Fintech funding set a record in the U.S. in 2019, securing investments of nearly $60 billion. Over the last decade we’ve watched fintech startups grow up before our eyes, evolving from disruptive outsiders to industry mainstays known for their ability to leverage technology to outperform and outpace legacy banking institutions.
And yet, the acceleration of the fintech industry isn’t without growing pains. Chief among them are protecting data, competing with big banks and complying with evolving regulations, all while continuing to provide the leading-edge customer experience customers have come to expect.
Here, we’ll cover five of the biggest challenges for fintech companies in 2020 and the opportunities they present for innovative firms in 2021.
Top Challenges for Fintechs in 2020
1. Data Security
Hackers have been hard at work the last few years, with as close to 1,500 reported data breaches in 2019–a 17% jump from the year prior. The cost of each breach is also on the rise, growing 12% over the past five years to an average of $3.92 million per incident. Fintechs have access to incredibly sensitive user data, the volume of which is growing constantly. Every person will generate an average of 1.7MB of data every second in 2020. With this explosive growth in the volume of data comes an equally massive responsibility to protect it.
The fintech industry is trending toward greater investments in cybersecurity and data privacy, with spending in this area expected to top $220 billion across all industries by 2024. For growing fintech firms without huge budgets, this presents a challenge. Fintechs must find cost-effective ways to implement robust security protocols that not only keep customer data safe, but give the user control over it.
Cloud-based contact center solutions continue to enable the best advantages in protecting sensitive user data with a multi-layer defense network managed by a team of security experts.
Rather than relying on in-house resources to manage data security, which can be incredibly costly, fintech firms can leverage an outsourced solution to manage the many facets of a robust security program including encryption, firewalls, identity and access management, crisis recovery, and more all with seamless integration options for existing systems.
2. Changing Regulations
Global fintech companies are known for moving at the speed of light. After all, that’s a key factor that has allowed disruptors like PayPal and Venmo to carve out significant market share. Historically, compliance regulations have lagged significantly behind fintech firms in evolving, but as these firms continue to grow, regulations are starting to catch up. Remaining compliant with them without losing technological momentum will be critical in the years ahead, especially as new rules from the CFPB and STIR/SHAKEN ramp up in 2021.
Fintechs must pay careful attention to data collection and security best practices like GDPR, which became widely adopted in 2018. Using a single, centralized consent management platform can help fintechs obtain the proper consent and determine user channel preferences in a way that not only complies with best practices, but adds value to consumers.
Further, an integrated contact center platform can automate regulation compliance tasks like obtaining consent and providing legal disclosures, rather than relying on humans to complete these tasks. This not only mitigates risk, but streamlines processes and reduces costs.
3. Competition from Traditional Banking Firms
In terms of innovation, fintech companies’ size and agility have long given them the edge over traditional banking firms, which are notoriously slow-moving and resistant to change. That’s no longer a universal truth, however, as legacy banks adapt their business models and make strategic acquisitions to help them compete.
Fintech’s success in the next several years will hinge on delivering products and services that continue to push the envelope on what’s possible in personal finance, payments and lending, like wealth management advice delivered by mobile app or round-the-clock social media support. An omnichannel communication platform can support customer engagement on all channels, from voice to chat to social to app, delivering a modernized and intuitive experience that keeps your brand a step ahead of the industry giants.
4. Excelling at Customer Experience
The superior customer experience is one reason customers love fintechs, but a slick UX and quirky brand voice alone aren’t enough to ensure longevity. In order to thrive, modern fintechs must deliver an unparalleled customer experience in the form of accessibility, convenience and ease of use.
Enhance the customer experience by harnessing technology that puts the focus on the user. Use automated tools like chatbots to transform your website into a self-service channel. Leverage SMS support to decrease call wait times and take agents from a 1-to-1 to 1-to-many service capacity. Use real-time speech analysis to decipher user intent and fast-track the most urgent inquiries to the proper decision makers.
Interactive voice response (IVR) has an enormous capacity to help fintechs step up their customer service game, delivering the information the customer needs when they need it. By interacting with your IVR menu, customers can self-select into the relevant support channel, ensuring the quickest resolution with an appropriately skilled agent. An all-in-one contact center platform can make IVR accessible at an affordable cost.
5. Demand for Personalization
Customer experience goes hand in hand with personalization, which is another key opportunity for fintechs to set themselves apart from the big banks. Technology is an invaluable tool in driving personalization and building trust, arming agents with the information and guidance they need to deliver unique and highly relevant interactions with every user.
Many traditional banks still rely on fragmented databases to house customer data, which makes user interactions slow and clunky. Fintechs, on the other hand, have an opportunity to corner the market in personalization by equipping live agents with all available customer information and previous ticketing data from a single information source. This not only enables faster, more seamless interactions, but allows agents to give personalized advice on things like credit cards and personal loans, which builds trust in a major way.
Cloud-based call center technology offers the full package of security, accessibility and personalization fintechs need to win customers who will stick around for the long haul, not just until the release of the next flavor-of-the-week app.
LiveVox is a next-generation contact center platform that powers more than 14 billion interactions a year. We seamlessly integrate omnichannel communications, CRM, and WFO capabilities to deliver an exceptional agent and customer experience, while reducing compliance risk. Our reliable, easy-to-use technology enables effective engagement strategies on communication channels of choice to drive performance in your contact center. Our battle-tested risk mitigation and security tools help clients maximize their potential in an ever-changing business environment. With 20 years of pure cloud expertise, LiveVox is at the forefront of cloud contact center innovation. Our more than 450 global employees are headquartered in San Francisco; with offices in Atlanta, Denver, New York City, St. Louis, Medellin, Colombia, and Bangalore, India.