Incorporating inefficient fintech systems in the finance industry has increased data breaches. Payment card details and user information are easily accessible to hackers, making online transactions vulnerable to cyber thefts
Fremont, CA: Fintech has remarkably improved services and products of the traditional financial services in the past few decades. Although many financial institutions have quickly adopted fintech services, they are still struggling to deal with some hidden risks. For example, the integration of the fintech services in the existing banking solutions raised a serious concern for data security. Besides, the rapid development and adoption of digital platforms have made the fintech industry and its customers exposed to various breaches in IT security networks.
Here we are discussing the severe risks of financial services:
Third-Party Security Risks
When it comes to banks, internal security is not always enough. Therefore, most of the time, when banks or other financial institutions use a fintech service from a not-so-reliable service provider, they end up dealing with so many undesirable consequences, such as service failures, data loss, and damaged reputation due to inefficient data. These types of damages happen because of third-party security risks. Eliminating third-party risks involved with fintech services require banks and financial institutions to consider the fintech relationship-related risks in their risk management assessment.
Digital Identity Risks
The introduction of digital tools in the finance industry has drastically increased the use of mobile-based services with one-time passwords and security codes. These security codes and passwords are not at all safe and easily available to hackers. The sensitive information of the banking customers could be easily accessed because of the flawed fintech system provided by the fintech service providers.
The modern world is data-driven. Industries across the world are leveraging data to improve the quality of their services. Data plays a vital role in every industry regardless of their domain. For banks and other financial institutions, data is as important as any other assets. However, incorporating inefficient fintech systems in the finance industry has increased data breaches. Payment card details and user information are easily accessible to hackers, making online transactions vulnerable to cyber thefts. The financial institution collaborates with third parties, and then data losses may occur because of their inefficient fintech services.