Digital payment sector growth depends on scalability of risk and security measures
The digitisation of money, rapid proliferation of the Internet and mass-adoption of mobile phones are positive headwinds in India’s journey towards a digital economy. While the potential for scale and growth for fintech companies is undeniable, success will be determined by the ability of players to scale without compromising risk and security.
Trouble makers in the digital eco-system are evolving and are finding innovative ways to breach it and hence the need to evaluate the current risk and security measures. Security and a pointed focus on compliance is of paramount importance, regardless of platforms – online or on mobile. Cyber breaches and successful phishing attempts have been possible on account of weak authentication across a majority of sites where user ID and password are sufficient to gain access to the sites and services.
While there is no one solution for all the issues plaguing the industry, it does highlight the need for the industry to partner and provide the end consumer a safe digital payments eco-system.
Data collection, correlation and collaboration is key for the industry to successfully defend against these threats. Leveraging the power of data will be critical. We need to develop predictive detection of access patterns, matching of identities and behaviours by machine learning to prevent malicious activities.
Combining advanced data processing with “detective work” by some of the best risk professionals in the world is how money can be moved to the right people and out of the hands of the wrong ones. Systems get smarter with every transaction and allow for accurate establishment of patterns in order to trust good people, and spot the bad guys.
Risk assessment and future proofing need to be the foundation on which financial technologies are built. It cannot be an ‘add-on’ feature. Convenience is enabling transactions with a click of a button but what will continue to drive adoption is the robust security that protects the click.
There is need for 24/7 data analytics combined with human oversight to help spot suspicious activity on accounts. While this process has already been initiated, there is further scope for payment companies to design advanced security technologies where risk based analytics can be devised to verify customer identity and protect the information. In addition, adjacent systems that come in contact of this data store need to do so through appropriate controls and encryption, one is only as strong as the weakest link!
Technology caters to a group of buyers and sellers who are always on the go transacting across time zones. This requires them to work round the clock and respond real time. Digital payment solutions that are truly global in nature have been able to bridge this gap and have in the process empowered merchants, across the globe.
A strong two-sided network backed with a unique story driven risk management approach coupled with deep expertise in data analytics to create risk solutions which can differentiate a fraud behaviour from the intended good user behaviour with great confidence will be a driver for growth in digital payments.
The author is the India director, PayPal
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