The advances in financial technologies are disrupting the financial services market and changing the way we manage our money.

As with every ‘tech’ denomination, Fintech is always experiencing emerging innovations. These developments not only assist in the growth of the fintech sector but offers many opportunities and challenges along the way.

This blog discusses the challenges faced by fintech organisations, and the strategies that might be employed to help combat them.

What are the major challenges being faced by Fintech companies in 2023?

System Vulnerabilities.

A solid security solution is essential in the fintech and financial services sector.  However, within the financial services environment, data security is challenging. Covering both the users’ money and personal information, vulnerabilities are much more diverse and have added layers of complexity,

The common solutions employed by traditional high street organisations, such as CCTVs, security guards, and vaults to keep data and valuables safe and secure don’t apply to fintech.

Hackers can exploit the vulnerabilities of financial and banking systems. There are rising number of security breaches and hacking attacks causing regulators to focus on these chinks in fintech armoury. Indeed, some statistics show that high or critical risks appear in every tenth internet-using web application while 46% of online apps deal with vulnerability problems.

Luckily, fintech has tools in place to offer added security.  These include,

  • 2 factor authentication
  • Data encryption
  • Biometric identification
  • Real time notifications
  • AI security
  • Routing data in the network.

Data Ownership.

Data ownership refers to who can manipulate data in the fintech and banking industries.  The regulatory system determines create, access, modify, and delete data.

Helping to manage the risk, security roles determine the ownership of data in fintech software solutions.  This enables the effective management of circumstances involving access credentials and access level.

It also results in minimised risks concerning third-party system breaches and financial and reputational damages.

Digital Identities.

Digital ID solutions protect users against the abuse of personal data while shielding the payments system against money laundering and financial crime.

Smartphone apps and contactless payments are two integral features of financial technologies and rely on robust digital ID solutions.  While these have been game changing developments for consumers, they do pose significant risks and challenges for data.

Digital IDs employed by fintech should have some key features that assure users of their safety.

  • They are trusted and verified – digital identities prove to be valuable when they are approved by regulators and authorities.
  • They are secure and have features protecting against theft, loss, corruption.
  • They should be encrypted for data safety.
  • They are portable – digital IDs should be just as functional as physical documents.

Third-party service integrations.

Third-party service integrations have become an integral part of modern applications. They offer app coherence and improved functionality for their users.  However, integrating third-party applications into fintech solutions does carry potential security risks.

Insufficient security in third-party integrations compromises app security and the digital security of banking and financial assets. Research has highlighted that 93% of companies suffered a cybersecurity breach because of weaknesses in their supply chains or third-party applications.

Malware attacks.

Malware attacks can cripple the infrastructure within a Fintech organisation.  Due to its high reward potential, the fintech and financial services sector are the industries that cybercriminals target the most.

Reputational, organisational, and financial damage are at risk as a target of a ransomware attack.  Therefore, it’s essential that fintech companies are kept safe from such attacks.

For advice on how to recruit cyber security professionals, read our recent blog.

A saturated market.

The pandemic led to a boom in the rise of fintech organisations. According to data from Statista, neo-banking has grown almost six times since 2019, and digital payments have doubled.

This is a double-edged sword for the fintech ecosystem. Does this propose a clear demand for challengers to legacy banking? Or does it create an over-saturated market with not enough capital and users to go around??

Commentators all seem to be of the same opinion.

The Fintech organisations that will survive will be able to offer their users real-world solutions to real problems.   In addition, the product and user experience must be backed up by a security system just as robust.

Customer acquisition in Fintech is a long and expensive process. Fintech companies will need to make use of all the emerging technologies at their disposal to stand out among customers and offer them a product over and above that of others in the market.

The skills gap.

Finding and retaining talent is expected to remain a key challenge for Fintech companies.  According to the Fintech Talent Report 2022, the most in-demand Fintech roles will be in Sales and Marketing, Business Development, and up in the C-Suite, e.g., CEO, CFO, COO.

This speaks to the need for growing Fintech companies to compete, expanding their business regionally and globally.

Of course, this is made more of a challenge as Fintech companies compete with each other, but with organisations across every industry that need similarly skilled talent.

Backing and finance.

Against a backdrop of ongoing volatility and tough economic conditions, potential investors will need to be presented with compelling business strategies and an argument about why they’re likely to succeed versus their competitors.

According to the State of Fintech Report, 2022 global fintech funding declined by 46 % to $ 75.2 billion in 2022 and reached its lowest level since 2018.  In 2023, this trend shows no signs of reversal.

Let us help.

We are experts in recruiting technology, digital, and data professionals who can help mitigate the risks facing fintech in 2023.

Whether you need people with expertise in digital products, or you need to boost your data security, we can help.

Our extensive network of tech professionals means we can overcome candidate shortages and have meaningful conversations with the best tech talent in the UK.

Our knowledge, understanding, and expertise in the tech and digital landscape allow us to truly understand each client brief. We know the function you need your role to perform and can grasp the nuances of each job. This ability is unrivaled and has allowed us to forge long-lasting professional relationships with true tech innovators.

Reach out today.

About the author: As a founder of Ignite Digital Talent, I lead our brilliant team to ensure we deliver time and time again for our clients. I also stay closely networked with industry influencers to ensure we are well placed to understand the issues and challenges our clients face.

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