The MENA region has seen a surge of fintech startups within the past few years. In November 2020, the region had over 400 fintech ventures.
Fintech is disrupting many business verticals and entrepreneurs around the world are constantly introducing new ways to bank through their Fintech startups.
But it is not all sunshine and rainbows. Entrepreneurs face several challenges and roadblocks when launching Fintech startups.
In this article, we will tackle the three most common technical challenges faced by Fintech startups.
What are the most common Fintech challenges faced by startups?
1.Cyber Security Risks
With great power comes great responsibility.
Access to sensitive financial and personal information makes fighting off cybercriminals a daily responsibility for Fintechs.
According to Verizon’s Data Breach Report, 9 in 10 data breaches are financially driven. Therefore, robust security and privacy protocols are paramount for Fintech products. Whether it’s biometric, two-factor, or risk-based authentication, Fintechs will need to invest in the best tech-driven security measures to stay one step ahead of cybercriminals.
2. Complex Regulations & Compliance
As pressure increases on Fintech startups to address existing or potential regulatory hurdles, this inevitably leads to the slowdown of their speed to market.
Therefore, as a startup, it is crucial to be aware of the regulatory framework of the financial system in your region: Are there existing regulations governing your products/services? Do you comply with them? What licenses are required? Should you partner with another company that has already acquired the license?
This is where Regtech comes into play. Regtech is an emerging industry enabling regulatory compliance using technology to ease the burden on companies. Relying on the latest fintech technologies to address regulatory schemes and compliance, Regtech companies act as a bridge between regulators and financial institutions.
3. Human-Tech Balance
As the use of AI and machine learning continues to increase, services are becoming more human-less.
However, the vast majority of customers in the MENA region prefer to interact with a human when handling their finances. This can leave many Fintech startups struggling to persuade customers in the region to abandon their traditional banks.
For Fintechs to overcome this “confidence gap”, a customer-centric financial model is paramount to be able to achieve the human-tech balance. This can happen through keeping customers’ needs and experience at the heart of every new technology adopted.
Learn more about how SimpliFi’s platform can help you combat these Fintech challenges.