Fintech in 2022 and Beyond: Trends, Troubles, and Tips
Earlier this year, REINNO co-founder and CMO Natalia Shirshova gave an interview to DevStyler. It was included in their special edition report called Fintech: The Rise. The original report is in Bulgarian, so we translated a few questions and answers to give you a little taste of the interview.
What trends do you notice in the fintech market?
Decentralized finance, or DeFi for short, is growing at a high speed. DeFi promises financial services without a central authority, such as banks or companies. These services are offered through decentralized protocols and processed on blockchain. DeFi apps and platforms are gaining popularity thanks to communities that form around them. They unite people that believe in the project’s mission, like increasing security or eliminating bureaucracy.
Are there any basic rules that a fintech enthusiast should follow to turn into a successful entrepreneur?
For me, the two important rules are: 1) follow the regulatory requirements of the country you are offering your products in, and 2) take care of privacy and confidentiality. Otherwise, an enthusiast can turn into an infamous persona non grata of the fintech world. Forget the saying “There’s no such thing as bad publicity”. It is not always applicable.
What are the biggest security challenges in Fintech? What impact, if any, do they have on the software development process?
The fintech industry has countless security challenges. Fraud prevention is a priority for all companies in this sector. We have a set of procedures for identity verification, such as KYC (Know Your Customer) and AML (Anti Money Laundering). Everyone who uses fintech services has to verify their identity with a government-issued ID (e.g. a driver’s license or a passport). This can create an issue with client confidentiality. Where and for how long do you store pictures of IDs? Who can access them? How to prevent identity theft? These questions force companies to impose stricter requirements for software development.
Furthermore, there are a number of cybersecurity threats and risks, like hacking. A lot of the time available for software development has to be spent on preventing such issues in order to produce a high-quality product.
Managing financial risk is a whole other topic. For us, balancing such risks is extremely important due to potential delinquencies and credit defaults. This challenge requires more attention from financial specialists rather than developers. However, in my opinion, software developers have to understand the basic financial model of a company. This allows them to write code that positively contributes to the company’s efforts to regulate financial risk.
Should banks improve their services to stay competitive?
In the long run, it is necessary for their survival. Most banks already look into new technologies to stay competitive. Fintech companies allow their clients to fulfill their needs quickly and with minimum effort. Some banks have been skeptical about innovative technology or have not seriously considered implementing it. Yet, in my opinion, they have to adapt to the new norm if they don’t want to stay behind. Customers continue to learn about the benefits offered by fintech companies. If banks don’t change, they will lose a big chunk of their business.
If the fintech market is booming now, can we get to a point of oversaturation? Will we see some companies lose clients?
It is possible. People want to try new products and explore technologies discussed in the media and among their peers. However, they lose interest very quickly after creating an account. I am no longer impressed to see an app with a million downloads. What’s more important is how many people use it regularly. I expect the fintech mania to abate as the market matures.
What connections exist between fintech and cryptocurrency?
I believe that cryptocurrency is moving the industry forward. It proves that some things that we previously couldn’t even dream of are possible. Crypto opponents still cannot believe that someone would pay $60,000 for a Bitcoin. However, Bitcoin already serves as a medium of exchange. Some companies use it as a unit of account for pricing.
Even central banks are creating their own digital currencies. This would not have happened without cryptocurrency.
What’s ahead of financial technology in the next 5–10 years?
I hope to see not only the growth of financial technologies and products but also the improvement of financial literacy. These days almost everyone can buy cryptocurrency but most people don’t understand what risks are associated with this investment. There are so many new and exciting financial instruments that making rational decisions is getting more and more difficult. I believe that financial education is essential for the stable, organic, and successful development of the industry.
