As per the Kaspersky Lab website, Cybersecurity is defined as the practice of defending computers, servers, mobile devices networks, data and electronic systems from malicious attacks, damage, or unauthorized access. With technology becoming all pervasive, data privacy and the security of the data shared is increasingly important.
The Fintech industry is one of complex nature and is growing at a fast pace. In such a scenario it is critical that it pays attention to aspects of data security and privacy in order to minimize the risk of cyber-attacks. With the increasing use of digital financial services, it is crucial to ensure that the fintech industry has a strong cybersecurity policy in place to be able to protect its consumers and itself from data breaches via cyber-attacks.
How does a Fintech company ensure privacy of data and its protection from data breaches and attacks on its security systems?
Consent and Notice
Obtaining consent of the customer before accessing their personal data is fundamental to doing business. This means that the Fintech must clearly communicate the purpose, nature, and the usage of data they collect from the individual through privacy policies and consent mechanisms.
Security Measures and Data Breach Notifications
It is important that a Fintech or any other start up ensures that it follows robust security measures that protect consumer data from disclosure, unauthorized access, alteration, or destruction. Companies are required to implement and manage reasonable security practices and measures to protect sensitive data that is personal in nature.
In case of a data breach, notifying individuals is necessary to align with the rules. Startups should also ensure that their vendors or service providers adhere to similar strict standards of security and follow the protocols to the relevant industry.
Localization of Data and Cross- Border Transfers
There are several categories of data that a company deals with. Certain types of data are required by the government to be stored only within the borders of India. Companies should assess their data storage and ensure that storage or transfer practices are compliant to local regulations.
In case an international transfer of data is required, it is necessary that the company must adhere to all regulations prescribed under the law (including RBI directions), keeping in mind the type of data being transferred.
User Rights and Grievance Redressal
Consumers providing data to companies have certain rights, including the right to access, erase or rectify the data as per the applicable laws. Companies must ensure that its customers are aware of these right by communicating with them in a transparent way and build a system to ensure that they can exercise these rights with ease and efficacy.
Apart from this companies must have an effective redressal system in place in case of a complaint or concern from the customer regarding data privacy.
Customer trust is key to running a business effectively and more so in the Fintech landscape since companies are dealing with sensitive information. Any breach in customer privacy can have a significant impact on the company’s’ reputation as well as its prospects. For this reason, it is important that Fintechs follow strict protocol on creating a solid security and compliance policy. In addition, it is important for companies to ensure that their employees are thoroughly trained in all aspects of security and data privacy regulations and keep up to date with latest government regulations. They should also ensure that vendors and third-party service providers handling data are adhering to adequate security measures. Last but not the least, companies must maintain comprehensive documentation of data processing activities, privacy policies and consent forms and conduct regular internal audits to ensure adherence to all regulations. With these measures in place a Fintech or any other startup will ensure a smooth journey and good prospects of growth.