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All you need to know about Risk management in Fintech

All you need to know about Risk management in Fintech

11-04-2021
Submitted by global_admin on Sun, 04/11/2021 - 12:10
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In the last few years, Fintech companies have emerged and grown rapidly - especially in Singapore - by making use of technology as a solution and tool to increase business efficiency and customer experience. 

Technology has been a huge area of growth in the last decade and has helped boost all industries.

What does ‘Fintech’ mean? 

Firstly, what is Fintech defined as? 

The term “Fintech” has been more commonly used in this age and time as financial institutions and tech companies are trying to get a piece of that lucrative pie.

On a broader term, Financial Technology – better known as ‘Fintech’ - is perceived as where an organisation’s main objective is to provide a wide range of financial services by making use of software and modern technology. 

The bulk of Fintech companies directly compete with the brick and mortar banks in most areas of the financial industry to provide a one stop service to customers. This will most often include customised investment, lending, payments services and products of financial services. 

The idea of 100% digitalisation appeals largely to the millennials. The more recent generations have a strong preference for easy and queue-free banking services instead of waiting in line for hours in a branch, which could also include speaking with bankers and lengthy consultation processes. 

Classification of Fintech solutions 

Entrepreneurs from all around the world are very attracted to Asia, and especially Singapore being one of the financial hubs in the APAC region. 

There are a range of different types of Fintech solutions: Payment solutions, Lending solutions, Data analytics, Cryptocurrency, Enterprise Management systems, Crowdfunding, Trading and fund management, Cloud, Blockchain and many others on a smaller scale. 

Most prominent Fintech services in Singapore

  1. Payment Services: Highly competitive and important due to the need for competition in Banking. One of the biggest sub-sectors in Fintech. 
  2. Lending services: Frequently known as peer-to-peer lending (P2P lending or P2B), it functions through a digital platform that matches lenders with potential borrowers, allowing lenders to potentially gain much more attractive returns than a savings account or other investments, and borrowers, lower interest rates than at a traditional financial institution.
  3. Blockchain technology and AI: By utilising technology to provide trading, exchange, new generation financial services.

Type of Risks

Due to the speed of changes and innovation, new risks are constantly emerging. 

Cross-border transactions are usually at a fast-transactional speed which is a powerful tool of Fintech but will also require Fintech firms to adapt stronger risk measurements that will match such speed and pace. Some of the risk that must be properly managed are listed below:

  • Fraud Risk 
  • Merchant Risk
  • Regulatory risk 
  • Anti-money laundering and countering terrorist financing
  • Consumer Risks
  • Cybersecurity and Data Privacy
  • Credit risk and operational risk
  • Outsourcing Risk 

The importance of Risk management must be the initial point for Fintech firms when dealing with risk and compliance matters. 

With the rise of new Fintech firms, it also means there are new risks and challenges that must be addressed appropriately. Risks may represent themselves in various forms. With the rapid pace of innovation, not only does it pose challenges to the Financial Institution, but also to the regulators.

Challenges of retaining talent in Fintech

It will be highly challenging to bring onboard a strong risk professional to identify such emerging risk as this is still a growing community. 

Retaining and attracting high quality talent seems to be the most prevailing business issue faced by Fintech organisations; there seems to be a smaller pool of available talent, particularly in Asia. 

One proven solution is to hire junior risk professionals and train them up on the risks to be taken in a Fintech firm. However, such a method takes time and, depending on the scale of the company, it may not be advisable to wait due to the importance of Risk management jobs and Compliance roles within Fintech firms.

Talent needs

At Morgan McKinley, we work closely with all types of Fintech firms ranging from start-ups to the most established global Fintech firms. We have proven ourselves to be a strong talent provider to organisations who value and understand the importance of good talent. 

With a team of specialist Risk recruiters, we have seen the high demand for Risk talent in Fintech first hand over recent years. If you are a potential employer seeking professional recruitment needs, get in touch today. Even if you would just like to understand more about the area as a whole or find out about the strong talent we work with, reach out and an expert will be happy to help!

