Over half of fintechs say they face more risk than before
More than 50% of fintechs believe they are facing an increased amount of risk, according to new research, as emerging technologies continue to affect the way the sector evolves.
A report from FIS – which has surveyed a broad range of over 2,000 business leaders from nine separate countries – found that 56% of fintechs are experiencing greater risk now than they were previously, seven percentage points higher than the cross-industry average.
The percentage of business leaders at financial institutions who say their level of risk has increased stands at a slightly lower 43%. Only 19% of financial institutions and 16% of fintechs believe they are facing less risk than before, with the difference accounted for by those who believe risk has stayed the same.
According to FIS, it shows that advancing technologies like blockchain and cryptocurrencies, artificial intelligence (AI) and machine learning (ML) must be carefully managed in order to ensure they grow safely – a trade-off that regulators around the world are slowly beginning to test.
Innovative businesses ‘more confident’ about economy
Melissa Cullen, Banking and Decisions Solutions Division Executive at FIS, says: “Every advance in technology creates new opportunities to innovate, while simultaneously
introducing new threats. While nearly half of executives believe their risk has increased, we should expect that number to climb as the pace of technological innovation accelerates.
“It’s all about balancing risk and reward through strong governance frameworks as we look to reap the benefits of emerging technologies.”
Elsewhere in FIS’ report, financial concerns are the biggest type of challenge facing fintechs right now, cited by 72% of respondents, following a sustained period of uncertainty that has been characterised by stubbornly high inflation, rising interest rates, a drying up of venture capital funding, mass layoffs throughout the tech sector, and general pessimism about the state of the economy.
Indeed, with the exception of retail, fintech is the industry most concerned by financial challenges of all of the sectors surveyed by FIS. Financial came out on top as a key worry for fintech decision makers, more so than in any other financial vertical, including financial institutions (64%) and securities and investment firms (71%).
However, there is hope within the industry that innovation can help pull companies through; more than 90% of fintechs and financial institutions both believe that innovating is a “significant” or “very significant” strategy for these turbulent times.
Tony Warren, Global Strategy Division Executive for Capital Markets at FIS, continues: “Early adopters are more confident, and no wonder. Whether it’s next-generation AI tools or regulatory technology, deploying the latest technology is the best way to protect [your] business from high levels of risk. Couple that with internal ownership of risk and companies can be more confident – even as they face a range of ever-changing challenges.”
******
For more insights from FinTech Magazine, you can see our latest edition of FinTech Magazine here, or you can follow us on LinkedIn and Twitter.
You may also be interested in our sister site, InsurTech Digital, which you can also follow on LinkedIn and Twitter.
Please also take a look at our upcoming virtual event, FinTech LIVE London, coming on 8-9 November 2023.
******
BizClik is a global provider of B2B digital media platforms that provides executive communities for CEOs, CFOs, CMOs, Sustainability Leaders, Procurement & Supply Chain Leaders, Technology & AI Leaders, Cyber Leaders, FinTech & InsurTech Leaders as well as covering industries such as Manufacturing, Mining, Energy, EV, Construction, Healthcare, and Food & Drink.
BizClik – based in London, Dubai, and New York – offers services such as Content Creation, Advertising & Sponsorship Solutions, Webinars & Events.
