Where the stakes are high,
the risks are higher
Financial Technology or Fintech is one of the fastest growing sectors, as its dynamism and unmatched potential in innovation has taken the world by storm. Through leveraging a diverse range of technology, not limited to big data, machine learning, artificial intelligence, blockchain and mobile apps, it has helped solve a multitude of problems in what was once considered a traditional industry. Although revamping institutions has shown its eminence, its proposition is still in its infancy and the risks remain paramount.
1. Cyber Attacks and Data Breaches
With disruption such as fintech, there is a propensity to get sued by a financial body, and although it is a major concern, it is not the only obstacle. Its cutting edge technology can pose serious risks such as cyber attacks and data breaches. In fintech, a plethora of sensitive information is handled, so therefore a company's proprietary information is highly suscpetible in getting stolen, viewed or copied. Thus, staving off unforeseen ransomware assaults is vital and necessary. If sensitive data is held hostage, the potential damage is exponentially greater than other industries. Cyber criminals value data that fintech companies possess, such as credit cards and social security numbers. Consequently, recovery from cyber attacks can be difficult and treacherous.
2. Professional Liability and Breaches of Contract
Fintech customers are heavily reliant on services provided and any system failures, outages or downtimes can lead to breach of contract, leading to possible litigation. A number of fintech companies rely on third party services to maintain their systems, which in turn could lead to lawsuits for failing to render promised services.
3. Regulatory Issues
Despite support from the government, current regulations are still considered over the top, which ultimately prevents fintechs from reaching their potential. Although regulations are in place for good reason, as new and complex technology may be challenging to understand initially, it puts fintech firms in a precarious position. Fintech companies develop and innovate, providing industry altering solutions and yet need to navigate a maze of regulations, in order to succeed.