5 Ways to solve the biggest IT problems faced by FinTech companies in emerging markets

Following COVID-19, all things digital have been accelerated, placing FinTech companies in a tough position; how to stay ahead? Major challenges lie ahead for FinTechs, especially in the emerging markets.

In this blog, we're going to review these challenges and outline the most effective solutions, and of course, the how!

Challenge 1: Data Security & Privacy Concerns?

Did you know that the average cost of a data breach within the financial sector equals $5.85 million (￡4.72 million) (IBM, 2020)? Considering the nature of data FinTech companies handle, this figure isn't all surprising but does highlight just how vulnerable financial companies are. Plus, with the rise of the digital environment and subsequent growth of mobile banking, FinTech companies are one of the cybercriminals' top targets.

Not only can FinTech companies incur monetary loss from a breach but reputation will be severely damaged and may cast a permanent cloud of doubt over an organisation's trustworthiness. This means, that no matter the size, businesses must ensure their data security is on point.

What are the solutions?

1. Implement two-factor or alternative authentication, for example, biometrics or facial recognition. Why not even support Yubikeys for physical authentication?
2. Integrate real-time monitoring and alerts through a Security Operations Center (SOC).
3. Optimise role-based access control so that only authorised users can access certain information, particularly sensitive data!
4. Encrypt and obfuscate sensitive information to ensure data privacy and data protection.

Challenge 2: Regulation compliance?

The financial sector is one of the most regulated and it’s no surprise with how sensitive the data they handle is.

As the FinTech sector integrates new technologies to handle this data, it only makes sense that new laws and guidelines are introduced to regulate how FinTech's handle, store and access data. So, it is essential that FinTech organisations quickly become aligned with these new regulations.

But why? Well, the regulations are in place to protect financial companies from frauds and malicious actors, and most importantly to safeguard customers' investments and sensitive information. Otherwise, companies may find themselves in the midst of a data breach!

How can you become more compliant and streamline the process?

1. Check legal compliance and guidance before developing an application or using any software.
2. Partner with an experienced legal consultant to guide you through the details and policies.
3. Turn to regulatory technologies to automate the process of monitoring the introduction of new regulations or any updates.
4. Create solutions with some of the top FinTech compliance practices in mind, including Knowing Your Customer (KYC) and Anti-Money Laundering (AMI).

Challenge 3: Lack of Mobile & Technology Features

In modern digital times, many people want seamless and convenient methods of accessing financial services, not least online banking. In 2017, nearly 300 million people in Africa had a bank account, and this is projected to increase to 450 million by the end of 2022, highlighting just how many people in Africa will need an efficient banking app by 2022.

Such a demand puts a particular strain on FinTech companies, and with a lack of expertise in the FinTech mobile app development services field, FinTechs are operating with non-user-friendly applications which don't utilise mobile devices to their fullest or fulfill popular demand.

Most notably, this means that FinTechs are missing out on vital security features such as NFC chips for streamlined payment methods, geolocation features, and biometrics/facial recognition authentication. As a result, it not only means FinTech companies are losing customers due to outdated software but also because sensitive data is highly vulnerable.

How can FinTech companies modernise their applications and software?

1. Integrate QR codes for payments in public transport technology.
2. Implement NFC chips within retail technology.
3. Allow mobile users to scan a credit card with a camera lens for automatic input.
4. Prioritise extra layers of security such as biometrics and facial recognition.

Challenge 4: Big Data & Artificial Intelligence Integration

Did you know? Around 79% of bankers believe that AI will revolutionise the way banks fetch data and interact with customers (Accenture, 2017). Already, we know that big data and artificial intelligence have both impacted many organisations globally, however financial organisations can benefit greatly through big data, allowing them to collect personal information, social status, financial behaviour, habits, and in-app activity.

This kind of data is crucial to how financial institutions operate, especially when it comes to credit ratings and offering high-risk banking services; as a result, financial organisations are able to effectively detect fraud, analyse risks, and manage transactions through automation.

However, FinTechs face various challenges to implement these technologies, requiring technical adjustments, a reshaped business model, and adaptation from both you and your customers.

What is the solution?

In order to effectively combine artificial intelligence with big data, AI needs to be taught through machine learning. For this, FinTechs require large amounts of data, and in many cases, financial apps are unable to process and fetch a large number of data sets, so outsourcing this process to a specialist organisation that has years of data built up is quick, cost-effective and efficient.

Another solution is to adopt a one-shot learning model that allows you to train your machine learning system on smaller quantities of data. Though smaller amounts of data may sacrifice an element of accuracy!

Challenge 5: Blockchain Integration?

Firstly, what is blockchain (or block chain) technology?

Blockchain is a shared, immutable ledger that facilitates the process of recording transactions and tracking issues within a business network. In simpler terms, blockchain is a record-keeping technology that is impossible to hack or forge data on, thus making it more secure and unchangeable.

Many FinTechs already use blockchain technology in their applications, however, there are still companies who don't view blockchain as a feasible option, primarily due to how challenging it is to integrate it due to government regulations and restrictions.

But let's look at the advantages of blockchain:

1. Allows you to analyse and track all phases of a transaction.
2. Allows you to prevent changes to any transaction; making it more securer than traditional transactions.
3. As a result of the security, your organisation will gain an improved reputation and trustworthiness.

What can you keep in mind to streamline integration?

1. Ensure you check and adhere to government guidelines and laws.
2. Avoid any government restrictions concerning mobile services. Many governments are still hesitant to allow mass blockchain adoption.

Address These Issues: Sooner Rather Than Later?

It's not unusual for FinTech to face many issues, considering the nature of data FinTech organisations store.

But it's critical to address these 5 key issues and here's why:

Though government laws and regulations are the primary challenges, they are designed to provide FinTechs with a layer of protection, ensuring sensitive data and transactional processes are handled properly and securely.

Outsourcing Is An Option

IT specialists, like Gemraj Technologies, have the collective expertise and data to help you overcome all 5 of these challenges, helping you to adopt advantageous technologies seamlessly and always stay ahead of government guidelines. Our specialities include Managed IT, Digital Transformation, Cybersecurity, IT Staffing, and IT Training.

Get in touch with one of our experts today by emailing [email protected] or calling us on 0800 051 7679. More information on our services can be found at https://gemrajtechs.com .