India’s fintech cos are growing but cybersecurity fails to make the mark

• Out of 2035 Indian fintech startups, only 58 focus on cybersecurity: India Fintech Report 2019.
  
• This is a big problem as India currently ranks 15th in a list of world’s least digitally secure countries.
  
• Lack of awareness and scarcity of talent is a big reason for the absence of cybersecurity companies.
  

Financial technology startups have been a major part of India’s startup growth story, especially after India’s crack down on cash during its demonetisation drive two years ago.

But among the 2,035 Indian fintech startups, only 58 work in regulatory technology (a segment of fintech dealing with compliance) and cybersecurity, according to the India Fintech 2019 report released at the recently concluded conclave Fintegrate Zone.

Some of the reasons behind the absence of startups dedicated to security is the lack of knowledge and resources, along with the required skills to work on the challenges of these sectors, according to the report.

India’s fintech story has been synonymous with leading players like Paytm, Policybazaar etc, with impressive reach on their side. Partly due to their success, and the opportunity in digital financial services, the number of players has since mushroomed. According to the report, India is home to a whopping 375 payment startups and 338 fintech companies.

However, given the sheer volume of players and India’s ranking of 15 on a list of the world’s least secure countries with respect to cyber security, only 58 startups dedicated to security may not be enough. Financial services and banking sector fall under “critical infrastructure” for cyber security, according to government think tank Niti Aayog.

Growing threats

According to the EY Global Information Security Survey (EY GISS) 2018-19 – India edition, only 19% of Indian companies have a sufficient budget to have the desired level of cyber security.

For instance, the WannaCry Ransomware which hit businesses including banks globally in 2017 didn’t spare India, which was the second-worst affected country in the APAC region while holding the fifth-worst affected rank globally.

When it comes to fintech, the importance of cybersecurity and regtech only increases further with people entrusting these companies with their payment details. India’s growing number of e-commerce and hyperlocal delivery startups, too, have integrated payment gateways through third party payment apps.

Further, fintech companies also gain access to customer spending behaviour and financial information, putting them at risk of cyber attacks. With the growing need for compliance in India, Regtech too becomes an important part of Indian fintech scene. Many players have relied on sensitive personal data such as Aadhaar to meet electronic Know-Your-Customer (e-KYC) requirements.

“Our database shows there are 53 startups in India in the RegTech space providing varied solutions like digital onboarding, fraud prevention, ID authentication, ID management, insight generation from structured data, digital signature, etc. RegTech would find increased usage in KYC/AML compliance,” stated the Indian fintech report.

See Also:
A majority of Indian corporates are unprepared for cyber security challenges: Report
India’s central bank tells digital wallets to avoid this app linked to compromising confidential user data
Here are the most controversial data breaches of 2018 that affected Indian users