Fintech Security Measures

Are One-Time Passwords (OTPs) losing their edge? New avenues like passkeys and biometric authentication are going mainstream in the digital payments industry — with an expectation of a 2-3% point jump in transaction success rates, Pratik Bhakta and Ajay Rag report for The Economic Times (ET). While OTPs have been prone to delivery issues and transaction failures, these new authentication options, being tied to the connected device, lead to higher success rates, the report explains. “We expect biometric-based payment authentication to improve transaction rates,” says Girish Krishnan, payments rewards and merchant services at Amazon Pay. Biometrics authentication also solves the wrong Personal Identification Number (PIN) dilemma for users when using the Unified Payments Interface (UPI), he adds. Technical decline — wrong PIN or backend issues — is the second common reason for UPI transaction failures, data from the National Payments Corporation of India suggests. “The impact (of this move) will likely be most pronounced in card transactions, where a chunk of failures is because of friction points, which biometrics can effectively address,” says Mobikwik’s CEO Bipin Preet Singh. Companies like Visa are amplifying authentication with passkey as the second factor after biometrics. “This reduces dependency on telecom networks and renders phishing or credential replay attacks virtually impossible,” says Ramakrishnan Gopalan, head of products, India & South Asia, Visa. Passkeys also help reduce digital payments processing costs, he adds. Another benefit? Fraud prevention, industry experts share with ET. “With device tokenisation, which is already in place, it’s a much better user experience and also more secure, since an OTP can be shared but this can’t,” Cashfree’s Reeju Datta says. ➡️ How will new authentication methods impact India's digital payments landscape? Share your take in the comments section. Source: The Economic Times: https://lnkd.in/g5dF7hcF ✍: Dipal Desai 📸: Getty Images #digitalpayment

Identity is the most misunderstood layer in financial services. Now it is becoming core infrastructure. Historically, financial services scaled through standardization and shared infrastructure. Identity has followed a different path: 𝟭. 𝗠𝗮𝗻𝘂𝗮𝗹 𝗶𝗱𝗲𝗻𝘁𝗶𝘁𝘆 Identity was established directly between the institution and the customer, typically in person. This ensured trust and control. But it limited scale, tying growth to physical presence. 𝟮. 𝗗𝗶𝗴𝗶𝘁𝗮𝗹 𝗶𝗱𝗲𝗻𝘁𝗶𝘁𝘆 Identity moved online, allowing institutions to onboard customers remotely and expand distribution. This solved physical constraints. But each institution built its own processes, leading to repeated verification and duplication. 𝟯. 𝗩𝗲𝗿𝗶𝗳𝗶𝗲𝗱 𝗶𝗱𝗲𝗻𝘁𝗶𝘁𝘆 Specialized providers and national identity schemes improved the quality and speed of verification. This made onboarding more reliable and easier to scale. But instead of convergence, it created a fragmented set of identity sources across markets.   𝟰. 𝗜𝗱𝗲𝗻𝘁𝗶𝘁𝘆 𝗮𝘀 𝗶𝗻𝗳𝗿𝗮𝘀𝘁𝗿𝘂𝗰𝘁𝘂𝗿𝗲 The number of identity systems increased, improving coverage for institutions operating globally. This gave access to more trusted identity sources. But it shifted the problem from verification to integration. 𝗔𝗻𝗱 𝘁𝗵𝗶𝘀 𝗶𝘀 𝗲𝘅𝗮𝗰𝘁𝗹𝘆 𝘁𝗵𝗲 𝗽𝗿𝗼𝗯𝗹𝗲𝗺: As financial services become more cross-border, embedded, and real-time, identity is no longer a one-off step. It sits across onboarding, access, fraud, and compliance - but remains fragmented. There are now 150+ government-backed digital identity schemes worldwide, each built for a specific market, with no common standard. 𝗪𝗵𝗶𝗰𝗵 𝗺𝗲𝗮𝗻𝘀: • Every new market comes with a new identity integration • The same user goes through KYC again and again, depending on the provider and country • Risk and fraud decisions change by market because the underlying identity data is different • The product experience breaks across countries 𝗧𝗵𝗲 𝗻𝗲𝗲𝗱: It’s obvious that there is a clear need for orchestration. Much like payments moved from local, disconnected systems to global networks like Visa and Mastercard - replacing many individual connections with a single shared layer - identity is now going through the same shift. Hopae is building identity as the next infrastructure layer - a digital identity layer for the internet: • Access to multiple identity schemes through a single integration • Reusable identity across providers and countries, instead of repeated verification • Consistent identity signals across onboarding, authentication, and risk • Identity as an access layer, not a system to integrate Find out more here: https://lnkd.in/diHn8BY2 This is one of the biggest shifts in finance in decades: identity is becoming the protocol layer of global finance - not moving money but deciding who can. Opinions and graphics: my own

