Leadership in the fintech sector has always been dynamic and rooted in innovation. Over the course of the past two and a half decades, the industry has produced great leaders whose thoughts and novel strategies have been seminal in transforming how finances are handled. Digital leadership seems to be the current trend as technology is developing at a fast pace. Fintech organizations have decision makers who are prepared to face anything thrown at them by continuously adapting and overcoming challenges. Most leaders are proponents of cutting-edge technologies like AI and Big Data Analytics for better security and user friendly solutions.
However, there might be some areas of the industry that even the best leaders might be overlooking. The technology centric attitude of firms can often take their focus away from aspects like ethical considerations or the importance of explainable AI. This can negatively affect the growth and development of a firm in the long term. Hence it is essential to address them proactively. According to Sabeer Nelli, CEO of Zil Money, several critical factors should be considered in order to ensure a balanced and forward-thinking approach in the fintech space.
Explainability of AI
Today, more and more fintech platforms are integrating AI into their products and services. Among these AI integrated decisions-making has certainly caused a stir among stakeholders and end-users. Such models are used in finance chatbots and automated trading. Questions about transparency of these AI systems and machine learning models will certainly plague leaders. Human users should be able to understand and trust the results provided by AI after taking the biases and efficiency of these models into consideration. For Nelli, it’s clear that trust in these technologies cannot be established without explainability.
“Leaders should ensure that these AI integrated systems are not trusted blindly in order to increase accountability. That is exactly why explainable AI is going to be crucial in the coming years” says Nelli. He believes that investing in resources to improve control and transparency in AI models will become a key differentiator in the fintech landscape.
Interoperability
One of the major prerequisites for growth in the fintech sector has to be collaboration and partnerships with other players in the industry. For example, payment platforms are becoming more open to integration with other accounting and payroll softwares in order to create a financial ecosystem that is really convenient to users. Hence, leaders have to prioritize interoperability in its broadest sense – collaboration with traditional financial institutions and other fintech platforms.
Although this might seem counter intuitive, siloed businesses that are isolated will have a hard time competing in the current marketplace. Establishing strong partnerships also allows firms to tackle cybersecurity threats and fraud more effectively. Nelli believes that fintech leaders can easily overcome regulatory hurdles if they work together. Alliances with other industry participants allow them to jointly promote favorable laws and regulatory requirements that encourage innovation while safeguarding consumers.
Financial Literacy
Although fintech adoption has led to increased financial literacy among users, stats show that 50% of adults in the US lack financial literacy. As more financial technology platforms emerge every year with new products and services, the people who are not fintech-savvy might feel intimidated to use them because of their lack of awareness.
There is also a genuine mistrust for technology among some parts of the population that still uses cash. Studies show that one in five people in the US strongly distrust non-traditional financial institutions like fintech.
This information suggests that a large part of the US population is still not accessible to fintech platforms due to lack of financial literacy and trust. So how do fintech leaders overcome this problem? One viable solution, according to Nelli, is to provide financial education to users through the platforms. Financial literacy is closely linked to digital literacy, so leaders should design comprehensive education initiatives that cover both areas. Adding resources like articles, seminars, interactive videos and personalized financial advice will certainly help users to make informed decisions.
Workforce Development:
The fintech sector has been growing at an alarming rate over the previous decade. While this is a positive thing, one factor that leaders in the industry overlook is the availability of suitable tech talent for which there is a shortage. The current workforce of many fintech firms might not be equipped to handle the technology requirements that might arise down the road. This is mainly due to the increased reliance on technologies like developing technologies like AI, blockchain and data analytics.
“Leaders should focus on hiring and retaining suitable talent along with upskilling and reskilling their current employees” Nelli asserts. Initiating skill development programs with a specific focus on technology, business and creative application of financial solutions can bridge this talent gap. Encouraging employees to complete online courses, workshops and organizing mentorship programs can have a positive impact on the overall quality of the workforce.
Customer Trust
A profit-driven outlook and stakeholder interests can become hurdles to doing things the right way, not just in fintech, but any business sector. Fintech leaders have an ethical responsibility to be transparent with their company’s operations and uphold customer trust. Data security and privacy issues remain a top concern that should be addressed effectively. Firms should have clear policies regarding data collection and usage to ensure that customer data is not misused in any way.
Moreover, creating and preserving trust with clients requires encouraging open communication. According to Nelli, in order to always improve their services, fintech leaders should actively interact with customers, immediately resolve their issues, and ask for input. Finally, keeping customers’ trust depends on accepting responsibility for errors and moving quickly to make them right. Fintechs will unavoidably make mistakes, whether they are technological problems, data breaches, or consumer miscommunications. Fintech executives need to own up to these mistakes, be open with those impacted, and put policies in place to stop them from happening again.
