Futureproofing FinTech: Walking the fine line between innovation and responsibility

Curated by: Sergio A. Martínez

So, as financial technology continues to evolve, there is an ongoing debate about the appropriate balance these platforms must have between responsibility and innovation. After all, the FinTech industry has the potential to cause the same type of economic impact as banks and should therefore be subject to similar oversight, but it can also be argued that traditional financial institutions are risk-averse and slow to adopt new technologies, which ultimately hurts the people who need these services the most. There’s no easy way to answer this question, but it is clear that both responsibility and innovation are important considerations in the world of FinTech. 

So how to thread this line, ensuring a FinTech product can offer new solutions for the market while keeping responsibility as part of its design? Futureproofing these technologies might be the answer. In the words of the financial blog Finance Derivative:

“As the years pass, it is becoming far more difficult to determine what the next decade will entail concerning technology innovation, due to the speed of digital transformation. This means it is important for organizations to futureproof their processes in the best ways possible. Network management and innovation is key to this, particularly for the FinTech industry due to the ever-rising data traffic in that sector.”

Solving the problems of today (and tomorrow)

The FinTech industry is one of the world’s most innovative and fastest-growing sectors. However, it is also an industry that is constantly evolving, and companies need to be future-proof to stay ahead of the curve. Considering the complexity involved in financial work, innovation requires a careful balance between four key areas that not only demand solutions today but also keep an eye on the future, overcoming challenges as the financial landscape changes. These areas are Regulatory, Data, Security, and Market, and each present their own unique angle to correctly futureproof a FinTech platform:

• Compliance: From mobile payments to peer-to-peer lending, FinTech companies are upending centuries-old business models and introducing new ways for people to interact with money, but to do so, they must navigate a complex regulatory landscape to stay compliant with the law. With new laws and regulations being introduced regularly, FinTech firms need to ensure that their products and services are compliant now but can adapt if a sudden regulatory change upends their service or business model.
• Data: FinTech companies need to deal with increasingly large volumes of data, and the ability to process and analyze it quickly and efficiently to make decisions about their products and services can make or break a FinTech platform. There are several ways that companies in this sector can deal with this challenge (including using cloud-based solutions and hiring data scientists), but the most important thing is to have a clear understanding of what data is needed and to design systems that can withstand an increasing amount of information every day.
• Security: As the world increasingly goes online, FinTech companies are under constant threat of cyber-attacks, thanks to financial information’s place as some of the most valuable data that hackers can obtain. FinTech companies must invest heavily in cybersecurity to protect their customers’ data, against criminals who are constantly finding new ways to bypass security measures, making security a challenge that FinTech companies must face daily. To stay ahead of the curve, FinTech companies must always be on the lookout for new threats and be quick to adapt their security measures, anticipating any exploit that might endanger their business and their customers.
• Market: In the world of FinTech, competition is fierce. Every day, new startups are vying for attention, and established companies are working hard to maintain their market share. This ultra-competitive environment can make it challenging for companies to survive, and to succeed. Companies not only need to have a strong value proposition and a clear plan, but also a way to stand out from the crowd and be able to appeal to a wide range of customers in the long run. How will your product fare when (not “if”) the financial landscape suddenly changes? Is your niche stable enough? Are there growth pathways your product can take to ensure long-term viability? 

As such, while the challenges facing FinTech firms are significant, there are also huge opportunities for those who can future-proof their businesses. By staying nimble and keeping up with the latest trends, FinTech firms can position themselves for long-term success in an industry that is only going to continue growing in importance.

Staying ahead of the curve

“In an increasingly digital world, the financial sector is under growing pressure to keep up with the times. FinTech startups have been at the forefront of this change, offering innovative solutions that are shaking up the status quo. However, as the industry continues to evolve, it is important for FinTech companies to futureproof their products to keep ahead”, says Rod Aburto, Service Delivery Manager and Senior Partner at Scio. “This means identifying emerging trends and developing products that meet the needs of tomorrow’s consumers, observing regulatory changes, and ensuring that compliance doesn’t stifle innovation. With the right approach, FinTech companies can ensure that they remain at the cutting edge of an industry that is only going to become more important in the years to come.”

Of course, creating a product or service that will still be relevant and in demand five, ten, or even twenty years from now is easier said than done. Predicting the future is never an exact science, and we know here at Scio how futureproofing presents unique challenges that can test any expertise in the field. However, by being smart about the market, listening to any warning signs, keeping up informed on the competition, and cultivating positive relationships with both consumers and overseers, FinTech firms can give themselves a better chance of still being around – and thriving – for years to come.

The Key Takeaways

• FinTech exists in a space where demand is high, but volatility is very likely, so developing useful products is always a challenge.
• The main issue is keeping a balance between innovation and responsibility, which is hard to accomplish in financial products.
• Futureproofing a FinTech product in four key areas (Compliance, Data, Security, and Market) is crucial to ensure success.
• Developing FinTech applications requires smart analysis, expertise, and the ability to extrapolate information to ensure a product thrives in the long run.

Scio is an established Nearshore software development company based in Mexico that specializes in providing high-quality, cost-effective technologies for pioneering tech companies. We have been building and mentoring teams of engineers since 2003 and our experience gives us access not only to the knowledge but also the expertise needed when tackling any project. Get started today by contacting us about your project needs – We have teams available to help you achieve your business goals. Get in contact today!