Fintech is changing the financial landscape as we know it. With digital wallets and service providers for payment gateway, making online payments is no longer a challenging task. Plus, you can manage all your finances on the go, making it easier for you to know about things happening in your business.
However, this amazing sector has been on the watch of cyber-criminals and hackers. As a result, there are some potential drawbacks that you need to keep an eye out for. To help you out, this guide will cover the different potential drawbacks of fintech that you need to know.
Cyber-Security Risks
This is a no-brainer that the most prominent threats to fintech businesses are cyber-security issues and data breaches. Unlike traditional institutions, businesses in this sector rely heavily on technology. Therefore, it becomes prone to risks and threats related to data. If cyber-criminals or hackers can get access to the fintech companies and service providers’ systems, then this could lead to the loss of sensitive information and critical data of businesses.
Regulations and Compliance Issues
One of the most important issues that fintech companies have to deal with is regulatory compliance. The fintech industry is relatively new and there are a lot of different new regulations coming in from time to time. This means that they would have to change their services or products in order to comply with the new laws. Not only that, it is a time-consuming and costly endeavor.
Lack of Human Interaction
When it comes to fintech, there is little to no human intervention. As a result, it can be a bit challenging for people who are not so tech-savvy to understand the functions of digital wallets, robo-advisors, mobile banking apps, or other such services. Some people prefer to deal with a person when it comes to financial matters. Therefore, they might have a hard time when it comes to using the fintech services and products.
Final Words
While these are some challenges that the Fintech industry faces, the incorporation of encryption protocols and advanced protection measures can provide a safe and secure environment. Fintech companies may use AI technologies to enhance their operations, decrease risks, and satisfy customers. Efficiency, security, and accessibility will be brought to all stakeholders, including digital wallet and high-risk merchant account users, by artificial intelligence (AI), which will accelerate the fintech sector’s development.