Reasons Why Fintech Needs to Prioritize Privacy
As Fintech grows worldwide it's important to ensure data privacy for end users and business alike. We explore why this privatization priority is vital for Fintech's continued growth.
Fintech companies are on the rise, with more and more people using them to manage their finances. The international fintech market is projected to grow rapidly, reaching a value of about $324 billion by 2026. It will develop with compound annual growth of approximately 25.18 percent between 2022 and 2027.
This skyrocketing growth prediction shows the relevance of fintech companies in the current world. These companies are also under constant pressure to develop new tech and services. And while creating these services, they need to safeguard customers’ data.
This article will help you comprehend the reasons behind the increasing need to prioritize privacy in the fintech industry.
What is data privacy?
Data privacy is the degree to which individuals should be allowed to access, possess, use, and share information. For example, you wouldn’t mind sharing your name with a stranger while making an introduction, but you would not want to do so until you’ve gotten to know one another better.
Furthermore, when sensitive data enters the wrong hands, things can go wrong. A data breach at a government office, for example, might result in sensitive information being released publicly. A data security incident at a school might jeopardize students’ personal information, which could be used to commit identity theft.
Therefore, the risk of losing data is everywhere, and each sector must take action to eliminate this. If privacy is breached, the company will suffer financially and reputationally. But the good thing is that consumers are more aware of their data privacy rights than ever before and are vocal about when their privacy is violated.
Why do fintech companies need to prioritize privacy?
This is the digital age, and one cannot forget that the number of hacking cases is increasing every year. The attacks on big companies like Equifax have made it clear that no company is safe from cybercrime.
Besides the risk of cybercrime, fintech companies also need to prioritize privacy to protect their users from other dangers. For example, if a customer’s data falls into the wrong hands, it can be used for blackmailing or identity theft.
Users themselves show incredible interest in security and privacy-focused options online. They might drop certain services if their operation or track records seem invasive.
For one, more privacy-conscious people choose to download VPN apps to minimize their digital footprints. A Virtual Private Network protects data exchanges online by encrypting internet traffic. Thus, users connect to VPNs when making financial transactions online. It gives users peace of mind and more confidence to conduct business online.
To comply with regulations
One of the main reasons fintech needs to prioritize privacy is to comply with regulations. Financial institutions have always been subject to stringent regulation, and fintech companies are no exception. They need to ensure that all customer data is protected and secure. It is particularly crucial considering recent data breaches suffered by Capital One.
To protect customer data
Another reason why fintech needs to prioritize privacy is to protect customer data. As mentioned above, financial institutions are subject to stringent regulations to protect customer data. Fintech companies need to ensure that all customer data is protected from unauthorized access, use, and disclosure.
To protect the company from liability
If a fintech company doesn’t take the necessary precautions to protect user data, it could be held liable for the damages or losses suffered as a result. It could include financial losses, loss of business, and damage to reputation.
To build trust with customers
One of the main reasons fintech companies exist is to build trust with their customers. If customers don’t trust a company to protect their data, they are unlikely to do business with it. Trust is essential for any company that wants to succeed in the fintech industry.
To compete with other fintech companies
Competition is fierce in the fintech industry, and companies need to do whatever they can to stand out from the crowd. Offering superior levels of privacy and security is one way to do this. Moreover, this can be the unique point of their success story.
To attract new customers
To grow, fintech companies need to attract new customers. One way to do this is by offering superior levels of privacy and security. This will make customers feel more comfortable doing business with them, and they may be more likely to recommend them to others.
To retain current customers
Fintech companies also need to prioritize privacy to retain their current customers. If customer data is mishandled or security breaches, customers can decide to take their business elsewhere.
To prepare for the future
The fintech industry is constantly evolving, and companies need to prepare for the future. In the same way, cybercriminals are also preparing for the future and speeding up the process to stay ahead of time.
So, one way to deal with this is by ensuring that all customer data is protected and secure. This helps build customer confidence and ensures that the company is well-equipped to deal with future challenges.
The fintech industry is rapidly evolving. Companies are putting efforts to do whatever they can to stay ahead of the curve and protect their customers’ data. Privacy is essential for companies in the fintech industry, and the reasons for the same are explained briefly above.