Financial institutions, particularly banks, often leverage online fintech solutions to access their users' real-time information. Banks further use this knowledge to conduct financial transactions and other critical banking operations.
Fremont, CA: Fintech startups have been growing at a rapid pace for some time now. They improve the products and services of current financial services and provide an alternative to traditional financial solutions. However, despite the rapid growth rate at which fintech solutions have changed the global economy, there are still some industry risks described above. With the advent of online networks and disruptive technology, the chances of cyberattacks have increased significantly. And that has been a big obstacle for the fintech industry. Not only that, but the introduction of fintech technologies into traditional banking services has raised questions regarding data protection.
Here are three issues the fintech industry face:
Application Related Risks
Financial institutions, particularly banks, often leverage online fintech solutions to access their users' real-time information. Banks further use this knowledge to conduct financial transactions and other critical banking operations. However, due to insufficient security modules and inefficient codes, these solutions also become vulnerable to cyber theft. As a result, all sensitive user information is readily accessible to hackers. Therefore if an individual is planning to create a fintech software solution, it is essential to pay attention to security and other key features.
The first and foremost challenge facing companies using fintech technologies is the uncertainties inherent in third-party software integration. It is no surprise that internal security is not always enough, particularly for banks and financial organizations. As a result, many banks and other financial institutions use third-party software tools from a less trusted service provider to fix security issues. As a result, they will end up losing their important data and other valuable user information. Not only that, but they might also encounter service failures and ultimately suffer a loss of reputation. Banks and financial institutions should also consider financial risks when reviewing their risk management system.
Another obstacle that financial organizations may face is the risk due to the complexity of the system. It is also seen that banks and financial institutions are incorporating third-party technologies into their current systems to develop their services. However, as most of these technological solutions are not built at the same time, the system's complexity is increased. Owing to all these complexities, it is challenging to detect weaknesses given the framework's complex nature.