The Challenges Of Fintech Application In Modern Era – A Comprehensive Guide

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Challenges of Fintech Apps

[Source: Created by eSparkBiz and Team]

Fintech refers to technology related to the financial service sectors.

It’s been years since Technology is putting a huge impact on the financial service industry.

However, the Fintech is able to emerge in just a small space.

Most of the people use Fintech in the context of back-end technology that helps in the smooth working of traditional financial services.

This term is primarily used in the area of disruptive financial technologies.

Now, the technologies are also divided into many different parts, and the ones that are covered under Fintech are insurance technology, financial data APIs, payments, regulatory technology, banking, and mobile banking.

Each of these categories is connected with one or another sector of Finance technology.

In recent years, people are getting more focused on the internet and mobile internet. And that’s the reason why we are noticing the rapid development of financial technologies.

Even most of the merchants and businesses are accepting the Fintech innovation or trend.

The best part is that Fintech applications offer many benefits and focus on B2B.

Benefits of Fintech Application

Cut Costs

Technology plays a very big role in bringing automation in businesses. With the help of Financial technologies, banks are able to save billions of money.

Also, in this case, the number of employee requirement declines; that’s why you can say that fintech applications have improved the operating efficiency.

Improvement in Decision-Making

It is very easy to make decisions in businesses with the fintech as it has increased the usage of AI solutions.

It has become very easy for businesses to rely on AI-powered, data-driven insights to shape strategies. It has improved decision making power.

Introduction to Transparency

One of the visible benefits of fintech is the introduction of transparency. It helps a lot in the case of Blockchain-based fintech and AI-powered regtech.

It has created the auditable money trails and helps in reducing the fraud. The transparency in the case of banks can be looked at by the AML and KYC industry.

Insurtech

Insurtech stands for Insurance technology, which has evolved at a very high pace. The un-innovative industry uses it.

There are strict regulations in the insurance industry that has held back the development process.

Now, because of fintech, the insurance agencies are able to look for insurance-specific solutions and serve their customers with something they want.

Regtech

Regtech stands for Regulatory technology, helps the financial institutions to meet the financial compliance regulations.

It has become popular in the past few years because of the rise of disruptive fintech products.

The new technologies in this area are all about protection as they use codify strict data regulations. This has made the working style of banks easy.

APIs

API financial data are changing with the new banking trends and have come out with a new concept of open banking.

This concept is all about opening up of bank amount of client data to help the new fintech startups.

Data is the key to banking. By protecting the personal information of the customers, the banks will be able to provide benefits to the whole industry.

Payment Methods

Payment methods have upgraded to a vast extent due to fintech space. It has improved the people’s experience by serving the payment solutions.

The small businesses have earned more benefit from new payment options like card payment and mobile payments.

Smooth Banking

Banking software has shown rapid development in the past few years.

The new mobile banking sector has been adopted by almost every part of the world.

It is because of the mobile banking allow their customers to bank directly through their mobiles.

Lending

Lending technology has also developed a lot with the help of fintech technology as it offers customers or users to borrow something more easily.

The loan software has improved a lot, and now they offer different tools to automate processes, cutting down on time spent on unnecessarily redundant tasks.

Even the functionality of landing has become simple, and everyone gets better comparison options.

Blockchain

The Blockchain is one of the few industries which adapted the fintech at the initial stage.

There are a variety of uses of Blockchain technology within the financial services industry. It has upgraded itself at a very fast pace.

Users of Fintech Application

Now the question comes, who use the Fintech? So while many of us use two of more budget apps in our phones, who are the other users of the Fintech Applications? So here we go.

B2B (Business to Business)

Before the emergence of fintech, most of the businesses have to go to the banks to ask for financing and loans.

But with the advancement of Fintech, the businesses are easily able to get loans, financing, and other financial services through their mobile technology.

Many platforms provide potential services.

B2C (Business to Client)

Fintech offers much B2C or Business to client applications. PayPal, Apple pay, google pay, and more are the parts of it.

These allow the clients to transfer money via the mobile app while using the internet. This has made the whole transaction process easier.

In the upcoming years, the fintech industry is going to upgrade at a very high pace. The AI, data handling, and analytics will make the handling very easy.

Open banking practices will increase because of fintech application development. Even the Blockchain projects have the potential evolution chances.

But do you think Fintech Applications are not facing any kind of challenge in this modern era? The answer is yes!

The Fintech Applications also have to face a lot of challenges.

Here are the top 10 challenges that are interrupting the era of Digital Finance

Challenges of Fintech Application

Challenges faced by Fintech Apps

[Source: Created by eSparkBiz and Team]

Cybercrime in Finance

Although banks make their 100% effort to keep the data safe, it becomes hard to protect everything from cybercrime.

There are so many cybercrime solutions that Fintech industries follow, but the Blockchain technology is able to control this issue.

As the new industries are emerging each day, the Blockchain industry has to look for the best solutions.

Even the DLT i.e., Distributed ledger technology, are facing serious obstacles that must be overcome.

Big Data Use in Finance

The Big Database offers both opportunities and obstacles for Fintech technology providers.