April 1, 2026. The Day OTP dies. For ten years, we’ve lived in a digital prison of our own making: Request code. Stare at screen. Wait. Retry. But RBI just signed the release papers. Come April 2026, the tyranny of the SMS One-Time Password ends, and a new era of invisible security begins. Under the new “Principal Based Framework for Authentication,” effective April 2026, the era of static SMS reliance ends. The mandate isn't just about biometrics; it’s about dynamic, risk based authentication. SMS OTPs were a brilliant hack for 2016, but they are a security liability in 2026. SIM swapping, phishing, and OTP interception have turned the humble text message into the weakest link in your bank account. Fraudsters don't hack banks anymore; they hack your impatience. The RBI framework mandates two factors, but it encourages moving beyond something you know (PIN/OTP) to something you are (biometrics) and something you have (device hardware). Imagine the change: Transaction < ₹5,000: Your phone’s FaceID authenticates it instantly. No SMS. Suspicious Activity: The bank’s AI flags a weird location, like a high value transfer from an unusual location, it will demand a strong biometric check combined with a cryptographic check of your trusted device. Zero Network Area: You tap your card on a phone, and offline biometrics approve the payment. This isn't sci fi; it's compliance. Banks must now build systems that look at context, location, spending patterns, device hygiene, rather than just blind codes. Are you ready to trust your face with your finances? #fintech #RBI #DigitalPayments

API Security Best Tips 🔥 Every API exposed online is a potential threat entry point. Securing them requires controls, monitoring, and clear policies. This guide outlines key practices for protecting APIs across their lifecycle. 1️⃣ Authentication & Authorization ▪️Use OpenID Connect and OAuth 2.0. ▪️Access Control: Apply RBAC or ABAC. ▪️API Keys: Store securely with secrets managers. ▪️Token Rotation: Automate expiration and revocation. Goal: Restrict access to verified entities. 2️⃣ Data Protection ▪️Data Encryption at Rest ▪️HTTPS: Enforce HSTS. ▪️Input Validation: Prevent SQL Injection and XSS. ▪️Key Rotation: Automate key updates. Goal: Keep data secure at rest and in transit. 3️⃣ Traffic Management ▪️Rate Limiting: Control request frequency. ▪️DDoS Mitigation: Use Web Application Firewalls. ▪️API Gateway: Centralize routing. ▪️Timeouts: Avoid resource exhaustion. Goal: Ensure stable API performance. 4️⃣ Monitoring ▪️Continuous Monitoring: Use Prometheus or Datadog. ▪️Audit Trails: Log anomalies. ▪️Alerts: Detect traffic spikes. Goal: Respond to threats in real-time. 5️⃣ Dependency Management ▪️Update Libraries ▪️Secure Configs: Enforce security policies. ▪️Secrets Management: Avoid hardcoded credentials. Goal: Reduce dependency-related risks. 6️⃣ API Versioning ▪️Versioned APIs: Avoid breaking changes. ▪️Deprecation Policies: Announce changes early. Goal: Enable seamless version transitions. 7️⃣ Development Security ▪️Shift-Left Security: Integrate in CI/CD. ▪️API Testing: Use tools like OWASP ZAP, Burp Suite, and Postman for penetration testing, vulnerability scanning, and functional validation. Goal: Build APIs securely from the start. 8️⃣ Incident Response ▪️Playbooks: Define response plans. ▪️Drills: Test readiness. Goal: Minimize breach impact. How do you identify if an API is being silently exploited (for example, through seemingly normal but malicious traffic)? ⚡ Join 24,000+ Devs for daily software visuals and career insights. I’m Nina, Tech Lead & Software PM, sharing through Sketech. Sketech has a LinkedIn Page - Join me!