For any strong risk professionals, we are always hiring for various Risk management roles in the Banks and Fintech space.

Technology has been a huge area of growth in the last decade and has helped boost all industries.

In the last few years, Fintech companies have emerged and grown rapidly - especially in Singapore - by making use of technology as a solution and tool to increase business efficiency and customer experience. 

What does ‘Fintech’ mean? 

Firstly, what is Fintech defined as? 

The term “Fintech” has been more commonly used in this age and time as financial institutions and tech companies are trying to get a piece of that lucrative pie.

On a broader term, Financial Technology – better known as ‘Fintech’ - is perceived as where an organisation’s main objective is to provide a wide range of financial services by making use of software and modern technology. 

The bulk of Fintech companies directly compete with the brick and mortar banks in most areas of the financial industry to provide a one stop service to customers. This will most often include customised investment, lending, payments services and products of financial services. 

The idea of 100% digitalisation appeals largely to the millennials. The more recent generations have a strong preference for easy and queue-free banking services instead of waiting in line for hours in a branch, which could also include speaking with bankers and lengthy consultation processes. 

Classification of Fintech solutions 

Entrepreneurs from all around the world are very attracted to Asia, and especially Singapore being one of the financial hubs in the APAC region. 

There are a range of different types of Fintech solutions: Payment solutions, Lending solutions, Data analytics, Cryptocurrency, Enterprise Management systems, Crowdfunding, Trading and fund management, Cloud, Blockchain and many others on a smaller scale. 

Most prominent Fintech services in Singapore

  1. Payment Services: Highly competitive and important due to the need for competition in Banking. One of the biggest sub-sectors in Fintech. 
  2. Lending services: Frequently known as peer-to-peer lending (P2P lending or P2B), it functions through a digital platform that matches lenders with potential borrowers, allowing lenders to potentially gain much more attractive returns than a savings account or other investments, and borrowers, lower interest rates than at a traditional financial institution.
  3. Blockchain technology and AI: By utilising technology to provide trading, exchange, new generation financial services.

Type of Risks

Due to the speed of changes and innovation, new risks are constantly emerging. 

Cross-border transactions are usually at a fast-transactional speed which is a powerful tool of Fintech but will also require Fintech firms to adapt stronger risk measurements that will match such speed and pace. Some of the risk that must be properly managed are listed below:

  • Fraud Risk 
  • Merchant Risk
  • Regulatory risk 
  • Anti-money laundering and countering terrorist financing
  • Consumer Risks
  • Cybersecurity and Data Privacy
  • Credit risk and operational risk
  • Outsourcing Risk 

The importance of Risk management must be the initial point for Fintech firms when dealing with risk and compliance matters. 

With the rise of new Fintech firms, it also means there are new risks and challenges that must be addressed appropriately. Risks may represent themselves in various forms. With the rapid pace of innovation, not only does it pose challenges to the Financial Institution, but also to the regulators.

Challenges of retaining talent in Fintech

It will be highly challenging to bring onboard a strong risk professional to identify such emerging risk as this is still a growing community. 

Retaining and attracting high quality talent seems to be the most prevailing business issue faced by Fintech organisations; there seems to be a smaller poaol of available talent, particularly in Asia. 

One proven solution is to hire junior risk professionals and train them up on the risks to be taken in a Fintech firm. However, such a method takes time and, depending on the scale of the company, it may not be advisable to wait due to the importance of Risk management jobs and Compliance roles within Fintech firms.

Talent needs

At Morgan McKinley, we work closely with all types of Fintech firms ranging from start-ups to the most established global Fintech firms. We have proven ourselves to be a strong talent provider to organisations who value and understand the importance of good talent. 

With a team of specialist Risk recruiters, we have seen the high demand for Risk talent in Fintech first hand over recent years. If you are a potential employer seeking professional recruitment needs, get in touch today. Even if you would just like to understand more about the area as a whole or find out about the strong talent we work with, reach out and an expert will be happy to help!

 

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