Through social media, customer databases, and news feeds, the banks can serve their customers in a better way. But torrent for sorting the unstructured data for useful information is very small.

Therefore, a powerful data analytics technology is required to acquire the benefits. Moreover, data analytics solutions are emerging with manageable trading, risks, and more financial services.

Fintech Disruption of Financial Industry

The small Fintech companies that were emerged less than a decade ago are unable to show the potential growth, which was hoped at the time of their emergence.

In contrast, many other companies are able to grow into a big firm.

This may be because of the irregular distribution of Fintech technologies.

Calculating the growth potential of any company has become hard.

In this scenario, Making Fintech Application Safe and Secure is a huge challenge.

The Blockchain Integration in Finance

It is said that Blockchain is a key component of battling against the cybercrime. But when we talk about the financial sector, Data security is not the only application of the Blockchain.

Whereas, it has already proved that Blockchain has the value in the variety of investment applications and banking.

They work on potential areas like an investment in banks and safer payment transactions. However, it is said that the industry-wide adoption of the Blockchain is quite difficult.

Crossing the Digital Divide in Financial Services

Digital banking is not just about having a mobile app; it is much beyond that. It focuses on digitizing the whole brand. But do you think it is easy?

If a company follows the better advertising campaigns from conventional ad-media to digital channels, they will be able to do so. This is how they will be able to reach their target audience in this competitive world.

The social media exposition is very important, and the facebook ads and google ads will make your work easier. It will help you to tap into the big data, AI to locate potential customers, and deliver customized options to them in no time.

Building A Brand Using Social Media is extremely important and therefore, you should take care of issues as earlier as possible.

Customer Experience in the Financial Service

Customer experience is the most important issue that most of the firms face in the financial services industry.

Today, banking customers only focus on getting mobile banking, and they don’t care whether the bank is fintech or not.

It will take time and money to bring the changes in the old-age traditions. However, most of them have an open mindset.

Regulatory Compliance In Finance

As you know, the regulatory environment is ever-changing; the financial institutions have to face constant challenges.

The RegTech, being an emerging industry, can help to overcome the burden of compliance.

With the use of the latest Fintech technologies to report regulatory compliances, RegTech startups are able to bridge up the gap between the financial service industry and their regulations.

It can be beneficial for process streamlining and automated reporting and audits.

Customer Retention In Financial Services

Customer retention is the prime goal of any business or industry. And the completion of becoming a potential financial service client is not at all easy.

But in today’s time, the personalization, better-automated services, and easier access matter the most for the customers. The industry that is able to deliver all of these can capture a bigger share in the market.

So the key to not losing the battle is to understand your customers and their concerns. Providing customers with what they want is the goal of the client.

Employee Retention in the Financial Industry

For the financial service industry, finding the right employee is as difficult as attracting the customers.

The good qualification and talent is a great combination, and it’s hard to find in the IT world. And once the company finds them, short-term employment becomes a big issue.

However, if a company wants to attract and retain its employees should change their philosophy.

The good pay and benefits are not enough; the works now look for a better employer’s nature, values, and lifestyle. Changes are necessary to fit in this competitive world.

AI Use in Finance

Most of the Industry experts work with the belief that AI will soon transform almost every aspect of the financial services industry.

According to them, AI solution providers will able to provide automated wealth management, open banking, and customer verification opportunities.

Powerful advances in deep learning technology are building a path for AI.

Even if you have been alerted by your bank’s suspicious activities, the AI will provide you with enough benefits. So how does it really a challenge?

It is because, most of the financial services think it’s hard to take the benefit from AI, without being an actual part of it.

It has proved that less than 10% of financial companies have implemented the cloud-based technology stack. The unwillingness to adopt easy technologies is still understandable.

After all, the barks are working well for hundreds of years without any upgradations. The traditional banking methods may work, but the new mobile banking will make everything easier.

Digital banking has already begun, and it will not add until we are using computers, mobile phones, and the internet.

Whether the company is taking too much time to solve the problem or the old transaction method is very time consuming, do you still feel the digital banking technology cannot solve the problem? Or will it still show you any kind of challenge?

To overcome the major issues, one should think beyond easy wins; they should exploit the natural advantages; automate to accumulation, and work smartly and stay lean.

The overall solutions have not changed, though the ability, automation, and operational efficiency, leanness, and responsiveness will always work as the currency of the Fintech application’s success.

There are many other challenges that Fintech Application have to face:

  • Small management Teams
  • Limited Credit and startup experience
  • Tight Financial resources
  • Unidentified target market or undeveloped business model
  • Nascent data analysis capabilities
  • Pressure from the investors to quickly establish the operations
  • Limited practice with financial compliances

Conclusion

All of these are not actually the challenges; these are beneficial in one or another way. It’s just, whenever someone is working with the Fintech applications, he should understand these characteristics.

When someone will able to identify the market opportunities, develop differentiated business models, and stimulate these in the bigger opportunities, they will be able to take the benefit from it.

It is hard to force any industry to use the Fintech Application, but it is easy to teach them about its benefits. When every industry starts using the new digital banking technologies, it will give birth to a whole new Digital World.

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