of data security is clear.
Lawsuits: When there is a data breach, the legal implications are massive too. Companies that have a data breach on their network, can be sued if it caused harm to their customers’ business and led to financial losses. Their clients can also sue if the breach is from the fintech’s mistakes or caused by weak security policies.
Protecting highly-sensitive financial data using conventional means is a recipe for disaster. Fintech startups have to utilize sophisticated technologies like Source Code Analytics, penetration testing, and the DevSecOps approach to protect customers’ information.Featured Image Source: ID Agent
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