What is financial technology?

Financial technology (also known as fintech) is the field of research and development that aims to improve the efficiency, effectiveness, and security of financial services. In the 1990s, financial institutions began to experiment with new technologies, hoping to make their operations more efficient and customer-friendly. Fintech extends this concept beyond strictly financial services and strives to improve customer experiences in all industries. An important aspect of financial technology is the creation of new financial products and services. New payment methods, new investment vehicles, and new banking channels are all examples of financial technology. With the increased use of digital channels, traditional institutions are also seeing a rise in fintech companies. These organizations are often startups that see an opportunity to provide customers with new financial products or services by cutting through the red tape of established banking channels.

Asset provenance and identity

The ability to prove the authenticity of assets is a critical part of any transaction. In the financial services industry, this is particularly important because assets could include cash, stocks, bonds, or even real estate. Asset provenance refers to the provenance of an asset from its origin to its current ownership. Revenue agents, such as real estate appraisers, often play a crucial role in asset provenance. Asset provenance is an essential element in blockchain, as it is one of the primary use cases for this technology. An important use case for blockchain technology in asset provenance is the transfer of assets between parties. For example, a real estate agent could transfer title of a property to a new owner, ensuring that the transfer is legitimate. Blockchain offers a unique solution to the problem of asset provenance. Assets are transferred directly from one party to another. There is no need for a third party intermediary, such as a lawyer or an escrow service.

Security monitoring and detection

Security monitoring and detection is a basic function of all IT networks. Yet, for many organizations, it is an essential part of managing their IT environment. The goal of a network security monitoring solution is to identify and monitor potentially harmful activities, such as unauthorized access, propagation of malicious applications, unauthorized modification of network resources, or unauthorized communications. Any of these activities could indicate a potential security threat, so it is critical to address them quickly and appropriately. The choice of a suitable solution therefore depends on the specific needs of each organization. Organizations can use different strategies to detect potential threats. For example, they can use advanced analytics to detect abnormal behavior in their network. In addition, they can rely on network traffic analysis to detect potentially harmful traffic. Yet, advanced analytics and network traffic analysis can take a long time to complete, so they might not respond quickly enough to provide protection. In contrast, a security monitoring and detection solution can constantly analyze network traffic and detect potential threats, even when they are initiated remotely.

Edge and browser security

An increasing number of attacks target web applications and services at the web server level, and not the client computer level. These server-side attacks include, for example, man-in-the-middle (MITM) and cross-site request forgery (CSRF) attacks. To understand and address these types of attacks, financial services companies must be familiar with the different types of attacks that occur at the edge and browser security levels. An edge device is a computer, server, or other device that sits between a user’s computer and the rest of the network. In most modern networks, the data flows in both directions between the edge device and the network. The purpose of an edge device is to inspect, filter, and manipulate the traffic before it is sent on to the network. A browser is a software application that allows users to access web applications. Modern browsers can be used to attack web applications, making it easy for hackers to launch cross-site scripting (XSS) attacks and other types of browser-based attacks. To protect financial services companies against these types of attacks, organizations can use appropriate browser security settings, for example, blocking unwanted cookies and enabling an ad blocker.

Authentication and Two Factor Authentication

Authentication refers to the act of proving identity. In most cases, the authentication mechanism relies on some form of user identification and information, such as a username and password, that are established by the user. To safeguard the user’s identity, the authentication mechanism can then check this information against relevant systems. Two factor authentication, or 2FA, is one of the most important ways to strengthen user authentication in financial services. 2FA is a combination of two factors: something you have (a password) and something you are (a phone number). 2FA provides an additional layer of protection and helps prevent “session hijacking” attacks, in which hackers steal a user’s session without knowing their secret information. 2FA can be used in a number of ways, including generating a one-time numeric code via text message, checking a smartphone app, or generating a token that is sent to a user’s email account.

Co-Authorship of Data and APIs

API stands for application programming interface. An API is a set of rules that govern how software components interact with each other. To make APIs useful, it is important to define their access controls. This can be done by defining the access control lists (ACL), which enable you to define access permissions for each API resource. All business-critical data handled by financial services companies will eventually be considered public data. The challenge is to ensure that this data is protected in a way that maintains its usefulness and integrity, while also protecting users’ privacy. The best way to tackle this challenge is through the use of APIs. APIs can be used to access public data, but they can also be used to manage the privacy of this data. By using an API to protect sensitive data, a company can ensure that no data is shared without permission.

Code Review and Auditing

The vast majority of vulnerabilities that hackers find are caused by software bugs, and most of these bugs are found in code. In order to ensure that the software code of an organization is as robust as possible, it is essential to conduct code reviews. This process involves reviewing the source code of a program to identify potential security issues. When it comes to auditing, organizations can choose from a variety of auditing tools. For example, organizations can use Web-based auditing tools to track activity across the organization. Alternatively, they can implement a proprietary solution, which can be integrated into the software development life cycle (SDLC). It is important to choose an auditing solution that can comply with industry standards, such as ISO27001 or the Financial Services Cybersecurity Work Program.

Conclusion

Technology is not just about the tools in front of you; it is about the value you create for your customers, employees, and society as a whole. Threats to your organization will change and evolve, and it is important to remain vigilant. As Ken Soo, Principal Technologist at FISCO, says: “Technology provides a useful tool to protect against cyber threats. However, it is important to remember that technology is just a tool; it’s up to humans to use it wisely and ethically.” When it comes to financial services, cybersecurity risks are growing at an accelerated pace. This makes sense, given that the sector is witnessing high levels of digital transformation, with greater use of digital channels, and increased reliance on technology. The best technology solutions for Financial Services companies are those that not only protect against cyber threats, but also improve customer experience and business agility.