We trust Face ID to unlock our phones. We trust it for banking apps. We trust it to access passwords, emails, even private photos. But when it comes to payments… we suddenly don’t trust it? We still type a 6-digit PIN. Slowly. Carefully. Sometimes twice. Doesn’t make sense. This is exactly what I found interesting about what BHIM Payments App just launched. You can now make UPI payments using biometric authentication Face ID or fingerprint. No PIN needed for everyday transactions. And before you think this is some shortcut that compromises safety, it’s actually the opposite. The biometric authentication stays on your device. Nothing gets stored or shared outside. And for higher value payments(over Rs. 5,000), PIN is still there as a fallback. So you’re not losing control. You’re just removing unnecessary friction. If you think about it, most payment failures today don’t happen because of lack of funds. They happen because: Wrong PIN Slow typing Switching between apps People just dropping off midway We’ve all been there. Biometrics fix that behaviour. It feels natural. The same way you unlock your phone, you complete a payment. No extra thinking. No extra steps. And that’s how real adoption happens in India. Not by adding more features. But by making things so simple that even a first-time user doesn’t have to think. UPI changed how India pays. This feels like the next layer of that evolution. NPCI BHIM

People hate mistakes. They treat them like stains that need to be scrubbed out. But you can't build anything meaningful without stacking mistakes along the way. And when you’re building in fintech, mistakes are guaranteed. • Wrong assumptions about licensing • Weak contracts with partners • Skipping over compliance fine print But mistakes are not the problem. Repeating them is. The first time you miss a regulatory detail is tuition. You pay for it. You learn. The second time you miss it is negligence. And regulators don’t forgive negligence. Every founder I know has a list of mistakes. But the smart ones: • Write them down • Fix the gaps • Don’t repeat them That’s how you turn mistakes into an advantage. Not by avoiding them completely. But by making sure each one sharpens you for the next stage. And you can also learn from other people’s mistakes. So here are the most common legal mistakes I see Indian fintech founders make: 1) Operating in Regulatory Gray Zones Without Clear Authorization • Lending without an NBFC license via FLDG partnerships • Investment advisory platforms without SEBI registration • Insurance comparison platforms collecting premiums without an IRDAI license How to avoid: • Get explicit regulatory approval before launching • Ensure partners have proper licenses • Don’t assume "whitespace" means permissible 2) Weak Customer Due Diligence and KYC Processes • Relying only on Aadhaar + mobile number • Missing fraud detection systems • No litigation history checks • Breaching AML cash transaction limits How to avoid: • Tag digital-only KYC accounts as high-risk • Implement advanced fraud detection • Run litigation history checks • Build robust AML monitoring 3) Incomplete Documentation and Inconsistent Agreements • Generic contracts • Verbal equity promises • Inconsistent terms between agreements • Missing stamp duty on enforceable docs How to avoid: • Draft tailored agreements • Keep terms consistent across docs • Document equity and IP in writing • Pay proper stamp duty 4) Data Protection and Privacy Non-Compliance • Not classifying user data properly • Weak consent mechanisms • No breach response system • Missing data localization How to avoid: • Classify data into proper categories • Capture consent clearly and specifically • Automate breach notifications • Localize financial data in India 5) FEMA and FDI Compliance Violations • Missing FC-GPR or FLA filings • Incorrect FDI structures • Onboarding investors from restricted countries How to avoid: • Set up systematic filing processes • Comply with sectoral caps • Run quarterly FDI compliance audits Most fintech mistakes aren’t malicious. They come from treating compliance as operational instead of strategic. So make your mistakes count. Build your systems stronger. And always be ready when the spotlight hits. --- ✍ Share with everyone below: What's the 1 mistake that taught you a good lesson in your business line?

