Turning Risks and Compliance into Opportunity

Posted on July 1st, 2022

The gamut of services and products disrupting the spectrum of fintech is becoming irrepressible. With the massive eruption of startups acquiring more and more fintech space, the world is undergoing a financial revolution. The global fintech industry is expected to grow at a compounded rate of 24%, and the overall valuation of the market size is expected to reach $124 billion USD by 2025. Such figures imply an enormous scope of opportunities that are yet to be tapped. 

Risk and compliance are the two sectors that have recently come in the limelight for the number of opportunities they offer, if tapped wisely. 

Growth of Fintech

The tremendous growth witnessed in the word of fintech has been caused due to a few underlying reasons that have helped shape the market:

Smartphones

One of the main factors that has had a colossal effect on the fintech front is the upsurge in the adoption and penetration of smartphones. With billions of people shifting focus from other media to smartphones, the reachability of most sectors like social media, banking, investments has grown manifold.

Inefficient Traditional Banking

Traditional banking methods were created as per the earlier needs and practices. Obsolete and slow systems, combined with population growth, are the main factors that have incentivized more players to enter the market and change the perceptions and ways of banking and financing.

Trends in Customer Behavior

With new entrants streaming into the industry, vis-à-vis new products and services, the reliance on old methods has taken a hit. The customer habits and behaviors prevalent a few years back have naturally adapted to the new systems dominating the world now. Such behavioral shifts are making way for more innovation and disruption.

Risk and Compliance as Opportunities

As more and more customers get familiarized with the range of services and products offered under the fintech umbrella, their expectations and behaviors change. Such changes in customer habits depict a more customer-focused approach for innovation.

With fintech making deeper headway into people’s everyday lives, new branches of this industry are gaining more prevalence in terms of the scope of opportunities they provide. Risk and compliance have recently received eminence owing to their level of involvement in shaping the industry. While there are countless opportunities surfacing all across the market, there are few which have recently received a lot of attention.

While customers need a secure and safe structure for all types of payments, they also want simpler processes which don’t involve multiple levels of verifications and password inputs. Such expectations open doors for the usage of biometrics to keep the fintech interface secure. 

Fraud detection is another big market in the risk assessment category of fintech in which customer habits, behaviors, activities and trends are studied intensely to mark outliers, which could help in fraud detection.

Information and data related to customer behavior and trends can be used to ascertain the chances of loan repayments, providing a cushion-like equipment to get better risk insights.

Information about the e-commerce activities of customers on various fronts can be stored and used to determine the creditworthiness of customer. In this way, companies and financial institutions can offer customized products and services as per their suitability and needs.

Such opportunities are incessantly flowing into the market space, and fintech players all over the world are continuously keeping track of new trends that have the potential to become the next big thing.

New technologies like machine learning, artificial technology, etc., have already been in the picture for a few years now. Their true potential is gradually surfacing as fintech players dive deeper into gaining better insights about the market and industry.

All fintech developments that have occurred in the past and will possibly occur in the future are regulated by authorities. With such rapid advancements occurring so frequently at a global level, it is imperative for regulations and compliance bodies to create very agile and adaptive systems that efficiently safeguard the best interests of businesses and customers while also allowing space for innovation and challenges. Hence, compliance is perceived as the Golconda of new-age fintech. 

The true potential of technology can be realized by focusing on the needs, trends and habits of customers and the requirements of the regulatory authorities. A number of fintech startups and companies have incorporated this in their vision, which has helped them come up with more innovative and customer-centric solutions and services.

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