Fintech and password security

Fintech is a “new” concept and popular buzz word these days. But what does it mean? How will it affect you and your finances? Fintech is a combination of two words – financial and technology. So how then can Fintech be new, since banks have always used cutting edge technology like mainframe computers, card payments on POS machines, ATMs etc. to drive financial transactions? Why then is there heightened interest in something that has been around for long? The new thing in the equation is technology in the hands of the Banks’ customers. With the advent of the smart phone and its numerous capabilities came innumerable possibilities for enhanced banking services. Four things are essential for Fintech to work –the bank’s Hardware where customers’ data is stored, the payment platform where the exchange is done (e.g. PayPal or Interswitch), the User Interface for connecting to the hardware and platform (e.g. mobile banking App) and the Communication Channel (e.g. POS or smart phone). The fourth essential is now ubiquitous hence the renewed interest in Fintech. Fintech is now driven by customer expectations and not by the needs of the banks or even technology itself.

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Financially intelligent people should know and use the best technologies available to effect their financial transactions efficiently. These technologies may be expensive initially but become cheaper with widespread usage. Fintech helps us to manage our finances better because we have access to our transaction history and can monitor our accounts.

As users of Fintech, what should we expect from service providers? Firstly, security. The payment platform should be secure enough to protect the user from identity theft and to protect funds and transaction history from unauthorised access. Secondly, consumers expect convenience/ ease of access – that’s the main reason for choosing to do the transactions on the smart phone instead of going all the way to the bank. Thirdly, we expect ease of use. The Apps must be user friendly and easy to use. Once these three basic requirements are in place, a Fintech product is good to use.

We now use various Fintech enabled products and services. Many of us have stopped using recharge cards to recharge our phone service. Many buy goods online and pay without buyer meeting seller. Others use the services of Uber and Taxify without cash exchange or even transferring funds online. Then there are the crypto currencies – the future of payment and store of value (the main characteristics of money). Caution and an in-depth education are required for investments in crypto currencies; there are five different categories and currently over 4,000 crypto currencies in issue; Bitcoin is just the most popular.

In life, identification grants access. Since physical identity verification is impossible in cyberspace, passwords are currently the most common means of ascertaining identity. Therefore, password security is key to an enjoyable Fintech experience. I cringe when I hear people sending their wards with their cards and PINs to collect cash from the ATM because “the queues are too long.” Your password should not be shared with anyone. Banks and payment platforms do not even have access to your password once you change the initial one they give you. The passwords are stored in their systems in a format known as “hashed form”, that’s why when you lose your password, you have to create a new one – no one has access to it. The best pass code is not only alphanumeric but also has a symbol in it. Writing down your pass code to aid your memory is a no-no; instead relate it to something in your life so you can easily remember it. For instance, if your parents’ names are Femi and Biodun and their birthdays are May 27 and December 31 respectively, you could create a pass code like – Fe27Ma&Bi31De. That would be easy for you to remember and almost impossible for anyone else to decipher. Avoid using one pass code for multiple Apps. Ensure all your devices are protected with up-to-date antivirus and anti-spyware products to limit the risk of hacking.

Insurance, telecoms, retail and commerce, government agencies, etc. are getting on the Fintech bandwagon. Fintech may soon become the only way to effect simple financial transactions. Bill Gates is quoted to have said: “We will always need banking but we will not always need banks”. If that is true, let’s embrace the exciting future that Fintech promises.