There’s no doubt that fintech innovations have transformed the way consumers interact with financial services. Digital systems have made it faster and easier to manage finances and pay for goods and services. But in exchange for more efficient and convenient services, users are asked to submit lots of sensitive data including birthdates, credit card numbers, bank routing numbers, and even Social Security numbers.

Fintechs often use this data to verify consumers’ identities, customize financial products, and in some cases, evaluate their creditworthiness.

But what happens when this personally identifiable information falls into the hands of bad actors or data brokers without the consumer’s permission? For the consumer, it can mean monetary loss, identity theft, fraud, or undesired outreach from third parties. For the fintech, it can mean losing reputation and profitability or even grappling with legal repercussions stemming from compliance issues.

As fintechs continue to evolve to deliver faster and more reliable financial services to clients, the importance of data privacy bolstered by strong data security is becoming more relevant.

There are many factors to keep in mind for fintechs striving to optimally safeguard consumer data and practice responsible data use. But here are three core elements to consider.

Data Security and Data Privacy Best Practices on the Front End — UI/UX

For many fintechs, UI/UX designs are focused on transactional processes. Your website or app may be the first point of exchange for consumer data, but in some cases, this can also be the first breaching point in a data leak.

Designs that account for data privacy and security can decrease risks for both your company and its consumers. Here are some best practices:

Be clear.

For UI/UX designers, clear, concise, and honest design choices are important. Using straightforward language, relevant information, and clear navigation can enhance the user experience while also reducing the risk of technical errors in how data is collected on the front end.

UI/UX content writers should also be sure to include language that clearly lets the user know why specific data is being collected and how the data will be shared.

Be intentional.

Designers can create safeguards that hide sensitive information being entered in a field, implement the use of two-factor authentication when necessary, and even secure certain areas of a site by requiring login credentials for access. Actions like these can directly protect data while also giving consumers confidence that their information is secure.

Be aware and monitor.

UI/UX processes can be refined and adjusted in a number of ways but ultimately are still susceptible to the continuous changes of the fintech world. Designers must be aware that some users will interact with digital platforms in ways that were not originally intended. It is important for UI/UX designers to consistently monitor their processes and adjust as necessary for any unforeseen outcomes.

Fundamentally, UI/UX, data privacy, and data security are not mutually exclusive, particularly in fintech. Disregard for how personally identifiable information is collected and managed can have profound consequences for consumers and your company as well.

Protecting Data Privacy with Secure Database Management

After a consumer interacts with your website or digital platform and submits their personal data, that data must be stored somewhere. Here comes the next leg of security — the database.

Fintechs should store consumer data in databases managed by a team of professionals whose purpose is to keep that information safe and secure. Database managers should also be responsible for troubleshooting production issues related to data population, data movement, and data storage.

Best practices for secure and responsible database management include implementing encryptions on data, limiting access to sensitive information by assigning permissions only to the employees who need it to perform their core job functions, completing proper training on security awareness, and consistently monitoring database systems for threats.

Working in fintech, it is important for database professionals to stay current. Industry leaders say that it is impossible for a system to be one hundred percent secure, but while this may be true, database managers and security professionals can equip themselves for any outcome through routine reevaluation of infrastructure and programs to ensure they meet your company’s standards.

Database security must also evolve as your firm grows and more data is collected. At Cane Bay Partners, we partner with a team of database managers who work diligently not only to enhance existing features of databases that securely store the data of our clients’ customers, but also to develop new features for their platforms.

Keeping Data Privacy, Data Security, Industry Regulations, and Compliance in Mind

Fintechs protect the data of their consumers to build trust and enhance the longevity of their brands, but there is also a legal component to this. There are regulations in place that govern how companies handle consumers’ personally identifiable information and other sensitive data. It is crucial for fintechs to know which regulations apply to the industry and put a plan in place to remain compliant.

Regulations like the General Data Protection Regulation (GDPR), the California Consumer Privacy Act (CCPA), and the Federal Information Security Management Act (FISMA) are standard in the fintech world. Essentially, these regulations give specific guidelines on how data is collected, stored, and accessed, and they may require justification for why some pieces of data are collected in the first place.

Failure to comply can result in fines, audits, and overall loss of business opportunities. One of the best ways to make sure your fintech remains compliant is to automate and integrate industry regulations into your digital systems, where possible. Like in previous examples, that may mean that your UI/UX designs and database systems are built in ways that consider data privacy and security regulations. You can also keep compliance in mind by creating systems that detect malware, viruses, intrusions, attacks, and even data encryption.

As technology advances, countries and states are defining their own data privacy laws. But it is important to note that companies themselves, especially in fintech, must prioritize data protection with good data security practices.

Wrapping It Up

Data privacy supported by strong data security is important to all parties in fintech transactions. It can protect consumers from theft, fraud, and even unwanted marketing tactics while helping fintechs maintain trusted reputations and avoid legal issues.

Best practices for data privacy and data security should be implemented into almost every aspect of fintech operations but especially areas that focus on how data is collected, stored, and shared.

UI/UX designers can create websites and other digital platforms that actively protect consumers through encryption and other safeguards built into their designs, while database managers can limit how long data is stored, who has access, and even detect the threats and potential attacks. And of course, routine monitoring of systems and processes as well as staying on top of industry trends and regulations helps are also essential to maintaining data security.

Ultimately, protecting and responsibly managing consumer data should be priorities built into every aspect of a firm’s infrastructure.

About Cane Bay Partners

Cane Bay Partners is a leading fintech consulting firm located in the U.S. Virgin Islands. We help fintechs grow with turnkey business solutions including risk analytics, portfolio management, scorecard development, and legal and compliance consulting.

To schedule a consultation, contact us today.