Security is a very important issue when it comes to lending operations in the context of a digital lending environment that is continuously growing. The first threat that is rife in the financial industries is cyber threats, especially data breaches and hacking in which personal and credit borrower details are vulnerable.
Another type of an attack is associated with phishing, when the criminals lure borrowers into sharing their details with whom they mistakenly believe are legitimate lending organizations. The trend of using social media and mobile apps escalates the vulnerability to cyber threats and scams necessitating innovation in protective measures.
There are numerous borrowers’ and bank’s personal and financial details on digital lending platforms, therefore data protection and confidentiality are essential. One tough job is compliance with privacy regulations; some of which include data encryption and controls, and the proper storage of borrower information.
This is because failure in any organization to protect such information has dire consequences including huge losses and reputation loss from customers. Borrower’s data is sensitive hence needs to be guarded from misuse, sharing, or breaches that may occur due to machine failure.
Secure forms of identification are crucial when it comes to providing safety to the online credit marketplaces. Old and plain number/manic endorsing of usernames and passwords cannot shield essential borrower data from the outside world. Multi-factor authentication (MFA) is a security protocol where the user is asked to provide further identification apart from the usual password or PIN by presenting a one-time code, for instance, fingerprint.
This makes sure that only the people allowed should manipulate their accounts or take part in any financial processing. But making such authentication smooth while maintaining adequate security can be challenging since it crosses the thin line between offering users the most comfort while unlocking the most robust security measures.
As the popularity of mobile loan applications increases, protecting such programs becomes problematic. Mobile devices are more vulnerable to threats due to mobility which may lead to either loss of device, or use of insecure wireless connections.
Moreover, security failures are known to cause apps to be prone to malware or unauthorized access because of wrong security practices. To avoid these risks, anyone operating a mobile lending platform must make sure that his or her app is updated with the latest security patches and must also use encryption that is as state of the art as possible.
There are certain measures to follow when using mobile devices to borrow or apply for a loan: need for protection of user information, need for security of the designed app, periodic security assessments, familiarizing users with risks associated with mobile lending.
Digital lenders have the obligation to conform to several regulatory measures and best practices to enhance cybersecurity. In most occasions these regulations require organizations to put in place some security measures like encryption, audit, response measures in case of an incident affecting borrowers as well as their data. Ensuring these standards assists in minimizing security threats while at the same practicing creating consumer confidence in digital lending platforms. The difficulty is in coming up with the new rules every time there is a change in the regulatory system and guaranteeing that the lending platforms will be able to meet local and international security demands.
The cybersecurity risks are also expected to increase with the advancement in the digital lending industry. The current threats associated with hacking, unauthorized virus penetrating, and fraud are real and need monitoring by financial houses constantly. AI and ML, being part of the technologies the lender uses to provide loans, offer a secure solution for borrowers if other regulations, password protection, and other security measures to protect data, are put in place. However, more changes in the cybersecurity environment should be expected, and the optimal tactics of the approach to security will remain crucial to ensuring the future of digital lending.
DEV-AASHISH CAPITALS PRIVATE LIMITED is a Non Banking Finance Company (NBFC) registered with the Reserve Bank of India (RBI). RUPEE112 is the brand name under which the company conducts its lending operations and specialize in meeting customer's instant financial needs.
