By Fergal Parkinson, Co-founder and Director of TMT Analysis
The fintech sector in the UK is surging, attracting investment on an unprecedented scale and hailed for its innovation and vision. Last year’s government-led review of UK Fintech by Sir Ron Kalifa was an official endorsement of an industry described as both world leading and a fast-evolving hero of the UK economy.
But is the boom in this sector taking customers with it or leaving them behind? Because there is certainly a perception among the wider public that fintechs are riskier than more established financial institutions.
That was the picture suggested by recent research we at TMT undertook looking at public perception of fraud risk and related questions. We found just 8% of those surveyed do not feel that businesses in financial services are at risk of fraud – meaning 92% questioning the security of the sector to some degree.
Almost half (45%) of respondents told us that they think fraud is worse than it has ever been.
Yet when I speak to fintech business leaders – something I do regularly – they don’t perceive a problem in nearly the same degree as the public do. They regard their business models as having built-in robust security which is at the cutting edge of what’s possible. And to a large extent I agree with them.
So while younger, more tech-conversant consumers may not see any disparity or may even see newer fintechs as more secure than heritage institutions, there’s a danger that the fintechs may be missing out on huge amounts of possible business if they don’t persuade the whole market to think this way.
It may also be that a perception of heightened risk is down to their perceived proximity to the crypto currency sector – which really does have an image problem.
The huge volatility of these markets has had great cut through in the media and we are now regularly seeing human news stories about ruinous losses and addictions and the like coming out of crypto.
Our research seems to support the idea that this is where trust is at its lowest: while nearly nine in ten (89%) know what cryptocurrency businesses do and how they work, only 9% believe the services on offer are safe and secure. And over half (56%) believe a lack of regulation attracts cyber criminals to target crypto currency providers.
It’s perhaps because of these mindsets that innovators in fintech are being seen as similarly risky. And any new financial service that requires customers to set up accounts and then invest not only needs to ensure its systems are secure but also to persuade the public that this is the case.
But if the tech inherently involved in these businesses is increasing the concern around financial security, it’s also, surely, the solution to allaying those fears.
We at TMT provide the primary layer of security for a whole raft of digital businesses from fintechs to e-commerce. Most of our customers use us because of the unrivalled intelligence we can provide on the integrity of their customers – based on live data from the phone companies – means they cannot be better protected.
The process is also fast and fuss-free: businesses do not need to adjust on-boarding or fraud prevention workflows as they enter new markets – and our platform is fully applicable to any country in the world and engineered to respond to millions of queries per second. In fact we cover every mobile number in the world!
The challenge to the fintech sector then is to ensure not just that it’s employing protocols like this to offer optimal security but that it’s informing potential customers about this.
Trust can be grown. If the stats show you’re safer with a fintech rather than at greater risk it will surely come if this story keeps being repeated. You’ll be telling your customers what they want to hear.
You can download our full report HERE