Table of Contents
When a financial app says “your data is encrypted,” it sounds reassuring, but it can also feel vague. What is encrypted? When is it encrypted? Who can decrypt it? And what does encryption actually protect you from in real life?
This guide explains encryption in financial apps without turning it into a computer science lecture. You’ll learn the two places encryption matters most (in transit and at rest), why key management is the real story, how biometrics fit in, and what you can verify as a user before trusting an app with your money.
What Encryption Really Means
Encryption is a way to turn readable information (like account details or transaction data) into unreadable text that can only be converted back using a cryptographic key.
If someone intercepts encrypted data without the right key, they should not be able to read it. That’s the promise. But it only holds if the app uses modern encryption correctly and protects its keys properly.
Encryption In Transit vs Encryption At Rest
Most people hear “encryption” and think it’s one thing. In financial apps, it’s two different protections.
Encryption In Transit
Encryption in transit protects data while it moves between your phone and a server, usually over the internet.
This is typically done using TLS (Transport Layer Security), which NIST describes as providing mechanisms to protect data during electronic dissemination across the Internet.
What this protects against:
- Someone on the same Wi-Fi network trying to “listen in”
- Man-in-the-middle attacks that try to intercept or modify data
- Basic network sniffing
A practical user takeaway: if an app transmits sensitive data without modern TLS, it’s not a serious financial product.
Encryption At Rest
Encryption at rest protects data when it’s stored, either:
- on your device (local storage), or
- in a backend database
Mobile apps often handle sensitive data locally, and OWASP highlights that mobile applications can store PII, secrets, and cryptographic material on-device, which needs strong protection.
What this protects against:
- A stolen device where data could be extracted
- Malware or other apps trying to access stored information
- Database breaches where stored data is copied
Encryption at rest is only as strong as the key protection behind it.
People Also Read: How Beem Handles Complaints
The Part Most People Miss: Key Management
Encryption is not just “use a strong algorithm.” The real question is: where are the keys, and who can access them?
A strong app:
- generates keys securely
- stores them in protected environments
- limits when they can be used
- rotates them when needed
- does not hardcode secrets in the app
Why Hardware-Backed Keys Matter
Modern mobile security relies on hardware-backed key storage, where cryptographic keys are managed in a secure subsystem rather than exposed to the main operating system.
On Apple devices, the Secure Enclave is described as a hardware-based key manager that is isolated from the main processor.
On Android, the Keystore system is designed to store cryptographic keys in a way that makes them harder to extract from the device, and keys can be non-exportable.
This is one reason biometrics can be so effective in finance apps: they can be used to gate access to keys stored in secure hardware.
Encryption vs Hashing vs Tokenization
These terms get mixed up in security marketing. They’re not the same.
Encryption
Reversible with a key. It’s meant for data you need to read later (like saving something securely).
Hashing
Not meant to be reversible. It’s often used for password verification (store the hash, not the password).
Tokenization
Replaces sensitive data (like a card number) with a substitute token, so the real value isn’t exposed during processing.
You don’t need to memorize these, but it helps to recognize when an app is using “encrypted” as a catch-all term.
What Encryption Does Not Protect You From
This is where people get a false sense of safety.
Encryption helps a lot, but it doesn’t automatically protect you from:
- Phishing (someone tricking you into giving access)
- Account takeover via compromised email/phone recovery
- Scams where you authorize a transfer yourself
- Weak passwords and reused credentials
- A compromised device (rooted/jailbroken phones are higher risk)
Encryption is necessary, not sufficient. Strong authentication and safe account recovery matter just as much.
What “Bank-Grade Encryption” Should Mean
“Bank-grade” is not a technical standard. It’s a marketing phrase. The better way to evaluate it is to look for behaviors that match serious security:
- Modern TLS for data in transit (and correctly configured)
- Encryption at rest where sensitive data is stored
- Hardware-backed key storage on mobile devices
- Biometric support (Face ID / fingerprint) and re-authentication for sensitive actions
- Clear disclosures about security frameworks and audits
NIST publishes guidance for selecting and configuring TLS implementations for secure communications. OWASP MASVS provides a security standard for mobile apps, including storage risks.
People Also Read: What FDIC Insurance Means for Fintech Users
A Simple User Checklist: How To Evaluate Encryption In Financial Apps
You don’t need to be technical to ask the right questions. Use this encryption in financial apps checklist:
- Does the app support biometric login?
- Does it re-authenticate you before sensitive actions (withdrawing, changing payout methods)?
- Does it explain security in plain language, not just slogans?
- Does it name security frameworks or independent audits?
- Does it avoid asking for weird permissions that don’t match the product?
- If it’s a mobile app, does it mention secure login using Face ID or fingerprint and protected access?
If an app can’t answer these basics, treat “encrypted” as an empty claim.
End-To-End Encryption vs “Encrypted”: The Most Common Misunderstanding
A lot of people hear “encrypted” and assume it means end-to-end encryption (E2EE), like private messaging apps where even the company can’t read your content. Financial apps usually don’t work like that. In most financial products, the service has to process transactions, run fraud checks, generate statements, and support account recovery. That requires the system to be able to decrypt certain data at certain times.
So when a financial app says “your data is encrypted,” it usually means encryption in transit (TLS) and encryption at rest, both essential, not “nobody can ever see anything.” The honest standard isn’t “is it end-to-end encrypted.” The honest standard is: when data must be decrypted to operate the product, is that access tightly controlled, logged, and minimized?
