Are Fintech startups prepared to endure cyber risks?
February 10, 2017 | Digital Payment Gateways, Regulatory Compliance
Probably the only startup fad that came any near to match present-day thrill surrounding the Fintech startup scene waswitnessed at the end of last decade when young motivated engineering and MBA grads presented exciting business models to earnseed funding for renewable energy business ideas.
That fad, however, capsized rather quickly as the global economic meltdown dried up state and venture capital funding even as falling energy prices shook the established solar panels and wind turbine manufacturers.
But the buzz around the Fintech startups, which develops technologies for financial services, has led to a fresh wave of mindboggling funding for financial products and services. And that optimism will most likely remain robust looking forward, as digital revolution is makingthe traditional finance industry look redundant.
From a host of digital payment gateways to peer-to-peer lending platforms and from highly innovative technologies like maximizing customers’ interest rates through moving around EU banks to Blockchain technology which helps in distributing financial instruments and digital currencies—Fintech startups have remodeled financial services.
Having said that; the nascent-stage industry will have to contend with several risks. A growing number of companies, for instance, will have to manage risks associated with regulatory compliance requirements as the status quo is challenged in the banking and finance industry.
Likewise, operational and data protection issues will need a closer look. Consider, Chinese digital payment provider, Ant Financial, an arm of ecommerce giant Alibaba. It has more than 500 million clients. That means, these Fintech enterprises will gather and process a huge amount of data. This data, which fosters decision-making process, will help gaining edge over the traditional financial industry. But gathering and processing highly-critical information also raises data privacy issues as cyber criminals will look out for security gaps to steal data. Any breach or misuse of classified information can have a catastrophic effect on the booming Fintech startup scene.
We now live in an increasingly digitized world, wherein the ability to maintain the digital trust among customers and investors by ensuring data security, remains one of the key performance metrics for startups, in fact for matured companies as well.
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