FinTech Security Will Help Foster Innovation, Say Experts
Development and Innovation The continuing growth of FinTech is poised to further modernize the financial system, though security will figure prominently on how safe that process is.
The rise of FinTech as a bubbling category portends an intriguing future where consumers will have a more seamless experience in how they choose to pay for things, and security will figure prominently within that experience. Security is vitally important for both consumers and merchants, who are each keen on protecting themselves, but also for solution providers who need to be compliant with a complex regulatory environment.
News headlines are generally focused on the most egregious examples of cyber theft and consumer fraud, where compromised accounts and data can lead to serious repercussions. Improving the overall payment experience, while maintaining the security behind each transaction, will grow in importance with the rise of FinTech.
Near Field Communication (NFC) has been a standard feature in many smartphones for the last few years, and beyond just being a simpler way to pair with Bluetooth devices, it is becoming a key bridge for mobile payments.
Biometrics, like fingerprint or retina scans, may offer new ways to make payments that would also be difficult for criminals to exploit. It’s estimated 50 percent of smartphones will come with a fingerprint scanner by 2019. Other security solutions have included temporary card numbers and various encryption methods to protect transactions and data from being stolen. However, these solutions haven’t yet proven to be bulletproof.
For some insight into the options FinTech companies have in countering such threats, Suzan Denoncourt, Managing Director, Canada, for Ingenico Group, and Richard Giannini, SVP Product Development, Canada, also of Ingenico Group, offer their perspective on some common myths.
MYTH Innovation naturally compromises security.
FACT “In the case of payments, incumbents are accustomed to working within the parameters established by compliance authorities and thereby build out, and are reputed for secure solutions. With security at the forefront, innovation may be limited by the rules of engagement if they are perceived as too confining or an obstacle. By contrast, FinTech start-ups have the luxury of focusing on creativity first, thereby allowing for rapid development of innovative approaches to improving customer experience. Their contribution is, in many cases, the ability to fast-track ideas into valuable solutions. Because commercialization and mass adoption of new solutions inevitably requires adherence to established payment security guidelines, innovation must be proven to not compromise security — either the solution will need to be tweaked or the rules may evolve to address a new use case/implementation. The marriage of incumbents and start-ups has shown itself to be a means by which to enable that balance between innovation and security, thus the trend we have been seeing in the Canadian payments industry.”
Suzan Denoncourt, Managing Director, Canada, Ingenico Group
MYTH NFC payments have become so popular with the emergence of smartphones and customers’ willingness to use their phones.
FACT “In Canada, the proliferation of NFC payment acceptance actually predates the use of smartphones for payment. The contactless payments ecosystem was driven by vendors who elected to provide contactless capability as a standard payment terminal feature several years ago, while card issuers were increasingly including contactless with CHIP cards. With contactless payment acceptance already in place in the country, smartphone users have enjoyed widespread use of their devices at the vast majority of points of sale.”
Richard Giannini, SVP Product Development, Canada, Ingenico Group