11 Problems in fintech app you should watch out

However, the development of fintech applications brings distinct challenges that demand careful consideration and strategic solutions. From ensuring secure data protection to seamlessly integrating advanced technologies like Artificial Intelligence and Big Data, these hurdles can test even the most resourceful teams. This article delves into the 11 main problems in fintech app that trip up aspiring fintech ventures and equips you with essential tools and strategies to overcome them

11 Major challenges you may face in fintech app development (And how to overcome them)

Below are 11 key challenges in fintech application development that you might face during the finance app development process:

1. Regulatory compliance

Fintech apps are subject to strict regulations, with complex rules that differ across regions. Ensuring compliance to data privacy laws such as GDPR and CCPA, as well as anti-money laundering (AML) and know-your-customer (KYC) regulations, can be especially challenging for apps targeting multiple markets. Non-compliance can result in heavy fines or even business suspension.

How to overcome this challenge:

• Learn about financial regulations (KYC, AML, PCI, DSS, GDPR, etc) to ensure the app follows all legal requirements in different regions
• Use AI and machine learning to automate KYC checks, verify customers, and monitor for suspicious activity, making compliance faster and more accurate.
• Use tools for biometric ID verification, facial recognition, and document scanning to meet KYC rules efficiently.
• Tokenize payment data to protect sensitive info and reduce the risk of data breaches.

2. Security concerns

Fintech apps handle sensitive data like personal info, financial transactions, and payment details, which makes them a target for cyberattacks. 

Key risks include data breaches, where weak security exposes customer information, and fraud, such as identity theft or unauthorized access to accounts. Another threat is phishing, where users are tricked into giving away personal data. These risks all highlight the need for strong security to keep users and their data safe. 

How to overcome this challenge: 

• Use strong encryption, like AES-256, to protect sensitive customer data both in storage and during transmission. 
• Add multi-factor authentication (MFA) and biometric methods like fingerprint or face recognition to secure user access and prevent unauthorized access or identity theft.

3. Integration with legacy systems

Fintech apps often need to work alongside traditional banking systems, which can be challenging and time-consuming due to outdated infrastructure, lack of standardization, and compatibility issues between new technologies and older systems. 

How to overcome this challenge: 

• Use APIs to connect fintech apps with traditional banking systems. APIs allow smooth communication between the two without needing a full system overhaul.  
• Implement middleware solutions, which act as a bridge, making data exchange easier and fixing compatibility problems. 
• Consider moving parts of the legacy infrastructure to cloud-based platforms. This helps simplify integration with modern fintech apps and reduce reliance on outdated technology.  

4. Scalability

As fintech apps grow, they need to handle more transactions without slowing down or losing reliability. Building a system that can scale efficiently is key to supporting more users and transactions. Without good scalability, performance issues and downtime can affect the user experience.

How to overcome this challenge 

• Use cloud services like AWS or Azure to handle growing traffic automatically, without needing big upfront infrastructure costs. These platforms adjust server capacity as needed during busy times. 
• Build fintech apps with microservices, so each function (like payments or user authentication) runs independently. This way, scaling one part doesn’t affect the others, making the system more efficient and reducing downtime. 

5. User experience (UX) design

Fintech apps must make complex financial data easy to understand while still providing strong features. It’s challenging to balance simplicity and usability, especially for non-tech-savvy users who expect smooth navigation and easy performance. 

How to overcome this challenge 

• Use user-centered design principles by involving real users in the design process to create an intuitive interface that offers a smooth experience while ensuring security. Conduct usability testing and use feedback to continuously improve the design. 
• Make onboarding easy by integrating key security features, like two-factor authentication, without overwhelming users. Use progressive disclosure to introduce more complex features gradually, keeping the experience user-friendly. 
• Ensure a consistent user experience across all platforms (web, mobile, desktop) so that users can switch between devices smoothly and easily. 

6. Trust and transparency

For fintech apps to succeed, users must feel confident in sharing their financial data. Common issues include unclear fees and terms, which can lead to dissatisfaction, and negative press from security breaches or regulatory problems that can damage trust. 

How to overcome this challenge 

• Be transparent about fees and policies: Clearly explain all fees, terms, and security measures at every step of the user journey. This openness builds trust and reduces frustration. 
• Maintain regular communication and provide incident reports: If there’s a security breach or operational issue, promptly inform customers about what happened, how it’s being fixed, and how their data is protected. Consistent communication fosters trust. 
• Highlight third-party certifications and audits: Show security certifications like ISO 27001 or SOC 2 compliance to demonstrate that your app meets high security and transparency standards. 

7. High competition

The fintech industry is becoming crowded, with many companies competing for market share. This competition makes it difficult for new fintech apps to attract users and stand out from established players. Many startups struggle to differentiate themselves, leading to price wars, lower profits, and losing customers. 

Additionally, larger, more established competitors often have the advantage of brand recognition, resources, and customer loyalty, which can make it challenging for smaller players to gain traction. New entrants must find ways to innovate and provide value to overcome the high barriers to entry. 

How to overcome this challenge: 

• Target a niche market: Instead of trying to compete in a large market, find and serve specific groups, like small and medium businesses or areas that don’t get much attention. Offer products that solve their unique problems.  
• Stand out through superior user experience and security: Make sure your app is easy to use, offers personalized services, and has strong security. A fintech app that is simple and safe can quickly attract users.  
• Form strategic partnerships: Collaborate with other fintech companies, banks, or financial institutions to offer combined services or integrations that provide more value to customers.  

