Content

  1. FinTech
  2. FinTech Foundations 

2.1 Market Acceptance

  • Building Risk management

3. Risks Associated by Fintech

3.1 Proficient legal responsibility

3.2 Controlling Environment

3.3 Fund Robbery

3.4 Cyber Event

3.5 Technology failure

1. FinTech

FinTech is said to be financial technology and are mostly start-up technology and financial expertise firms, providing domain-specific products and services that are already provided by various traditional financial institutions. FinTech inaugurated in the 1990s when the Internet and e-commerce business models arose and in the upcoming period banking in most parts was already completely digitalized. Financial technology has been worn to automate investments, insurance, trading, banking services, and risk management. Thus the financial technology and its development are targeted to proceed with usual financial methods. The services may originate from various self-governing service providers as well as with at least one licensed bank or insurer. The interconnection is enabled through open APIs -Application Programming Interfaces, which are the hooks and software used by programmers to build applications that connect to other firms and technology. Let us see the Fintech markets differ and the scope for Fintech solutions below in detail

2. FinTech Foundations 

Firms must understand the Fintech market as they impact them such as the present commitment and future engagement with Fintech and understand the product under development. The modern category of investment helps to yield maximum end results, and it also helps to generate the growing force of modifying payment methods, categorize the evolving regulatory landscape, and get better knowledge of Robo-advising, crowdfunding, peer-to-peer lending, and block chain. These are the basic strategies of FinTech Foundations.

2.1 Market Acceptance

The subject matter of FinTech is a structured number of real-time concern around the world, such as 

  • Introducing fundamental essential economics which including money, moral hazard, property rights, and bank run 
  • Psychological problems like engagement, trust, and privacy 
  • Uncertainty in technology transformative solutions to those problems like big data, distributed ledgers, artificial intelligence, machine learning, and natural language processing. 

2.2 Building Risk management

The primary goal of FinTech is to understand and to become more confident and persuasive towards analyzing and make recommendations to the changing finance industry. Therefore, the firm should logically measure the risks of its operations through the eye of its future profitability. It is vital to identify and understand the applicable risks, particularly the “disappearance risks” which compel the firm out of business. This can be done by the regulator’s statutory objectives which help to identify those risks. This statutory objective includes

• Consumers

• Market integrity

• Financial stability

Firms should also ensure that they understand their hand over the situation of outsourcing with external service providers. Thus market observers will predict a sudden large amount of future fintech developments which will disrupt markets and release efficiency and value. If the scale of change is extensive, a booming firm needs the necessary controls around risk identification, improvement, and monitoring. 

3. Risks Associated by Fintech

3.1 Proficient legal responsibility

If there is no proper client services, then collective risks for financial services based companies, including with FinTechs which offer new financial products will be a requirement.

3.2 Controlling Environment

New technology and the products related to it are essential in fetching out and new distribution fetch chance of wealth along with new regulatory exposures. Therefore, Fintech companies should confirm to keep the top execution of suitable and satisfactory risk management systems.

3.3 Fund Robbery

Always high frequency of funds movement is handled by the majority of FinTechs. Payments, transactions, and customer accounts, as well as the fast growth and implementation of new technology, leaves them vulnerable to theft. 

3.4 Cyber Event

Fintech companies are prime targets for cybercriminals for their nature of operations. Thus, the major challenges faced by Fintech will be Network security, data breaches, or denial-of-service attack along with damage and rectification costs.

3.5 Technology failure

Innovative technology is essential for Fintech companies. So when technology failure arises which can make customers unable to access services resulting in lost income or lost customers.

 Thus hereby, I conclude that the structure and scope of the regulatory establishment have been aroused by historical reasons which are unconnected with Fintech. At the moment, some areas of Fintech activity are controlled while others are yet to do. Cool-headed attention towards the risk will prevent firms and other investors from dropping target to any Fintech over-hype. When Fintech risks are identified, the firm will not be able to diminish its efficiency. If there are any mismatches in the applied standards, then there may be a risk that might be arising and developing.

Hope this article provides information about understanding the market foundations of FinTech and the risk associated with FinTech.

About the Author

BankReed Admin

Banking Professional with 16 Years of Experience. The idea to start this Blogging Site is to Create Awareness about the Banking and Financial Services.

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