hsm for Banking

Cybersecurity in digital transactions and methods of payment of Banking and Fintechs

Secure Digital Transactions, PSD2 Compliance, PCI Compliance and Blockchain

Although in our  mind 2020 will remain like the year of the worst crisis ever remembered, the pandemic has also brought the acceleration of the Digital Transformation process in financial institutions.

Increased purchases through e-commerce, increased use of e-banking and mobile banking, Wallets systems, as well as third-party payment Apps linked to Open Banking such as Amazon or Google, have led a higher-than-expected increase in digital transactions and payments, through these channels, to the detriment of the use of cash.

In turn, this situation has turned out into an increase in the number of cyberattacks and fraud incidents, both in traditional banking and fintechs and in the need to strengthen the security of transactions made through these new digital channels.

Trends in Financial Cybersecurity

To alleviate the effects of this situation, traditional financial institutions and Fintechs have security policies, procedures and measures, as well as regulations aimed to preventing and mitigating the risks of phishing fraud, such as the European PSD2 Directive, which obliges financial institutions to implement enhanced authentication systems (Strong Customer Authentication, SCA) through which , at the time of accessing online banking or making digital payments the user must be identified by something that s/he only knows (a PIN or password) and through something that s/he owns (such as the mobile phone). In addition, in some cases, this authentication can be reinforced by an additional third factor, something inherent to the user (for example, facial recognition).

Another security solution that financial systems rely on in their business operations is Cryptographic Hardware or HSM. Banking cryptography allows you to encrypt and protect banking transactions, generate secure access keys for users of Electronic Banking and Mobile Banking, create Tokenization keys, generate PIN codes, EMV certificates for Chip Cards, protect data and information of users and cardholders, etc.

Banking cryptography used in the methods of payment must have the appropriate level of certification to be reliable such as PCI HSM PTS 2.0 Certification or higher.

As a result of the process of digital transformation of traditional banking and the emergence of Fintechs, new innovative digital financial systems are being implemented, within what has been called “decentralized finance” or DeFi, and within whose scope are digital assets (cryptocurrencies), Smarts Contracts and Apps built in Blockchain technology, among others.

Blockchain, is a disruptive technology based on cryptographic foundations that allows block encryption and digital signature (Smart Contracts) and that, although initially oriented to management of cryptoactives, has transcended to other business processes in the financial sector such as Compensation or Cross-Border Payments.

The software-based encryption and digital signature functions using Blockchain can be enhanced by the use of cryptographic hardware, providing confidence to the methods of payment operation; while providing this technology with greater governance, taking advantage of decentralization and efficiency, among others.

The emergence of crypto-economy means that, in the financial sphere, it is necessary for them to live together fiat money with Blockchain-based digital currencies and that they are state-owned and supported by regulator entities.

The exchange of securities or fiat money by cryptocurrencies needs to be normalized, as it is due to a growing reality that, for some time, companies and individuals have been carrying out without any fear.

With regard to the situation and state of the art of this technology in Spain and Latin America, we encourage you to read this II Blockchain Report of REALSEC

Another trend that also gains ground in the methods of payment is IoP (Internet of Payments) that takes advantage of the communications of devices connected to the Internet of Things network for the realization of secure and agile transactions, often using Blockchain for “Blockchain of Things” transactions (here we can cite as an example the payment of parking through our car).

Just as Tokenization which, through algorithmic encryption, replaces the PAN numbering of the payment card with a single-use numeric code, which significantly reduces fraud while storing this data on trusted shopping sites. All of this translates into convenience, agility and security in the methods of payment.

Hardware Security Module for robust encryption

We must not forget that, if we want to strengthen these technological trends, cybersecurity in the financial field is a key factor and that Cryptographic Hardware is the most robust and reliable option to consider.

If as a financial institution you want to meet the requirements and standards of the industry, in terms of cybersecurity, it is essential to choose a hardware security module, which has the international certifications PCI HSM PTS V2.0, granted by Security Standards Council and / or FIPS 140-2 Level 3, endorsed by the NIST.

REALSEC’s Financial HSM offers, among other advantages, the highest transactional performance on the market, all banking cryptographic functions and algorithms included, remote console for Keyblock management and support for secure key processing, as well as easy integration with systems of payment and infrastructure of any Bank or Fintech.

To learn more about our Financial and Payments HSM, visit the following LINK

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