Managing risk in FinTech: Balancing innovation, regulation and consumer protection

Anat Goldstein and Subramanian Narayanaswamy
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Anat Goldstein: FinTech Strategist and Co-Founder, FinOptima Solutions, USA
Subramanian Narayanaswamy: Financial Services Risk Management Executive, USA

Journal of Risk Management in Financial Institutions, 2025, vol. 18, issue 3, 219-231

Abstract: This paper examines the complex field of risk management in the FinTech industry, highlighting the need for robust methods to mitigate inherent risks and leverage new technologies. FinTech presents various operational and regulatory challenges that call for thorough management to support stability and growth as it continues to upend established financial paradigms. We examine the high failure rates in innovative endeavours, emphasising the significance of strategic financial planning and entrepreneurial agility for long-term viability. The potential for operational hazards to compromise financial integrity and trust is closely examined, with a focus on cyber security, business continuity and intellectual property protection. The paper also discusses the evolving regulatory frameworks that have a significant impact on the development and implementation of new financial technologies. We evaluate how these rules affect the preservation of competitive advantages, the defence of consumer rights, and the overall stability of the economic system. Additionally, the report examines market dynamics that affect liquidity and investment strategies, which are essential to FinTech’s long-term viability and profitability. This study employs a combination of qualitative observations and case studies to describe the most effective risk management techniques for safeguarding FinTech businesses against common mistakes. These techniques help ensure their long-term viability and establish new standards in the financial sector. The main objective is to provide stakeholders, including investors, business owners and legislators, with a clearer understanding of operating ethically and profitably in the FinTech sector. This article is also included in The Business & Management Collection, which can be accessed at https://hstalks.com/business/.

Keywords: risk management; FinTech; regulatory challenges; banking; innovation; cyber security; embedded lending; BaaS (search for similar items in EconPapers)
JEL-codes: E5 G2 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:aza:rmfi00:y:2025:v:18:i:3:p:219-231

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