Integrating Risk Management: Technology’s Role in Bridging FinTech and Traditional Banks
Authors:- Chintamani Bagwe
Abstract- This article overviews risk management strategies details in the financial industry landscape, comparing the practices of risk management between FinTech companies and traditional banking taking into account the regulatory landscape that embraces technological changes. Risk management has always been central to the financial sector, ensuring the stability and safety of all stakeholders involved. FinTech companies, enabling most traditional banking services through technology, introduce unique offerings that come with new risk types such as cybersecurity and regulatory risk that require widely different mitigation measures. Some of the risk’s responses include automation, flexible ecosystem formation, and creating customer-focused entities. Traditional banks, in contrast, have developed time-proven risk management schemas that focus on enterprise risk management to regulatory compliance to risk aversion. However, they face their own complexity with the immense burden of maintaining compliance and integrating existing technology with emerging tech. The collaboration with Fintech is a way out through the cross-role processes. Furthermore, the regulatory space will also see change regulations on FinTech firms and traditional banks that will have to adapt to continue operations. In the future, existing and new technologies will be integrated into the space, resulting in better risk management schemas. Successful partnerships between a bank and a traditional bank are shared at the end. The collaboration between FinTech companies and traditional banks will be essential to survive the current revolution.
