HYDERABAD: While the government's aim to move to a cashless and digital economy following demonetisation may come with its set of benefits, it also brings along a host of security threats. Catering to this problem are financial technology startups which are helping banks and financial institutions deal with possible security breaches and threats at different stages of a transaction. Financial technology startup Quantum Data Engines (QDE) partners with banks and financial institutions for fraud monitoring, and anti money laundering compliance, among others.

Their services come in three levels -first is to identify potentially suspicious individuals or entities, which is followed by identifying a suspicious transaction and then helping them report the same to the regulator.

In the past month, QDE has received enquiries from their existing custo mers, like Kotak Mahindra, to tweak the software and incorporate new features based on the new guidelines banks have received after demonetisation. "For example, Jan Dhan accounts were not monitored earlier, but banks are required to monitor these accounts because of the sudden inflow of cash in the last one month," said Satya Prakash, cofounder of QDE.

Proximity payment solution-provider ToneTag is using blockchain technology to help avoid financial security breaches and is also tying up with a few public sector banks to use the technology at ATMs that will be live in a few months. The company went live with its proprietary technology for point-of-sale (PoS) machines last month and has seen adoption by 14,000 merchants.

"We can pre-detect fraud through blockchain even before it can take place. When our software is set up at a card-swiping machine, it can track the hardware sector and detect injection of malware. If a merchant uses a PoS machine with malware, with ToneTag, the metadata including payment data and security data that is transferred to an 'envelope' in the blockchain also carries information whether the hardware was compromised," explained Kumar Abhishek, founder of ToneTag. He said the technology is expected to be used at 25,000 cardswiping machines by the end of December. Experts in the field recommend that to mitigate risk, Indian banks must rapidly adopt better secure access mechanisms, such as a strong two-factor authentication both for intranet and customer-facing networks.

"A report by Dell SecureWorks suggests that 56% of breaches originate due to weak secure access systems, especially for command and control infrastructure," said Chakradhar K, director of Unik Systems, a developer of secure communication technologies for the Indian defence and aerospace sectors.

SOURCE: CIO