RBI in their recent MPC meet, spoke about a very interesting concept, of doing away with SMS based OTP as an authentication mechanism. Now for a country that is used to 2 factor authentication, such a move could induce fear in the minds of customers. So, how can we build this principals based authentication mechanism, that still keeps the element of consumer trust with it? Got me thinking, we already have this in the blockchain world. Its called Zero Knowledge proofs. And while they are currently used to validate transactions, I can see how they can be tweaked for person authentication as well. So, what are ZK proofs? Let the Fintech Chronicler explain in 5 levels of difficulties: Level 1 - Toddler 👼 Imagine you have a cookie jar with a secret compartment. You can prove to your friend that you know where the secret compartment is by taking a cookie from it, without showing them where the secret compartment is. This is like a Zero Knowledge Proof - you prove you know something without revealing the secret. Level 2 - Teenager 🧒 Let’s say you have a rare pair of sneakers that you want to sell online, but you don’t want to reveal your identity. You can prove the authenticity of the sneakers (maybe by showing a purchase receipt or a certificate of authenticity) without revealing any personal information. This is similar to a Zero Knowledge Proof. Level 3 - College Student 👩 Imagine you’re applying for a loan, and the bank needs to verify your income. With a Zero Knowledge Proof, you could prove that your income is above a certain threshold without revealing the exact amount. This way, the bank knows you’re eligible for the loan, but they don’t know your exact income. Level 4 - University Graduate 👩🎓 In a digital payment system, Zero Knowledge Proofs can be used to verify transactions without revealing sensitive details. For example, you could prove that you have sufficient balance to make a payment without revealing your actual balance or other transaction details. Level 5 - Expert 👩💼 Zero Knowledge Proofs are crucial in creating secure, private digital payment systems. They allow for the validation of transactions without the need to share sensitive data, thus reducing the risk of data breaches. For instance, in a frictionless checkout process, a customer can prove they have valid credit without revealing their card details, making the transaction secure and private. Its time to put to use the modern day technologies to solve for a very traditional problem statement. #fintech #rbipolicy #payments

API Security: 16 Critical Practices You Need to Know Drawing from OWASP guidelines, industry standards, and enterprise security frameworks, here are 16 critical API security practices that every development team should implement: 1. Authentication Your first line of defense. Implement OAuth 2.0, JWT, and enforce MFA where possible. 2. Authorization RBAC and ABAC aren't buzzwords - they're essential. Implement granular access controls. 3. Rate Limiting Had an API taken down by a simple script? Rate limiting isn't optional anymore. 4. Input Validation Every parameter is a potential attack vector. Validate, sanitize, and verify - always. 5. Encryption TLS is just the beginning. Think end-to-end encryption and robust key management. 6. Error Handling Generic errors for users, detailed logs for systems. Never expose internals. 7. Logging & Monitoring You can't protect what you can't see. Implement comprehensive audit trails. 8. Security Headers CORS, CSP, HSTS - these headers are your API's immune system. 9. Token Expiry Long-lived tokens are ticking time bombs. Implement proper rotation and expiry. 10. IP Whitelisting Know who's knocking. Implement IP-based access controls where appropriate. 11. Web Application Firewall Your shield against common attack patterns. Configure and monitor actively. 12. API Versioning Security evolves. Your API versioning strategy should account for security patches. 13. Secure Dependencies Your API is only as secure as its weakest dependency. Audit regularly. 14. Intrusion Detection Real-time threat detection isn't luxury - it's necessity. 15. Security Standards Don't reinvent security. Follow established standards and frameworks. 16. Data Redaction Not all data should be visible. Implement robust redaction policies. The key lesson? These aren't independent practices - they form an interconnected security mesh. Miss one, and you might compromise the entire system. What's your experience with these practices? Which ones have you found most challenging to implement?

