Data Encryption in Transit and at Rest

Sensitive data safety is non-negotiable in software development for fintech. A core banking system, a payment gateway, or a mobile fintech app – all of these need a encryption mechanisms that are robust and very specific— both in transit and at rest. It is essential to securing personal and transactional data, maintaining user trust, and ensuring regulatory compliance. 

As developers at OceanoBe, we deal with this challenge daily. Here's a practical, no-nonsense guide to implementing encryption at both ends of the data lifecycle — from transmission to storage — with the right balance of security, performance, and maintainability. 

Why encryption matters in banking and fintech 

Financial systems handle a vast range of sensitive information — from personal identity details and payment credentials to transaction histories and authentication tokens. Breaches not only damage a company’s reputation but also trigger massive financial penalties due to strict data protection regulations like PSD2, GDPR, PCI-DSS, and more. 

Encrypting data in transit ensures that even if intercepted, the data cannot be read. Encrypting it at rest protects against data leakage from internal threats or compromised infrastructure. Both are required to establish a secure-by-design architecture in banking software. 

Encryption in Transit: TLS everywhere 

Transport Layer Security (TLS) is the standard protocol for encrypting data in transit between services, apps, and APIs. In banking platforms where microservices architecture is common, every communication path must be protected. 

Implementation tips: 

Enforce HTTPS with TLS 1.2+: Outdated protocols like SSL and early TLS versions are vulnerable. Modern banking systems should enforce at least TLS 1.2, ideally TLS 1.3, across all endpoints. 

Use strong ciphers: Avoid weak cipher suites. Stick to AES-256-GCM or ChaCha20-Poly1305 where performance is critical. 

Mutual TLS (mTLS): Especially for internal service-to-service communication, mTLS ensures that both the client and server authenticate each other. 

Certificate management: Automate certificate rotation with tools like Certbot, HashiCorp Vault, or AWS Certificate Manager to avoid expired or misconfigured certs. 

In microservices environments — especially those using service meshes like Istio or Linkerd — encryption in transit can be enforced uniformly across services with minimal developer overhead. 

Encryption at Rest: AES and Tokenization 

When data is stored in databases, file systems, or backups, encryption at rest keeps it safe from unauthorized access — whether due to a breach or misconfiguration. 

Key approaches: 

Advanced Encryption Standard (AES) 

AES is the gold standard for symmetric encryption in the banking industry. 

AES-256: For most financial applications, 256-bit key length is used to meet compliance and ensure future-proof security. 

Key Management: Never hard-code keys in code. Use centralized solutions like AWS KMS, Azure Key Vault, or HashiCorp Vault for generating, storing, and rotating encryption keys. 

Field-Level Encryption: Apply AES selectively at the database level for sensitive fields (e.g., SSNs, card numbers) to reduce performance impact. 

Tokenization 

Tokenization replaces sensitive data (like a credit card number) with a non-sensitive placeholder (token), which has no exploitable value outside of the system. 

Use Cases: Especially useful in payment processing where PAN (Primary Account Number) data must be protected. 

Vaulted Approach: Store the mapping between tokens and actual values in a secure vault, ensuring only authorized systems can access the original data. 

Tokenization is widely used in compliance with PCI-DSS requirements and has become a core component of modern payment systems. 

Architecture for security and performance 

Encryption — especially at rest — comes with trade-offs in performance and complexity. That’s why architectural decisions are crucial: 

Encrypt selectively: Not all data needs to be encrypted. Use classification strategies to identify what’s confidential or regulated. 

Offload crypto to hardware: Use Hardware Security Modules (HSMs) or cloud-native HSM-backed services to boost performance and increase tamper-resistance. 

Audit and monitor: Implement logging for encryption/decryption events. Combine with SIEM tools for anomaly detection. 

At OceanoBe, we incorporate these patterns into our development lifecycle and client architectures, using industry-approved libraries and audited solutions. Whether it’s a cloud-native fintech app or an on-premise core banking system, we help financial institutions balance security, scalability, and speed.