Fintech CTO Challenges: What to Expect

With the fintech industry expected to grow over the next few years, it’s a very exciting time. But it also can’t be denied that there are several obstacles to navigate. Being the owner, and CTO, of a fintech company is now harder than ever. In this article, we explore exactly why and explain how you can combat the most common fintech CTO challenges.

There isn’t an industry out there that is immune to obstacles. Whether it’s related to funding, recruitment, marketing, or changing consumer demand, every business – whatever its size – will have to navigate some hurdles. Plus, when you do, your business is likely to be stronger and you’ll have learnt valuable lessons. Here, we highlight the most common challenges faced by fintech companies so that you can prepare for what’s ahead.

Navigating Emerging Technologies

The very essence of a fintech company is new technologies, which makes it hard to ignore emerging trends like blockchain, machine learning and AI. If you do, it’s likely that one of the big names in the sector will focus their attention on it – and do it well. However, implementing these technologies is easier said than done and they pose a big risk for fintech CTOs.

For starters, you’ve got to identify which technology trends are going to be worth tapping into and which ones will simply be a buzzword. Sign up to something too fast and you could waste a lot of resources on something that just isn’t right. Leave it too long and your fintech company could get lost behind competitors.

Expertise

With so many new technology trends to know about, it’s hard to keep up with the relevant skills and knowledge required to make them work. While you can carry out research when a new technology is announced, if it simply becomes a latest fad, you’ll again have wasted resources focusing on it.

When you do choose to implement a certain new technology though, it’s important that you spend the right amount of time getting to know it. Those that rush this stage to simply be ahead of the competition, can face overall issues with quality and their team’s expertise. This, again, can do irreparable damage for your brand awareness and customer experience.

Interoperability

In today’s digital world, customers want a seamless, personalised experience – and the same can be said for their banking and payments. For this reason, several fintech companies choose to partner with other system providers and platforms to level up their service offering and make the whole user experience better.

As a CTO, you need to carefully weigh up all the options. Not every partnership will be the right fit for your fintech company, and you need to ensure that any technology systems involved can be integrated. If not, it could result in apps and websites not working and your customers will soon look elsewhere.

User Experience

Staying on the topic of user experience, it’s crucial that fintech organizations keep their customers engaged. After all, technology is always evolving and it’s likely that there is another name out there that’s already tapping into a new trend. CTOs need to ensure the UX of their website and apps are user-friendly. This includes making sure they work on various platforms, are easy to navigate, and contain all the relevant information. 88% of people have even said they are less likely to return to a site with a bad UX.

It’s not just about creating a nice looking and functional interface though. The interface must be secure too, which is especially important when sensitive information and financial data is concerned. It’s also important to note that any security measures should not impact how seamless the experience is. CTOs must therefore create services that are easy to access yet hard to break.

Data Security

The reality of cybercrime is stark. Data breaches are on the rise and becoming more intelligent. New figures have even revealed that the cost of a data breach in the fintech industry is around $4 million per incident. News of these attacks rarely stays quiet too, which is why CTOs must make it clear to their customers how they are protecting sensitive information.

The same report found that stolen user credentials are the most common attacks and customer data including name, email, and password is exposed in up to 44% of data breaches. It’s not just about user data as malware attacks also try to tap into company information. For this reason, fintech companies need robust and reliable infrastructure to secure all data.

Compliance

Technology advancements and trends aren’t the only area that CTOs struggle to keep pace with. Another common challenge in the fintech industry is compliance with everchanging and inconsistent regulations. As fintech companies control lots of sensitive data as well as personal and corporate finances, it’s essential that rules and regulations are put in place to ensure an appropriate way of working.

However, this also means that fintech organizations are closely monitored, meaning one small error could cause huge damage. When a new application or feature is released, fintech companies and CTOs must prove compliance, which is not only a laborious task but can demand lots of resources.

Big Data & AI Integration

Nearly 40% of organisations use AI and 90% of leading businesses have invested into AI technologies. It’s clear that big data and AI have had a huge impact in almost every industry – but none more so than in the fintech sector. It makes collecting personal information easier, can help to analyze and track financial behavior and habits, and can also predict future in-app activity and preferences.

That’s not all as these types of technologies can also be used to prevent fraud. AI can quickly analyze risks and threats and better protect data resources and systems. However, while AI can be very useful for fintech companies, cyber criminals can also use it to create more sophisticated attacks. CTOs need to stay ahead of the game with strategies to implement these systems but with the expertise to keep them safe.

Blockchain Integration

Blockchain technology is being used to allow safer transactions, around the world, without users having to go through a financial services provider or bank. It’s also used by companies to track and analyse transactions, keeping data in one place, and having an eye on any threats.

However, as mentioned above, any new technology must adhere to specific financial and government regulations. Implementing blockchain technology isn’t an easy task either and typically requires a dedicated team with specialist skills to maintain and oversee any applications.

Marketing

Latest figures estimate that there are over 26,000 fintech companies globally. This has increased dramatically with over 12,000 fintech companies reported to be active in 2019. Competition in the market is getting more fierce, so if you want your company to stand out, effective marketing tactics are needed. This requires a team of experts but and enough budget.

Great care also needs to be taken to understand your target audience, their pain points, lifestyle, and financial goals. Just knowing this information simply isn’t enough either. You need to create tailored, targeted campaigns that grab attention and highlight how your company solves your audience’s problems. With so many fintech companies out there, it can be difficult to identify your niche USP, but this is essential if you want your voice to be heard amongst the growing crowd.

Talent Acquisition

We know that the fintech industry is growing dramatically fast, and this means that your fintech company needs to hire the cream of the crop if you want to keep pace. But this is where many fintech companies struggle. Nearly a quarter of employers who were surveyed in a study confirmed that their existing employees lacked basic digital skills. Two-thirds even admitted that this would likely have an impact on their profitability.

Technology recruitment is a real issue, especially for CTOs. With constant additions in the technology sphere, it makes it difficult to keep up with changing skills – even for the most experienced. When CTOs do hire a dedicated team, work must be done to retain them. Increasingly, employees value more than just a good salary. Company culture, flexibility and employee benefits are all more important than ever before now.

Budget

Nearly all the fintech industry challenges we’ve mentioned above have either a direct or indirect connection to budget restraints. Running a business is expensive and budget constraints are felt by all – whether they’re a start-up or huge global name. These budget constraints make it difficult to invest in ongoing employee development, company-wide equipment, market and technology, and infrastructure. But, if CTOs ignore these areas, it’ll soon impact employee and customer engagement as well as your bottom line.

CTOs must therefore find ways to make the most of their budget and limited resources. Upgrades and investments must be strategically analyzed to determine their ROI and a careful eye must be kept on expenditure and value.

It’s a very exciting time for the fintech industry thanks to evolving technology, a growing interest and continued investment. However, as with any sector, especially those that are in the early stages of discovery, CTOs in the fintech space do face several fintech challenges. To combat these more effectively, they must be aware of the common hurdles as well as ways to approach them.

Don’t worry if you’re struggling to keep up since specialists like Vsourz are here to help. As your tech partner, you can leverage our dedicated team to level up your digital transformation. Get in touch to find out more about how you can hire a dedicated remote team to navigate common fintech problems and lead your fintech company on the path towards long-term, sustainable success.