The Server-Side Reality: Encryption Is Only Half The Security Story
Most consumers think encryption fails when someone “cracks” it. In practice, many incidents happen because attackers don’t break encryption; they get around it. They steal credentials, hijack sessions, abuse account recovery, or gain access through misconfigured systems.
That’s why a serious security posture is not just “we encrypt.” It’s also:
- Who can access sensitive data internally, and under what controls?
- Are access permissions limited to only what’s needed (least privilege)?
- Is access logged and monitored, so unusual behavior triggers an investigation?
- Are production systems separated so one mistake doesn’t expose everything?
Device Encryption, Backups, And The “Invisible Leak” Most People Miss
Even the best encryption in a financial app can’t protect you if your device environment is unsafe. Here’s the real-world reason: your phone doesn’t just run apps; it stores data, caches sessions, saves screenshots, and sometimes backs up app data depending on settings.
Practical examples that can undermine “encrypted app” safety:
- A phone with a weak passcode or no passcode
- A shared device where others can access your unlocked screen
- Cloud backups that include sensitive content (like screenshots or exported files)
- Jailbroken/rooted devices, where protections are bypassed more easily
What A “Breach” Usually Means In 2026 (Even When Encryption Exists)
People hear “data breach” and assume it means “all data was readable.” That’s not always true. Encryption can reduce harm when attackers only get encrypted databases without keys. But modern breaches often involve attackers gaining access to systems where data is decrypted during normal operations, or stealing tokens/credentials that let them impersonate users.
So the most useful way to learn about breaches is:
- Encryption helps most when attackers only obtain stored data.
- Encryption helps less if attackers gain access to systems or credentials that can legitimately decrypt data.
- The strongest companies reduce exposure by storing less sensitive data, limiting access, and monitoring aggressively.
People Also Read: The Complete Cash Advance Checklist
A Practical Encryption In Financial Apps Trust Test
A set of signals to check without turning into an engineer:
Green Flags (Good Signs)
- The app supports biometric login and re-authentication before sensitive actions
- The app explains security clearly (not just “bank-grade encryption”)
- The company talks about audits/frameworks and security practices in plain language
- The app doesn’t ask for unnecessary permissions (contacts/location) for basic finance features
- You can quickly see and control security settings (login methods, device sessions, alerts)
Yellow Flags (Proceed Carefully)
- “Instant” access to money but unclear delivery fees or unclear confirmation screens
- Vague security statements with no detail (only buzzwords)
- Overly aggressive permissions or odd requests during onboarding
Red Flags (Don’t Connect Your Bank)
- No app-level lock (stays logged in with no biometric/PIN option)
- Confusing recovery flows that rely only on SMS/email with no safeguards
- No visible cancellation path for subscriptions (security and billing trust overlap)
This test doesn’t require technical proof; it teaches how to spot whether the product is designed with real safeguards.
How We Think About Security At Beem
At Beem, we treat safety and security as core, not as an add-on. We publicly state that our security program is based on industry frameworks such as NIST CSF, PCI-DSS, and SOC 2, and that we maintain up-to-date security certifications via third-party auditors.
We also support biometric login for added safety, including Face ID or Touch ID login on supported devices.
One more important point we state publicly: users’ personally identifiable data is never stored in our infrastructure.
If you’re evaluating the Beem app, we want the standard to be simple: you should be able to understand how we protect your account without decoding fine print.
Conclusion
Encryption in financial apps isn’t a buzzword. It’s the baseline for trust. But the truth is also simple: encryption only works as well as the system around it. Secure key management, hardware-backed protection, biometric authentication, and clear user controls are what make encryption meaningful in real life.
If you’re evaluating a financial app in 2026, don’t ask “does it say encrypted?” Ask: Can I understand what it protects, when it protects it, and whether the app treats security like a core product requirement? That’s the difference between a reassuring label and real protection.
Frequently Asked Questions on Encryption in Financial Apps
1. What Is The Simplest Definition Of Encryption In Financial Apps?
Encryption is the process of making sensitive data unreadable unless you have the correct cryptographic key. In financial apps, it’s used to protect your data while it travels over the internet and while it’s stored.
2. Is HTTPS The Same As Encryption?
HTTPS usually means the app or website is using TLS to encrypt data in transit. TLS is the mechanism NIST describes for protecting data during electronic dissemination. It’s a big part of encryption, but apps also need encryption at rest and strong authentication.
3. If An App Uses Face ID, Is My Data Automatically Secure?
Face ID can add strong protection because it can gate access to protected keys and sessions, especially with hardware-backed systems like Apple’s Secure Enclave. But it doesn’t protect you from phishing or weak recovery flows, so it’s only one layer.
4. Why Do Some Apps Still Get Hacked If They Use Encryption?
Because many incidents aren’t about breaking encryption. They’re about stolen credentials, phishing, weak account recovery, compromised devices, or server-side mistakes. Encryption reduces risk, but it can’t fix every security failure.
5. What’s One Thing I Can Do Today To Be Safer?
Turn on device lock and biometrics, keep your phone updated, and never share one-time codes. If a finance app supports biometric login, use it, and avoid using sensitive finance apps on rooted or jailbroken devices.
