Fighting fraud through data compliance: What fintech companies can do to keep customer data safe

Fighting fraud through data compliance: What fintech companies can do to keep customer data safe

By Tony Fitzgibbon, Chief Executive Officer, Data Zoo.

Fintech companies across the globe are facing an increasing threat from fraudsters, making fraud prevention a critical challenge for the industry. A comprehensive study conducted by Roy Morgan revealed 93 per cent of Australian consumers express concerns regarding digital bank fraud – a staggering figure that emphasises the urgent need for fintech companies to implement effective fraud prevention and customer data protection measures.

In Australia, there are robust laws and regulations in place to ensure the safety and security of customer data for fintech companies. Fintech companies operating in Australia must comply with federal and state-level regulations to safeguard customer information and maintain data privacy.

The primary federal law governing data protection in Australia is the Privacy Act 1988, overseen by the Office of the Australian Information Commissioner (OAIC). The Privacy Act sets out the Australian Privacy Principles (APPs), which provide guidelines for the collection, use, storage, and disclosure of personal information by organisations, including fintech companies. It requires entities to implement reasonable security measures to protect personal information from unauthorised access, use, or disclosure.

In addition to the Privacy Act, there are sector-specific regulations that fintech companies may need to comply with, such as the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act). This legislation imposes obligations on financial institutions, including fintech companies, to implement measures to prevent money laundering and terrorist financing activities.

Fintech companies in Australia may also need to adhere to state-level regulations. For example, the Victorian Privacy and Data Protection Act 2014 and the New South Wales Privacy and Personal Information Protection Act 1998 provide additional requirements for data protection within those states.

To ensure compliance with these laws and regulations, fintech companies in Australia are adopting various frameworks and standards. One such framework is the Australian Government’s Digital Transformation Agency (DTA) Digital Service Standard. This standard provides guidelines and best practices for government agencies, and it is often used as a benchmark by fintech companies to ensure the security and privacy of digital services.

Fintech companies are leveraging advanced technologies, such as artificial intelligence (AI) and machine learning, to prevent fraud and detect suspicious activity and meet compliance regulations. These technologies enable fintech companies to analyse vast amounts of data in real time, identify patterns and anomalies, and flag potentially fraudulent activity. AI and machine learning can also improve the accuracy of identity verification and authentication, reducing the risk of unauthorised access.

Data Zoo is a leading provider of technology solutions that help businesses, including fintech providers, prevent fraud and protect customer data. Data Zoo’s tech solution includes a suite of tools and services designed to help businesses comply with regulatory requirements and safeguard customer data from cyber threats. Data Zoo’s fraud detection solutions leverage cutting-edge biometric capabilities, such as passive liveness and voice biometrics, to detect and prevent fraudulent activity in seconds. By utilising intelligent identity tools, businesses can verify the identity of global customers, flag suspicious users and prevent account takeover attacks.

Another measure that fintech companies can take to protect customer data from fraudsters is to prioritise employee training and education. Cybercriminals often use sophisticated techniques, such as phishing and spear-phishing, to access sensitive data. By educating employees on recognising and responding to these threats, fintech companies can reduce the risk of successful attacks. Employee training can also include best practices for password management, data access controls, and incident response planning.

Despite these measures, fintech companies are still face significant challenges in protecting customer data from fraudsters. Cybercriminals are constantly developing new techniques to bypass security measures, and fintech companies must remain vigilant to stay ahead of the curve. Additionally, businesses engaging in compliance washing can put customer data at risk by failing to implement meaningful measures to protect data.

To address these challenges, fintech companies must continue to invest in advanced technologies and remain up-to-date with evolving fraud threats, and the legislation that governs data protection. By doing so, they can stay ahead of fraudsters, protect customer data, and maintain the integrity of the financial system.