Today’s fintech industry processes vast amounts of data that would be unimaginably valuable to malicious actors if they could get their hands on it. The fintech industry, therefore, uses robust security protocols to protect this sensitive information, prevent fraud, and ensure all their systems, services, and apps are safe.
These security protocols and processes are crucial for building trust and maintaining the integrity of the fintech industry because no one would trust it if they thought their data would end up in the hands of malicious actors. Whether you are a developer, organization, business, individual, or just an interested party, here are the most common fintech security protocols.
Encryption
Encryption is just one of the many layers used to protect data during transmission and storage. It protects data or information by scrambling it using different mathematical models to make it unusable unless the party accessing it has the right key.
Encryption ensures that data and information are unreadable and unusable if intercepted during transmission or accessed when stored.
User and Account Management
In addition to using encryption algorithms to protect data and information, the fintech industry also uses other mechanisms to protect user data. These include detecting and preventing account enumeration, credential stuffing, unauthorized access, and brute force attacks.
Additionally, businesses can enable automatic account lockouts for a specific period on failed login attempts, including using incorrect usernames, passwords, and access protocols.
Multifactor Authentication
The use of only one method of authentication is dangerous in a world where options like passwords can be stolen or brute-forced. Multifactor authentication reduces this risk by requiring that users provide more than one type of authentication.
Users can use at least two types of authentication that include:
- Something they know, typically their password
- Something they have, that could be a phone they use to generate access codes or receive one-time passwords
- Something they are, which includes biometrics like fingerprints
Multifactor authentication provides an extra layer in addition to encryption and other security protocols. It also applies to fintech software and services users, not just business users. For example, users interested in trading in stocks or commodities on the advice of experts like James Cordier can use two-factor authentication to secure their trading accounts on fintech software. Doing so gives them peace of mind in knowing no one else can access their funds or investments.
Tokenization
There have been cases where fintech companies have had their data stolen even with robust security measures and protocols in place. Such cases could be devastating if sensitive information like bank accounts and credit card numbers is stored in plain text.
Fintech companies solve this problem using tokenization. Tokenization entails replacing sensitive data with random tokens. For example, a token like $12345# (not a real token) could replace sensitive data while also helping fintech software and systems know whose data was replaced. Think of it like using a username instead of your real name but in a much more sophisticated way.
Tokenization has a significant advantage over encryption because there is no direct relationship between the token and the original data. Tokens are irreversible, unlike encrypted data that can be reversed using a key or brute force. There has to be additional data to know the data replaced by the token, and that system can be encrypted or tokenized for additional protection.
Secure Sockets Layer (SSL) and Transport Layer Security (TLS)
TLS and SSL are encryption protocols that establish secure connections between servers and browsers. They are crucial for protecting data during transmission, so you should never use a website that does not display a valid SSL certificate or other identifier, like the familiar locked padlock next to the page’s address.
Data and information security is critical in the fintech industry due to the sensitivity of the data it handles. Businesses in this sector have a wide array of security protocols they can use, in any case being able to combine them for the highest level of security.
