In this chapter, the authors aimed to investigate cyber security, information security, and privacy in the context of the fintech ecosystem in India with real-time cases and examples. In the chapter, basic framework for cyber security is discussed along with an iterative process with actions under consideration. This chapter is aimed at providing a brief overview of cyber security in the fintech ecosystem. The nature of cyberattacks faced by organizations on digital payments channels with real-time examples include cybersecurity risk – reality check, traditional threats versus latest threats, cyber forensic and monitoring technologies. The chapter will also be focused on Cyber Swachhta Kendra' (CSK), maintaining cyber hygiene in digital payment transactions, and innovative ways to security and privacy in digital payments. Preventive measures in digital payment to avoid fraud are given.
TopIntroduction
Globally More than 85% of online buyers use at least one fintech service, a figure that is expected to rise as more people grasp and learn about contactless payments, mobile banking, online lending, online travel booking, micro-investing, and other fintech-powered money-related activities like insurance, online capital, and investment instruments, etc. The FinTech industry has become a most globalized segment of the world’s economy & also among the most digitized and datafied segments among other segments and industries.
Presently FinTech is accountable for bringing basic changes in Global Financial Payments and investments. The rates of change specifically observed over the last two decades are summarized as ABCD systems: artificial intelligence (AI), blockchain, cloud, and data are evolving with the fund at an increasing rate. Numerous would include web and Internet of things (IoT) to this ABCD system. These changes have positive viewpoints but moreover negative ones, inside the shape of advanced threats. The FinTech industry is disquieting and becomes more challenging because of raises many risks and challenges. Financial apps are becoming gold mines for cybercriminals looking to take profitable individual and monetary information. Banks, the Payment industry, Credit, and Insurance industry, and financial institutions utilize Fintech innovation, counting through the Web & Internet, and smart devices & without strong cyber security measures, financial stability & integrity, financial efficiency, financial development, customer protection, and inclusion might be at high risk.
This chapter highlights many of the key areas of Cyber risk and challenges related to Fintech, cyber security in Fintech, and Cybersecurity solutions in the Fintech industry with real-time examples.
Financial Innovation and The Fintech Ecosystem
Traditional financial services models face difficulties in reaching customers in remote areas. Underbanked communities frequently conduct small, frequent transactions that are hampered by traditional transaction fees and commercial banking system inefficiency. Again, the financial needs of consumers differ from entity to entity and are determined by multiple factors like socioeconomic, Income level, Geographic factors, etc. FinTech is working well to address these issues. It has identified a market opportunity in serving the needs of the bottom-of-the-pyramid income segments that are usually ignored by traditional financial institutions.
FinTech is inextricably linked to financial innovation. As a result, there is a need to study the literature on financial innovation in addition to the fundamental and well-established understanding of digital innovation. Financial innovation can be considered “the act of creating and popularizing new financial instruments new financial technologies, institutions, and markets” (Lerner and Tufano, 2011). Financial innovation has changed into three categories – new products and services, new production processes, and new organizational forms (Frame and White, 2014). the study finds that financial innovation has a relationship to economic growth that varies depending on the variable used to measure financial innovation. The long-run, growth-driven financial innovations are confirmed, with causality running from economic growth to financial innovation. (Bara and Mudzingiri, 2016). Arnaboldi and Rossignoli (2015) argue that financial innovation drives economic growth, while others point to its dark side., The right kind of innovation and favorable conditions that may encourage banks to invest in new technologies would assist the financial system in carrying out its functions and, as a result, deliver growth.
The Fintech Ecosystem
FinTech refers to financial services or products that are offered by using technology. It is a field that integrates finance, technology management, and innovation management. Fintech refers to a service sector that applies technology & Internet of things to improve the efficacy of the financial system. The main objective of FinTech is the development of systems for modeling, valuing, and processing financial products such as insurance, Mutual Funds, stocks, bonds, money, and contracts. Technology through financial services has a significant impact on our day-to-day lives, it provides the facilities and infrastructure for Digital payments, Digital payment Settlements also provide the essential infrastructure to the operation of the world’s financial institutions. (The Ernst & Young Tax Guide 2014, p. 2).