Data Privacy Concerns in Booming Fintech Industry

The fintech industry has grown by 96% in the first three quarters of 2021, creating a boom not only in revenue but also data privacy concerns. Fintech has become widely popular in the U.S. with nearly 90% of Americans using some sort of fintech service. Beyond being widely used, the services offered by fintech solutions are also becoming vital for consumers. Almost three quarters of users would consider switching banks if their current financial institution cannot connect to their fintech app. It’s no wonder that consumers are so keen on using fintech solutions as it helps them get more control over their money as well as saving them time and money.

Turn Security Woes to Business Advantages

With the onslaught of the pandemic came a wave of increased online activity. However, with the rise in online activity also came a rise of cyber-threats. Over 70% of security professionals reported an increase in these threats since the lockdowns started, but an overall increase in online security threats is not the only worry for fintech. A survey of over 100 fintech start-ups found that 98% are vulnerable to web and mobile app attacks. There are several areas of concern with data privacy and fintech solutions.

• Third-Party Data Sharing

The Problem: Even if a fintech company has a strong data privacy policy, if it is not well communicated to consumers, it won’t make much difference. Close to 75% of consumers believe that fintech companies are more likely to sell their personal data than traditional firms. This belief is not built on complete fiction either. Of fintech app users, The Clearing House reports that between 62 – 81% are not aware that the apps may access a range of data nor that the apps may sell their data to third parties.

The Solution: Fintech companies should be open and honest about their data-collection policies. Incorporating those policies into marketing will drive trust with consumers. Financial services are built on trust, more so than many other service providers due to the nature of their products. Failure to live up to consumers’ expectations and support of quality data privacy practices put that trust at risk. The Fintech companies that clearly communicate the data they collect and how they use that data will experience greater success. Accenture found that consumers were more willing to share more personal information with companies if they were transparent about how it is used.

Also, putting into place a strong data breach plan that includes timely communication to consumers will also benefit fintech companies. The Clearing House also reported that the most influential reason why a consumer may stop using a fintech service is the company’s lack of responsibility for data breaches.

• Increased Phishing

The Problem: Phishing has become more prominent during the pandemic and fintech is not immune to this form of attack. Hackers are going after individuals for credit card information and account details to break into bank accounts.

The Solution: Implement and offer account monitoring for users to watch for fraudulent activity on accounts. Fintech companies should also offer two-factor authentication, with various authentication options to make it easy to for users to convert. Again, offering a service to users that performs Dark Web scans would also help mitigate fraudulent activity.

• Integrations with traditional banks

The Problem: While digital first banking is an option for consumers, many individuals still rely on traditional financial institution for their banking needs. Many of these banks have limited API capability to securely connect with fintech services.

The Solution: Not only should fintech companies keep their API security up-to-date, but also select vendors that are trusted by Fortune 500 companies and government as technology partners. Proactively improving any products and services that connect with third party financial institutions, such as banks, will also help keep integrations secure.

• Abandoned or Forgotten Projects

The Problem: Tech is ever evolving and with every change companies quickly pivot from one project to the next, often abandoning something that is outdated. While this is great for giving consumers the most relevant products and services, this can create a nightmare for security threats. Web security company, ImmuniWeb, found that 100% of fintech start-ups had security, privacy and compliance issues related to abandoned web applications, APIs, and subdomains.

The Solution: Making sure to delete data from abandoned projects is a great first step to raising security. Another solution can be to offer a product or service that will do Dark Web scans for your users. This service will help catch fraudulent activity across the web that may have been missed in forgotten projects.

• Deep Fakes

The Problem: One of the more concerning technological advances in recent years is deep fakes. This technology can mimic faces as well as voices raising concern over phone transactions when voice confirmation is required for accessing account details with fintech customer service.

The Solution: Requiring unique passwords or pins when confirming accounts via the phone would help mitigate the risk of potential deep fakes trying to access an account.

As data privacy becomes a greater concern for consumers, fintech companies need to view their data privacy practices as a top priority.

Data Privacy Solutions for Fintech

Partnering with companies that offer additional data privacy and cybersecurity solutions can build more trust and value to any fintech service. Look for solutions that protect your consumers’ privacy with features such as dark web scanning, data broker removal, VPN and Wi-Fi protection, fraud alerting, identity theft protection and other features that safeguard what consumers value most. Our IDX Privacy solution with the ForgetMe feature is one solution that could help. Try it out for free and see how providing features like this to your customers will not only build value for your company but trust with your consumers.