Riding the wave of cybersecurity in digital banking

The wave of technological advances and digital innovation over the last decade has rapidly transformed the BFSI sector, making financial services more efficient and easily accessible to everyone. From making purchases, payments, and withdrawals to crowdfunding, investing, and applying for loans, people can now avail a plethora of banking services digitally, all from the comfort of their homes. Recent government data testified the boom in digital transactions in India—primarily led by UPI—climbed close to 90 percent, from 232,000 to over 430,000 between FY19 and FY21, and projected to account for nearly 71.7 percent of overall payment volume by the end of 2025.

As enabling and disrupting fintech is to our way of life, this accelerated pace of digital innovation has become a lucrative avenue for cybercriminals, spurring a sharp increase in cyberattacks. The fintech industry witnessed a large portion of fintech applications within their networks becoming the victim of cyber threats and attacks, unearthing a new range of digital security gaps over the last two years. With the value of digital payments in India expected to grow three-fold and touch $1 trillion march by FY26 from $300 billion in FY21, it is critical for fintech businesses and financial institutions to safeguard their networks and sensitive data through adequate cybersecurity solutions to fend off future breaches. Now, the question remains: Are enterprises equipped to safeguard themselves against the ever-evolving cyber threats in 2022?

Prioritizing network security

The advent of cloud, artificial intelligence (AI), and machine learning (ML) has further boosted the integrity of banking networks in terms of data safety, seamless operations, and rapid response to cyber threats. While the introduction of biometrics and network-level analytics have kickstarted protection against fraudulent activities in the digital world, fintech product and service providers must adopt a strategic security approach to accurately contextualize, correlate, and profile all digital entities within their network. Governments and businesses alike must combine efforts to identify exploitable cyber vulnerabilities and allocate budgets for network vulnerability management and infrastructure security in a smart and efficient manner.

Leveraging the cloud

With numerous fintech and financial service providers migrating to the cloud, the BFSI sector has undergone a paradigm shift from cumbersome manual processes and high operation costs to efficient and budget-friendly operations and enhanced customer experiences. Combining a ‘Zero Trust’ architecture on the cloud with AI capabilities will help enterprises procure complete visibility into every stage of digital interaction in hyper-connected security infrastructure. The IT teams can additionally leverage cloud computing combined with advanced network analytics to perform threat intelligence-based actions.

Enhancing fraud detection through AI

The large-scale impact of AI in the fintech space is evident, dawning a revolution in how consumers and companies alike access and manage their finances. Today, fintech is gravitating towards adopting AI and ML-based solutions to effectively identify and prevent fraud and financial crimes on their networks. With cybersecurity measures being fortified with AI, the BFSI sector in India will soon witness the emergence of futuristic concepts like ‘digital banks’ and ‘open banking.’

Ramping up endpoint security with SASE

According to a recent study by PwC India and the Data Security Council of India (DSCI), the BFSI sector accounts for 26 percent of the total expenditure in the Indian cybersecurity market with $518 million and is expected to hit $810 million by the end of 2022. Implementing a Secure Access Service Edge (SASE) architecture on SD-WAN will allow financial service providers to seamlessly integrate cybersecurity and network access management onto a single, unified platform. By leveraging SASE and a Connected Security strategy, organizations can efficiently manage network security across endpoints through direct, secure access to applications on the cloud, and unified visibility and policy management.

The way forward

The rise of fintech has also introduced the concept of Buy Now Pay Later (BNPL), which has revolutionized the digital banking ecosystem in India. According to a report by RedSeer Consultancy Group, the BNPL market in India is India is expected to grow from $3-3.5 billion to $45-50 billion by 2026. With a sharp spike in consumers using digital transactions, fintech can ride on the trend of digital money and leverage blockchain to provide innovative security features in a reliable and decentralized manner through adequate adoption of regulatory technology.

As BFSI continues to grow as one of the most dominant industries, the security of the entire ecosystem against active threats to personal data accessible via mobile or desktop applications must take precedence. A security-first approach must be adopted by banks, fintech firms, small banking businesses, and financial institutions to strengthen their security posture, act preventively, and stay ahead of evolving cyber threats.

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