The FinTech sector is the financial industry’s fastest-growing segment. Startups are popping up in the industry all the time and in just about every target market.
Singapore alone, for example, boasts over 1,100 FinTech firms, totaling S$1 billion in investment in 2019; about 40% of the Southeast Asian marketplace.
Meanwhile, global FinTech investments hit 1,221 deals worth $26.5 billion in the first half of 2020. This growth is good news for the world’s economy in 2022.
The bad news is that new or existing FinTech firms like yours will face many tough industry challenges in 2022. Some of these will be new, while others be particular to the FinTech sector.
And if your FinTech firm focuses on creating a competitive advantage to the point where you fail to address these critical industry challenges, it could spell disaster for your business.
In this article, we discuss some of the industry challenges that are expected the impact the FinTech sector most in 2022. We also discuss possible steps owners of FinTech firms like yourself can take to ensure your businesses are prepared to tackle these challenges.
1. Big Data and AI Integration
Accenture reports that 79% of bankers worldwide believe artificial intelligence (AI) will revolutionize the way banks capture data and interact with customers.
That sounds about right, considering AI offers a significant competitive advantage over other technologies by providing a deep understanding of what customers do and what they need.
These deep insights give financial institutions the ability to sell the right product to the right customer at the right time.
When combined with Big Data in finance, AI can provide critical real-time organisational information—the kind of information needed to zero in on operational weaknesses, boost flexibility, and increase agility.
However, FinTech firms like yours face numerous roadblocks when implementing these technologies, which require expertise and constant maintenance. Plus, they come with additional risks and costs when first switching to these technologies.
2. Need for Greater Data Security and User Privacy
FinTech firms like yours are squarely in the crosshairs of hackers as more people are using FinTech products and services.
That’s because with more usage comes more security risks. The FinTech industry, in fact, is second only to retail as the sector hardest hit by cybercrime.
The rate of growth that the FinTech sector enjoys also comes with unintended consequences, the biggest of which is the growing need for to protect your customer data.
While the vulnerabilities of FinTech firms like yours are much more discreet than other businesses, they also have more impact on users than with other organisations.
With so much at stake, you’ll need to beef up the cyber security defenses of your business in 2022, or risk getting hacked.
According to a recent report from IBM, getting hacked can cost a company as much as US$3.86 million. To safeguard your data, your FinTech firm will have to incorporate some of the following technologies into your app products:
- Two-factor authorization
- Biometric authentication
- Data encryption
- Real-time alerts
- Behavior analysis
3. Compliance With Industry Regulations
Regulatory compliance is among the most significant banking industry challenges, due to significant increases in regulatory fees placed on earnings and credit losses since the 2008 financial crisis.
Compliance can put a strain on the resources of FinTech firms like yours, which depend on their ability to correlate customer data from various sources.
This makes it important for your business to ensure that any apps or software programmes on the drawing board will legally comply with the local regulations where it’s being marketed.
Of particular concern for FinTech firms are a country’s anti-money laundering (AML) and combating terrorism financial (CFT) regulations. These are often among the most critical regulations FinTechs must comply with, if not the most important.
Vital areas of primary concern include governance, client due diligence, ongoing monitoring, record keeping, and management reporting.
4. Adapting to A Digital World
According to a 2019 Gartner CIO survey, more than 50% of financial services CIOs believe that most businesses will operate through digital channels, and that digital initiatives will generate more revenue and value.
For example, many businesses face issues with disparate legacy systems which do not share data between each other. Such organisations will find it hard to keep up with a world increasingly reliant on digital technologies.
However, with software-as-a-service (SaaS) and platform-as-a-service (PaaS) cloud computing, these businesses can now simplify and standardise their IT infrastructure.
This comes in especially handy for financial institutions like banks and credit unions, which can make use of such cutting-edge technology to reduce their costs and improve their data analytics
How Oracle NetSuite Helps FinTech Firms Tackle Industry Challenges
Oracle NetSuite is ideal for helping FinTech firms like yours tackle today's industry challenges. As a true cloud-based ERP software, it provides your business with everything you need to run their organizations efficiently and effectively.
As a true cloud ERP software solution, NetSuite is designed to integrate disparate systems in use within your FinTech firm, to generate a single unified source of truth that’s accessible anywhere, anytime with an Internet connection.
It also provides the real-time reporting capabilities you need to boost visibility into your FinTech firm, using data generated by your business processes to provide insights into your organisation on the spot.
Last but not least, NetSuite comes with strict security standards that help FinTech firms like yours protect your customer data, and stay compliant with data security standards such the General Data Protection Act (GDPA) and the Personal Data Protection Act (PDPA).
Ensure Your FinTech Firm Is Ready For Industry Challenges In 2022 With Oracle NetSuite
FinTech firms like yours will find that certain types of business challenges will become more prominent in the sector, going into 2022.
Integrating AI and Big Data into your business processes almost goes without saying, but with your customer data growing more valuable to your FinTech firm than before, safeguarding it against malicious actors will also take priority.
Ensuring that your FinTech firms and its products comply with the local regulations will also be one of your top priorities in the new year, along with streamlining your IT infrastructure with the use of cloud technology to equip it for an increasingly digital world.
To address all of these pressing industry challenges, your FinTech firm needs the right software solution. Oracle NetSuite, the #1 true cloud ERP software available on the market today, is especially suitable to help your business tackle the unique industry challenges it faces.
To see the many ways that Oracle NetSuite can transform your FinTech firm and help it overcome any challenge, click on the image below.