Top 5 Challenges of FaaS Platforms in the Fintech Sector
Though technology has indicated its existence in most business sectors, it’s still embodied with its own set of challenges. By way of instance, fintech-as-a-service (FaaS) is a creation that has broadened the assortment of banking and investment chances, thereby making them easier and more elastic. Many integrations of varied technologies have caused fintech applications to address the many complex needs of gamers in the financial industry.
FaaS applications are easy to get on the market for financial businesses in the kind of applications development kits (SDKs), that can be intended to be readily integrated with existing procedures and systems of businesses. Nonetheless, these SDKs will need to be updated based on changes in regulations set down by the banking/financial government on a regular basis. Other than this, there are different challenges that firms encounter when utilizing FaaS platforms.
How to Overcome the Challenges of FaaS Platforms?
1. Credibility issues
Obtaining a service or product to the marketplace might be simple, but gaining customer confidence and loyalty requires a whole lot of difficult work. That is even more applicable in the event of the fund business, particularly FaaS platforms. With cash involved, it’s been seen that the majority of men and women lack confidence and are doubtful whilst shifting to something new like fintech, to create their fiscal operations easier. As in the case of the majority of brand new product launches, gaining customer confidence requires some time and substantial effort.
Solution: Educating clients about fintech is the only means to achieve their confidence. Rather than aiming to offer your merchandise, raising awareness concerning the benefits of FaaS platforms can go a long way in gaining a bigger consumer base. Create persuasive educational content through the studies, client reviews, and whitepapers, alongside the use of infographics to showcase the way your system is beneficial. It would also be a fantastic idea to consider issues as illustrations and compare the way that FaaS would resolve them rather than conventional financial solutions.
2. Data privacy and security issues
In the current world, data privacy has been the talking point across industry verticals. Conventional banking solutions are more physical in character. They’re deemed as highly protected by the public because they rely on vaults, safety cameras, guards, and even more to maintain customer resources secure. But when we change to the digital universe, things aren’t as simple. Mobile providers, online banking, payment software, and fintech are considered more vulnerable from both a financial and private information perspective. This can limit the large potential of software that FaaS platforms provide.
Solution: In precisely the exact same manner that financial and banking institutions describe how stable they are, you’ll have to produce your FaaS platform exceptionally safe and increase consciousness concerning the exact same. Some ways of accomplishing so are ensuring that the system:
- Incorporates detailed documentation
- Has biometric and multiple-factor authentication
- Works on encrypted data technology
- Provides real-time alerts, is constantly updated
- Has been extensively tested to be secure against hacking
Showcasing these attributes will soon put to rest the doubts that clients have regarding information privacy and security issues.
3. Compliance with various regulations
The financial sector is among the most regulated companies in the entire world. Additionally, finance-related regulations keep changing frequently, and also the FaaS platform has to be adaptable and updated to comply with present and changing standards. Classic banking methods are already set up and readily meet regulatory compliance. The exact same is not as simple for fintech. The issue becomes more notable once you expand your enterprise and venture into global markets, and then, distinct regional regulations get involved.
Solution: Assess the applications and their own procedures together with applicable legal compliance. It would be smart to employ a legal adviser or possibly a group for this objective. You would have to keep abreast of their latest and current governmental regulations and often include changes as and if demanded. Working hand-in-hand with authorities would also assist in overcoming regulatory troubles. Simply speaking, it’s compulsory that the FaaS system is compliant with pre-requisite regulations not just in the country but across regions.
4. Market reach and user retention issues
Market reach can be hard considering the tens of thousands of fintech startups that are operating around the globe. As stated by the Statista Research Department’s March 2021 report, in February 2021, there were 10,605 fintech startups from the Americas, 9,311 in EMEA, and 6,129 from the Asia Pacific area. Obtaining a FaaS platform or product to stick out in one of these huge contests won’t be simple.
Solution: First and foremost, determine the target audience. Unlike conventional banking services, innovations like fintech would largely be favored by the millennial people, who are far more tech-savvy. Concentrating on their particular requirements and catering to them is highly advised. Through your site, increase awareness about your goods and services. Additionally, while doing so, ensure that your program is protected but at precisely the exact same time user-friendly also. The platform must strike a fantastic balance between high safety and an easy consumer experience. By way of instance, many users wouldn’t obey a two-factor authentication procedure but might dislike being asked to log in using a username and password each and every moment.
5. Big data, artificial intelligence, and blockchain integration
Compared to other industry verticals, traditional banking has been slow in getting on board the AI, big data, and blockchain trend. It may be said that conventional financial institutions are cautious of new, evolving technologies. In any case, blockchain fund technology is comparatively new, and there are not too many specialists out there on the industry. Also, governments across the globe are still not too receptive to the concept of mass blockchain adoption.
Solution: AI and blockchain integration require highly specific experience. It requires professional specialists who understand how to incorporate them securely into the FaaS system. At exactly the exact same time, compliance with various government regulations needs to get cared for. To keep a blockchain-based stage, hiring your blockchain development group could be a fantastic idea.
With every passing day, the prevalence of mobile banking is simply getting bigger. Technologies like FaaS can make it suitable for individuals to execute transactions in addition to helping financial institutions in functioning more effectively. FaaS platforms will need to integrate the newest technology, together with conventional banking expertise and regulatory compliance. FaaS is a business that’s still in its early phases, and raising awareness and educating customers will go a very long way in advancing this disruptive technology.