Biggest Challenges Fintechs Face in Achieving Meaningful Social Impact

The fintech industry continues to revolutionize banking and payments, often spotlighted for advancing financial inclusion and fostering healthy financial habits, as stated in The Fintech Times. However, the path to ensuring meaningful social impact is fraught with challenges. In this article, we explore insights from industry experts on the hurdles fintechs must overcome to align profit with purpose and foster a more inclusive, socially conscious financial ecosystem.

Thekla Paschali, CTO at Payabl., emphasizes that social impact must be ingrained in a fintech’s culture and operations. “When the market is challenging, investors are pushing for returns, and the board is focused on profits, how does a fintech maintain its focus on social impact?” Paschali asks. “The reality is that delivering positive and measurable social impact isn’t about ticking a box. It’s about weaving it into the fabric of the business—it’s culture, DNA, and identity.”

Sergiy Fitsak, managing director at Softjourn, points out that scaling inclusivity while remaining profitable is a key challenge. He highlights the need to navigate outdated regulatory frameworks and prioritize data privacy and ethical AI deployment. Fitsak also advocates for collaboration with governments and NGOs to responsibly expand fintech’s reach.

Wendy Murphy, VP of corporate communications at Exinity, warns that financial pressures can threaten a company’s commitment to social impact. “Even when everyone is aligned on being a force for good, this belief may waver during tough financial times,” Murphy notes. She advises fintechs to develop contingency plans and maintain a realistic understanding of the need to run as a competitive business while staying true to their mission.

Jayne Sibley, CEO of Sibstar, stresses the importance of designing inclusive products that cater to financially vulnerable populations. She identifies regulatory hurdles as a significant challenge, requiring fintechs to balance flexibility with compliance while maintaining authenticity to build trust. “Social impact is a long game,” Sibley says. “Customers need to see consistency and authenticity before they buy in.”

Elena Bazhenova, payment specialist at Exactly, highlights cybersecurity as a critical area of focus.“In 2023, the finance sector experienced the highest number of breaches, underscoring the risks fintechs face,” Bazhenova explains. She urges fintechs to prioritize secure technology, adapt to evolving regulations, and address financial illiteracy to make a lasting impact.

Deep Varma, CTO at Alkami, underlines the need to address barriers like limited digital infrastructure and financial literacy in underserved populations. “Investing in financial wellness to drive inclusion and literacy must be an underlying value system,” Varma says. He also stresses the importance of balancing profit and purpose while navigating regulatory complexity and ensuring data security.

Matthieu Maurin, CEO of Iceberg Data Lab, emphasizes the need for investment in ESG expertise and sustainable financial practices. He calls for efficiency gains and open-source financial data hubs to free up resources for climate, nature, and social data investments.

Sameer Goyal, head of engineering at Acuity Knowledge Partners, highlights several areas fintechs must address, including:

• Data privacy and security.
• Financial inclusion for underserved populations.
• Balancing growth with sustainability.
• Building trust and transparency.
• Securing funding for socially driven initiatives.

As fintechs continue to innovate, they must confront these challenges head-on to create lasting social impact. By embedding social good into their DNA, balancing profit with purpose, and addressing barriers like accessibility and cybersecurity, fintechs can lead the charge in fostering a more inclusive and equitable financial future.