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As the Fintech sphere is evolving with advances in digital technology, it is natural that the aspect of cybersecurity needs to be taken into account. The days are over when the cyber-attackers were only interested in monetary gains; today's highly motivated attackers are using sophisticated and complex mechanisms that have a much higher probability and frequency of occurrence. The continued focus on creating an advanced and comfortable user experience has ultimately led to a rush in which financial institutions are taking advantage of digitization and mobile technology to innovate and transform virtually every aspect of the business. The potential of this threat is actually realized when we realize that account creation attacks have increased by a whopping 382% in the fourth quarter of 2017 compared to that of 2015 alone. In this scenario, technologies like Blockchain can be exploited to mitigate these cyber attacks on financial institutions.
Over the years there has been a growing interest in Blockchain – a technology whose potential is unimaginable – and how it could be used to create a paradigm shift in the way that financial services activities are handled in general and its application in the field of cyber security to In simple words, a technology consisting of severely secure blocks that represent various records, connected to each other by a hash function that provides a secure storage of data, is in the calculation by numerous telecommunications devices to protect themselves from cyber attacks.
Blockchain, if exploited properly, has the power to enable a robust and highly secure security network that practically can not be hacked. In addition, real-time transaction speeds, controllability and transparency, user-controlled and decentralized networks and allowing feedback processes are some of Blockchain's best-known features that could be exploited by the FinTech sphere as part of the cybersecurity applications in particular for the sphere of financial services. To top it all off, blockchain with its tamper-proof and decentralized registry system paves the way to move away from the centralized and private internal accounting system that is used by almost every company – something that makes systems vulnerable to cyber attacks in first – in addition to reducing personnel and server costs and empowering informed decision-making. It is estimated that the global banking sector could end up saving nearly $ 20 billion by 2022 if this were to be put in place.
The thought that a decentralized open source code, easily downloadable and can be managed by anyone, has the potential to create unimaginably robust IT security applications is truly revolutionary and its acceptance and implementation by biggies in global financial services is still in its nascent stages. However, with numerous forward-looking leaders and venture capitalists – Marc Andreessen to name one: recognize the power of blockchain technology and invest in it is proof of its increasing acceptance. A further blow in the arm for the acceptance and use of the blockchain comes with the formation and acceptance of the Consortium R3– a group of over 200 companies in the research and development of accounting books distributed in financial systems – from almost 25 global banking and financial institutions. One of the group's goals is to develop standards that can further catalyze the financial services industry, with a strong focus on cyber security. Also NASDAQ has stated that they intend to use the power of the blockchain to create platforms for securities trading.
In conclusion, Blockchain has numerous advantages that could be exploited to prevent the sphere of financial services from various cyber attacks – something that not only results in huge losses, but also creates a loss of credibility. The future is definitely bright for blockchain technology and the evangelists expect the blockchain to be "Knight in Shining Armor"For players in the sphere of financial services.
(Faisal Husain is Synechron's co-founder and CEO and has over 20 years experience in the financial services and technology industry.)