💡 With the 3rd quarter Board meetings over, the trend I found in the Board discussions this year, is the question gradually shifting to 'is your business truly ready' from 'have the audit observations been closed'. 💡 This readiness is from a larger view of parameters such as operating efficiency, margins, risk management, people availability and more; but also includes technology robustness and security governance. And underlying on all the above, is regulatory compliance. 🔅 Let's discuss on technology regulatory compliance. - The new directives issued by the three lead regulators in India, viz, RBI, SEBI and IRDAI between 2023-24, with added guidelines in 2025, are more than regulations, they're the blueprints for survival in this digital age (if taken seriously). - The guidelines make clear that the technology backbone, digital practices and cybersecurity aren't just IT checkboxes anymore; they're about credibility, operationalizing trust into preparedness and bring board-level accountability. 🔑 For Tech and Cyber leaders and Chief Risk Officers, the mandate isn’t merely compliance — it’s a chance to lead transformation. 🔑 Building an operational, real-time, tested, trained #cybercrisismanagement framework, which goes beyond just a document in the shared drive, strengthens trust with policyholders, partners, and regulators alike. 🪝 However, most organizations fail or fall short in moving beyond documentation and checkbox exercises, and to demonstrate real readiness, resulting in regulatory penalties, inordinate delays in recovering from incidents, lack of visibility and control over critical vendors / service providers and so on. 💡 Let's take some examples : 1. In the 'Incident Response' Playbook : - Classify incidents (data breach, insider abuse, cloud infra unavailability etc) with severity levels, not only on the impact of the potential loss of business, but also with expenses (ex, consultants, forensic experts, additional server space, penalty etc) that may be incurred to recover and restore. - As part of the Tabletop exercises, conduct crisis simulations across primary, DC and DR - simultaneous and asynchronous; measure responses against the documented timelines and procedures for communication, containment, recovery; capture learning from the mistakes / gaps, improve the plan and training of relevant team members. 2. In the 'Crisis Communication' playbook : - Map each incident (as above) to escalation protocols. From SOC analysts to crisis coordinators to the CEO, every person should know their action - first 30 minutes, first 2 days, first week, if this goes beyond 1 week. - Design Crisis Communication scripts, in hard copy (systems may not be available during a cyberattack) for media, regulators, and customers Are you ready to translate compliance into strategic capability and competitive edge? Want to learn more? Let's talk! #CyberSecurity #RegTech #IncidentResponse #CyberResilience #RiskManagement #DigitalTrust

DPDP Act Decoded #30: Lifecycle Mapping — From Collection to Deletion (A Fintech Onboarding Flow) Most privacy programmes still map notices, consents and policies in silos. That is not how systems operate. Under the DPDP framework, compliance becomes clearer when you map one system end to end. Take a fintech onboarding flow. A user enters mobile number and PAN, uploads documents, completes verification, gets risk-screened, opens an account, receives communications, and eventually exits. This is not one privacy event. It is a chain of processing events across systems and actors. 1 Collection defines the system At collection, the fintech must show what data is processed, why, how rights can be exercised, and how grievances may be raised. Sections 4, 5 and 6, read with Rule 3, frame the basis of lawful consent-based processing. Where consent is used, it must be free, specific, informed, unconditional, unambiguous, and given through a clear affirmative action. This is not just a notice issue. It is a product design issue. 2 Use is a chain of handoffs KYC vendors, fraud engines, cloud and communication platforms all form part of the flow. Each handoff is a processing event. Section 8(1) is explicit: the Data Fiduciary remains responsible for processing on its behalf. You can outsource processing. You cannot outsource responsibility. Processor engagements must be governed by a valid contract and reflected in system design. 3 Decisioning raises the accuracy bar Where data is used to make a decision affecting the user, or disclosed to another Data Fiduciary, completeness, accuracy and consistency matter. Section 8(3) makes this a legal requirement. Weak pipelines here create legal risk. 4 Security must show up in operations Section 8(5) requires reasonable security safeguards. The Rules translate this into measures such as access control, logging, monitoring, backup and processor safeguards. Not just policy. System behaviour. 5 Breach response must be designed Section 8(6) requires notification to the Board and Data Principals. Rule 7 adds operational detail, including immediate intimation and follow-up information to the Board. The system must support detection, escalation, containment and coordination. 6 Deletion is where systems fail Is the purpose still served? Has consent been withdrawn? Is retention required by law? Has erasure been carried out across fiduciary and processors? Section 8(7), Section 8(8) and Rule 8 make this an operational obligation, subject to retention required by law. For fintechs, DPDP erasure must be reconciled with other applicable retention laws. Do not map compliance by document. Map it by lifecycle: collection → validation → sharing → decisioning → storage → grievance → breach → deletion That is where DPDP compliance becomes real. Relevant Provisions Sections 4, 5, 6, 8(1), 8(2), 8(3), 8(5), 8(6), 8(7), 8(8) Rules 3, 6, 7, 8 #DPDPAct #DataProtection #Fintech #Compliance #DPAPA #DPAP