Fintech should make data safe and secure
Why security will be essential in Financial Services
As 2016 closes, I will share insights associated with the methodology and outcomes of my 3 (edtech, fintech, real estate tech) updated investment theses. The goals of “Notes on a Thesis” are to 1) present my research, 2) connect with relevant founders, 3) cultivate a discussion around the thesis, and 4) provide templates for aspiring VCs.
Information is everywhere thanks to the internet. With the emergence of mobile devices and the IoT space, we can now track data on the way we live, play, and perform in various aspects of life. Every since fintech 1.0 stalwarts like PayPal have existed, consumers have had the luxury of obtaining information at our fingertips. Mobile Banking has specifically has created numerous chances for growth and innovation within the fintech sector. Many consumers enjoy signing up for fintech solutions because they are easy to use and provide more choice. Fintech products typically offer an easier onboarding process thanks to technological advances and less regulatory processes that typically cause roadblocks in progress.
However, there is a growing concern that is a byproduct of the banking industry’s growing access to consumers’ data: security of consumer data. The proliferation of fintech products has increased the chance of risk of data breaches. This trend calls for an improvement of authentication, security, & fraud analysis solutions.
A crucial sub-sector in the fintech industry will be startups that aim to address the 4x growth of cyber breaches of the last 5 years. It’s evident that traditional banks see the need to address data breaches given the anticipated 37% growth in enterprise mobile security budgets.
Advancements made in machine learning, analytics, artificial intelligence, and blockchain, have the potential to secure the transactional trust banks need to maintain in the future. There are a number of fintech startups that are building cyber verification tools or machine learning algorithms to specifically help financial institutions to identify fraud and/or protect information (consumer, transaction, and aggregate financial data). As more and more consumers use technology to conduct and track their financial history with multiple various companies, it will become even more critical that the financial service providers have the necessary security tools to protect the consumers’ data.
Earnest Sweat is an Entrepreneurial Engineer for Camelback Ventures and an Investor in Residence for Backstage Capital. If you have any questions or requests please connect with Earnest through LinkedIn, Twitter, or AngelList.
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