FinTech (or Financial Technology) is one of the biggest headline grabbing sectors of the start-up boom in the cybersecurity world. But are the advances being made actually making corporate finance any safer from online fraud and cyber-attacks?
A young industry but not naive
Technology services to support, supplement and enhance the financial industry isn’t a new thing. Banks and financial institutions have always been cautious of new technology but also keen to take advantage of the competitive edge that such advancements could give their business. The direction of such developments has therefore largely been at the mercy of these big organizations. That was until the global financial markets unwittingly changed the face of financial services as we know it. The money that was lost during this crisis was second only to the huge impact that the process had on consumer faith in big banks and the rest of this huge sector. Businesses, large and small, and the general public suddenly had an appetite to look at alternative ways of using financial services.
The market to fill this demand was a vacuum left wide open to be filled by entrepreneurs with new ideas. Of course, the symbiotic relationship with the technology sector meant that FinTech was established.
FinTech may only be in its infancy as the phenomenon we know it as today but it is far from being an inexperienced field. Innovative start-ups in the field of payment processing, alternative lending cryptocurrency and wealth management services are all too aware of the dangers that go hand-in-hand with using technology as a means to do so. As a result, most of the companies that are pushing the boundaries of the FinTech movement have incorporated cybersecurity at the heart of the products; they understand all too well the need to assure customers over reliability and security.
How is FinTech affecting businesses?
The huge range of applications being driven to market by innovative developers is giving businesses faster and more flexible access to their financial service needs and, in a secure environment, this can only be a positive thing. Businesses are benefiting from lower overhead investment in financial software suites, more adaptive displays on real-time data and unprecedented business insight into their financial information. Not only that but organizations are able to offer their customers and suppliers the same combination of speed and flexibility to enhance their relationship.
‘If you build it, they will come’
The more applications that FinTech developers produce then the more opportunities exist for cyber criminals to attacks so is all this technology making organizations any less vulnerable from cyber-attack?
That is the critical question and, because the industry has grown up in a rather disjointed and haphazard way, is playing an important part about how the future of this sector is shaped.
Countries that have been active in the FinTech revolution have realized the need for collaboration of the growth of the sector in order to ensure that financial markets and institutions (as well as their customers) are safe. The need to factor in legislative compliance and global interconnectivity is therefore driving the recent formation of a federation for the FinTech sector. Innotribe and Innovate Finance has already established a British federation but African, Turkish and Chinese clusters have indicated their intent to join forces. This is good news and offers a significant opportunity to establish a hub for learning and sharing resources which can only help to improve the security of the FinTech sector.
What are the challenges for the future?
As the FinTech sector gears up for an era of collaboration, we hope to see continued innovation from existing players as well as new entrants to the market. With advances in the field of AI, we can expect to see changes in the way financial advice is offered to clients and possibly continue to supplement or even replace existing human interaction in many of the ways we do business.
Great analytics of data will yet further refine the way financial markets are exposed to risk and that greater market insight could expose bigger rewards for some businesses.
What is obvious is that all of these developments require additional protection that keeps up to date with existing threats and vulnerabilities but that also innovates new solutions to stay ahead of those risks. Cyber-security must remain at the heart of this blossoming industry if the public are to invest their trust in financial services once more.