With the spread of COVID-19, financial service businesses like banks are reflecting on the impact of the unprecedented global health crisis on themselves.
Right from moving employees to remote working, to addressing the elevated demand on technology systems in such extreme untested circumstances, banks are living through a long, live stress-test environment to provide customers an easy access to products and services.
In the pandemic era, resilience has become one of the defining characteristics of the financial domain. It has come to the forefront on both people and operational ends. While on one hand, the sector has started focusing on their manpower wellbeing, on the other hand, it has started moving towards digital transformation for operational resilience.
In our next sections, let us dig deep into why Fintech resilience is necessary and what are the different ways fintech service providers become/ continue to be resilient.
Why is Fintech Resilience Necessary?
Fulfill regulatory requirements
Because of the rising complexities of the financial systems, financial regulators have laid out the importance of nation-wide regulations. The government-level regulators evaluate the operational resilience of a fintech firm in a holistic manner led by the technological and market changes.
Prepare for security threats
With growing dependence on third party service providers and digital tools, fintech business exposure to security attacks has increased the need for the sector to prepare for security issues. Compared to other types of risks, cyberattacks are a lot more difficult to find and eliminate until a resilience engineering system is created.
Eliminate the risks of outages
When resilience is not kept on priority, core business elements become vulnerable to cyberattacks, pandemics, and geo-political environments. By creating resilience, fintechs get visibility of processes and crucial assets, which prepares them for instances of outages of fintech processes or services.
Now that we and the entire fintech industry have established how resilience is necessary, it is crucial to look into the challenges that stand between its complete incorporation.
Challenges Associated with Establishing Resilience in Fintech Products
Cultural challenges
An individual business service can extend across third parties and technologies. And when you add cyber crime and people in the mix, it can get difficult to collect the data points and map them against the business objectives.
Achieving this requires a defined ownership to be brought into the picture by the key cross-team business services. Each team must offer their share of inputs in the assessment along with a plan to improve their business areas.
All of this calls for a strong risk management culture in the business processes.
Investment
Depending on the age of the fintech business, investments in resilience can be very high. Money will have to be allocated behind –
- Regularly assessing the operational risks that they face with regulatory developments
- Analyzing the potential vulnerabilities
- Implementing the right defense mechanisms
Complexity of legacy systems
The legacy systems of financial institutions can get very complex and difficult to manage and upgrade. To improve the operational resilience, the full tech stack of the legacy systems must be upgraded and assessed for maintaining resilience capabilities.
Noting why risk management is important for businesses and the challenges associated with it, it is important to understand how to build fintech software resilience with perfection.
