For the last few years, we have seen Fintech industry challenges grow aggressively as the industry itself bursts into a multi-billion-dollar dynasty. Apart from the trust-disruptive technologies it introduces, many other challenges ensue, especially for startups.
In this article, we discuss a few of these challenges.
1. Data (Cyber) Security
Among the major challenges facing fintech industry is data security. Hackers will go in to any length trying to access the wealth in their databases. These databases hold scores of discreet customer files with discreet info ranging from social security numbers, credit card details, net worth, income intervals, and more.
Any security breach can cause the whole company huge losses in potential law suits, fines, and general customer loss resulting from a negative reputation. Such fintech startup challenges can only be resolved through technical solutions such as biometric authentication, data encryption, and consistent data analysis.
2. Government Regulations
Prior to the tech revolution, governments ran traditional policy checks. If the same structures are used to assess this industry, fintech industry challenges will be endless.
To be on the safe side, a legal expert needs to interpret the laws and regulations in place regarding the fintech startup. The processes, products, and services need to be aligned with the current government regulations. Failure to this can land your entire company in trouble triggering hefty non-compliance fines.
3. Stifled Growth
Business operation fintech industry challenges including insufficient working capital, lack of partnerships and compliance issues stifles growth for most startups. Fintech’s are fast growing businesses in nature. Their growth curve needs to have an upward trend. This is important for two reasons.
- For any investor to express interest in a fintech startup, numbers must speak. Potential is seen through the initial stages of the startups. However, a myriad of challenges facing the fintech industry can slow down growth.
- There needs to be clarity on the target consumers. This means you niche down and targets a certain audience. Though proven to be one of the main fintech Startup challenges, if done tactfully, it boosts growth.
4. Knowledge Gaps
The fintech market trends change rapidly prompting ripple fintech startups challenges. Unfortunately, some of these challenges are very unpredictable.
Visualize running a startup where the personnel cannot detect threats, are not eager to grow with the market, and cannot offer delightful customer experience. What will make the customer choose you over other fintech service providers? Lack of knowledge is one of the critical challenges facing fintech industry.
Challenges facing fintech industry demand exceptional technical skills, customer handling expertise, and consistent learning. Failure to which they end up with un-friendly, un-sellable consumer solutions. This makes IT outsourcing extremely essential to your business.
5. Funding and Competition
Interestingly, when fintech companies started, funders such as banks would offer financial support. After a while they discovered they can also benefit from this market. Instead of partnering to provide solutions, banks started building their own mini-Fintech solutions.
This doubled fintech startups challenges because, not only did the banks withdraw as funders, they also became part of competition by offering competing products.
Most fintech industry challenges stem from funding. When funding is limited, it limits the extent to which a company can explore products. They are also challenged with investing in hi-tech systems that would ensure seamless services.
One of the major challenges facing fintech industry startups is ineffective marketing processes. To top it up, essential elements such as marketing that would boost growth, in this case, marketing become secondary yet they are essential in spreading products’ awareness.
Luckily, there is an alternative solution to that. Marketing through social media platforms such Instagram, Facebook, and Twitter is quite effective. Using mediums such as YouTube, web content is also a safe escape. You can also rely on IT outsourcing from offshore companies to create for you apps that streamlines marketing processes.
Fintech industry challenges pose a great hindrance to the technological advancement and overall growth of fintech startups. If you want flexible and affordable financial technology services including app development, outsourcing from offshore companies can be great. Offshore fintech services from Israel IT include solutions suitable for every fintech startup. Contact us for queries and browse around to get an idea of our fintech app development services.