FINTECH is a combination of two words; financial technology. In simple words, Fintech is any technology and related innovations used in the various financial institutions. According to recent reports, the Fintech market’s largest segment is Digital Payments with a total transaction value of US$51,756m in 2018 as revealed
No doubt that Fintech companies are the most aggressively pacing companies, but, there are a lot of challenges which these companies encounter with issues related to the security of confidential information.
Listed below are 5 top challenges faced by the Fintech in the Financial Sector:
- Concept of Fintech on the whole: Fintech companies enjoy a notorious reputation. There is an extreme lack of knowledge when it comes to breaking down the word ‘Fintech’. The scenario is such that half the people don’t know what is it and the remaining half have numbers of misconceptions. And the saddest bit is that nobody even cares to share or know about it in an organized manner.
- The problem of capital and raising funds: Fintechs are always in a neck to neck competition with other Fintechs in the market and probably this is one of the reasons that there is fast growth in this sector. Due to the tough competition, the banks also see the Fintechs as potential rivals. Thus, traditional banks make it tough when it comes to lending money to Fintechs. There are a number of rules and regulations which the banks will make the Fintechs aware of when the funding is required and they would provide funds, but, only after they have taken ample time. The process of procuring capital is never going to be quick and handy.
- Difficulty in attracting new customers: As already mentioned in the first point above, the customers do not trust Fintechs with all their heart and this makes it a real challenge for the Fintechs to attract new customers and also to make them believe in the concept of Fintechs and what they really do. Until all the misconceptions and myths are not removed from everyone’s minds, the difficulty of attracting new customers is not at all going to lessen.
- Issues related to the security of data: As all the data of the customer is stored by the Fintechs in the digital form, risk of a data breach is the highest with the Fintechs. The customer is always afraid of losing his data. There are the hacking issues also which can easily let your bank lose information.
- Adapting to the new software: As majority of all the financial and non-financial institutions have been working on legacy software from a long time without much inconvenience, they have become a legitimate part of the Fintechs’ process operations. This legacy software, despite being old, fulfils all the needs of any business. Thus, a minor portion of the Fintechs is really interested in getting the latest software installed in place of these. The ease of working with such software is such for them that they hardly feel the urge to upgrade. They take time in breaking the law.