8. Data management and analytics

Fintech apps deal with a lot of sensitive user data that must be processed, stored, and analyzed effectively. Key challenges include making sure financial transactions are accurate, handling large amounts of data, and gaining insights to personalize the user experience, all while following data privacy laws like GDPR.

How to overcome this challenge: 

• Big data and AI integration: Use AI and machine learning to analyze large datasets, providing personalized financial services and spotting fraudulent transactions in real-time by detecting unusual patterns. 
• Secure, compliant storage solutions: Utilize secure cloud storage that meets GDPR and PCI DSS standards, ensuring safe storage and encryption for sensitive data, along with strict access controls. 
• Data governance frameworks: Create strong data governance policies to ensure data accuracy, proper handling, and compliance with privacy laws. 

9. Payment processing and transactions

Managing cross-border and real-time payments comes with challenges such as processing delays and currency exchange issues. High transaction fees and the need to handle chargebacks and refunds also add to the complexity. 

How to overcome this challenge: 

• Use blockchain technology for secure, transparent, and faster cross-border payments, reducing delays and currency exchange fees.     
• Work with well-known payment processors like PayPal, Stripe, or TransferWise. They provide fraud protection and handle currency conversions, making payments easier and cheaper. 
• Set up automated systems to manage chargebacks and refunds, reducing the workload for customer support and improving user satisfaction. 

10. Customer support and responsiveness

Fintech apps need to offer fast, efficient customer service for financial issues. Key challenges include handling complex questions about transactions or security, providing 24/7 support without high costs, and keeping customers happy with reliable communication.

How to overcome this challenge: 

• Use AI-driven chatbots to handle routine inquiries, offering instant support around the clock. Chatbots can manage questions about transactions, security, and account issues, enhancing the user experience. 
• Provide customer service across multiple platforms, including in-app, social media, email, and phone support, allowing users to contact you through their preferred channels and reducing response times. 

11. Innovation speed vs. risk

Fintech companies often hurry to launch new features to stay competitive, which can lead to bugs, security risks, or non-compliance with regulations. It’s hard to balance fast innovation with proper testing and compliance. Finding a balance between rapid innovation and thorough testing is a common challenge.

How to overcome this challenge 

• Agile development methodologies: Break down feature releases into smaller, manageable sprints for quicker, well-tested deployments. 
• Continuous integration and continuous delivery (CI/CD): Use automated testing and deployment to catch bugs and security issues early, while keeping up a fast pace of innovation. 
• Sandbo testing: Test new features in a secure sandbox before launch to ensure they meet security and compliance standards, reducing the risk of failures. 

Develop a risk-free fintech app with Synodus

Synodus, an IT consulting and software development services provider, has amassed over 5 years of experience in the industry. From its humble beginnings as a tech lab, Synodus has transformed into a premier tech provider, catering to organizations and enterprises worldwide. Their primary goal is to elevate their performance and grant them a competitive edge over their rivals.

Today, Synodus boasts a team of 250+ highly skilled IT specialists. With an impressive 88% of recurring customers, Synodus has successfully completed over 30 Fintech App projects, including digital banking, digital e-wallets, cryptocurrency exchange white label, P2P lending, and more.  

What sets Synodus apart are the exceptional fintech app development services they offer.  

Successful fintech case study

Synodus supports the 60% cost savings of a UNESCO Gem.  

Synodus’s client, UNESCO, faced challenges in managing the daily flow of tourists due to their traditional manual ticketing methods. Synodus analyzed the problem and provided solutions that streamlined operations, cut costs, and improved the tourist experience.

How Synodus solve the challenge: 

1. User experience (UX) design: Synodus focused on creating a seamless and user-friendly experience by researching tourists’ purchasing habits and payment preferences. The result was an intuitive e-ticketing system, allowing users to purchase tickets remotely with ease. Features such as centralized inventory management and automated ticket issuance simplified the process, enhancing the overall user experience. 

2. Data management and analytics: To manage the influx of large amounts of tourist data, Synodus implemented secure, scalable cloud-based storage solutions. These systems complied with data privacy laws, ensuring the protection of user information while providing real-time insights into ticket sales and tourist behavior. AI and data analytics were used to personalize recommendations and improve overall decision-making. 

3. Payment processing and transactions: Synodus introduced multiple payment options, allowing tourists to pay conveniently using their preferred methods. To address the challenge of real-time cross-border transactions, Synodus uses Blockchain technology to create secure payment gateways and automated systems for handling refunds and chargebacks. The integration of QR codes for seamless access at entrance gates further streamlined transactions. 

4. Customer support and responsiveness: Recognizing the importance of efficient customer support, Synodus implemented an AI-powered chatbot to handle common queries related to ticket purchases and refunds. This reduced response times and ensured 24/7 availability. For more complex issues, the system was designed to escalate the case to human agents, ensuring fast and satisfactory resolution. 

Results

The implemented solution led to remarkable outcomes, including a 40% reduction in ticket counter staff, a 60% reduction in expenses related to printing tickets, transportation, auditing, and paper ticket storage, and a 50% reduction in inspection and revenue accounting time.

The e-ticketing system also improved the tourist destination’s reputation with both domestic and international customers. 

Conclusion

In the fintech app development industry, it is undeniable that there are challenges that hinder their seamless operation. From ensuring robust security and user experience to navigating complex regulations and offering diverse financial products, fintech app developers must constantly adapt and innovate to stay ahead.

Addressing and overcoming 11 key problems in Fintech apps can help businesses create a future where financial services are accessible, secure, and easy to use for everyone.