Fenergo Study Reveals Emerging Challenges in the FinTech Payments Sector

Fenergo, a prominent provider of digital solutions specializing in Know Your Customer (KYC), Transaction Monitoring, and Client Lifecycle Management (CLM), has recently undertaken an extensive study to examine the emerging risks within the FinTech payments sector following the introduction of FedNow, as reported by Fintech Global News. 

The study involved collaboration with high-level risk and compliance officers from various payment companies, including P2P payment platforms, mobile payment applications, and digital/virtual asset service providers. Fenergo’s analysis has illuminated the obstacles posed by the swift implementation of real-time payments, particularly focusing on issues related to fraud prevention, security measures, and regulatory compliance.

One of the key findings from the study points to 42% of risk and compliance officers at FinTech payment firms grappling with the challenge of maintaining a seamless user experience during compliance operations as they embrace FedNow. Simultaneously, a significant 69% expressed concerns that neglecting the adoption of FedNow could detrimentally affect their business operations, ultimately leading to an unsatisfactory customer experience.

Moreover, Fenergo’s analysis unveiled a host of concerns among risk and compliance officers in FinTech payment companies. An overwhelming 78% of respondents emphasized inadequate staff training as a top concern, highlighting the pressing need for comprehensive training to adapt to evolving compliance requirements.

Additionally, 34% of participants reported a shortage of anti-financial crime expertise, underscoring the significance of talent acquisition in this evolving landscape. Cumbersome manual KYC procedures (67%) and limited collaboration with regulatory authorities (65%) were identified as other notable challenges.

Despite the multifaceted challenges faced by risk and compliance officers in the FinTech payment sector, all respondents acknowledged difficulties in securing adequate funding for investing in new technology and improving compliance efforts. For 43% of those surveyed, the struggle lies in predicting future compliance needs amid regulatory shifts, while 30% cited prioritization of sales-driven projects over compliance, potentially exposing them to regulatory fines and long-term reputational damage. The remaining 27% grappled with limited stakeholder awareness and uncertainties regarding return on investment (ROI) and long-term benefits.

Fenergo conducted this comprehensive survey in collaboration with 100 high-level risk and compliance officers from various FinTech payment enterprises across the United States, representing diverse sectors within the industry.