Know About Cybersecurity In Fintech Vs. Traditional Banking

In today’s digital world, we do almost everything online, including managing money. Whether sending money through a mobile app or checking your bank balance on a laptop, financial services have become fast, easy, and convenient. 

However, this convenience comes with the severe risk of cyber threats. That’s why cybersecurity has become a significant concern, particularly in fintech and traditional banking. Although they have different approaches, both try to keep your money safe.

Fintech Vs. Traditional Banking

FinTech or financial technology, refers to digital companies that offer financial services through apps, websites, and other tech platforms. Companies like Google Pay, PayPal, Razorpay, and app-based investment platforms are examples of this.

On the other hand, traditional banks have branches in different areas where customers can visit to get financial services. They’re usually more regulated than fintech companies. Both fintech and banks offer similar services, such as money transfers, loans, payments, savings, etc. However, there is a difference between how they offer the services and how they handle security concerns.

Why Is Cybersecurity Significant for Fintech and Traditional Banking?

When using a banking app or a FinTech wallet, your data, like your account number, passwords, and biometric info, is stored and transmitted online. It implies that hackers can steal your money and your data. One wrong click, and you may become a victim of fraudulent activities. So, cybersecurity isn’t just a tech issue; it’s a trust issue, too.

How Does Fintech Handle Cybersecurity?

Most fintech companies are fast, secure, and tech-savvy. Most fintech companies take it seriously because their growth depends highly on how efficiently they handle cybersecurity. Here is how they approach cybersecurity:

• Use of the latest technology: The Fintech industry has boomed significantly in this digital age and incorporated the latest technological tools in its operations since its inception. Moreover, Fintechs use AI and machine learning to detect fraud and use tokenization to hide sensitive data. 

• Cloud-based systems: Many fintech companies operate in the cloud to offer a fast service. However, this also means they must depend heavily on third-party services for data storage and protection.

• Focus on user experience: Fintech apps are user-friendly and hassle-free. They use security features to prevent their consumers from fraud without complicating the entire system. 

• Used tools: Most fintech apps use encryption and secure APIs to ensure zero risk of cyberattacks while running regular testing and vulnerability assessments to remove potential threats.

How Traditional Banks Handle Cybersecurity?

Though traditional banks are not as fast as fintech, they often follow stricter cybersecurity rules and perform regular audits to comply with government regulations. Here is how they handle their cybersecurity:

• Layered security: Banks mostly use multiple layers of security, such as firewalls and encryption, two-factor authentication, OTPs, etc. They also have a backup system to tackle the cyber threats.

• Slow Innovations: Traditional banks are highly regulated, preventing their flexibility to incorporate new technology. Though the system is safe and secure, it falls short when the time comes to speed up.

• In-house teams: Banks usually have a large team of experienced IT and cybersecurity experts that manage their systems instead of relying heavily on third parties.

What can you do to stay safe?

Security is a shared responsibility. While no system is 100 % foolproof, being alert can help you protect your money and data. Whether you are using a fintech app or a traditional banking system, here are some tips for you:

• Set powerful and unique passwords

• Turn on two-factor authentication

• Update the apps regularly

• Avoid sharing OTPs and passwords, phishing emails, and fake websites

Conclusion

Fintech and traditional banks are working hard to offer a safe financial life to their customers. While fintech brings innovation and speed, traditional banks bring trust and regulation. As a user, you can stay informed and cautious while enjoying the convenience of modern banking to stay away from cyber threats.