IT Examiner School eBook May 2025

Fintech

• Partnerships • Subsidiaries • Banking-as-a-Service

FinTechs and Risks Why is FinTech Considered Risky? Regulatory Uncertainty: Many FinTech solutions operate in areas with evolving or unclear regulations. Third-Party Dependencies: Heavy reliance on third-party service providers and APIs increases exposure to supply chain risks. Cybersecurity Concerns: The digital nature of FinTech makes it a prime target for cyber threats, including data breaches and ransomware. Data Privacy Risks: Massive amounts of consumer financial data are collected, often across international borders. Operational Resilience: Rapid growth and technology changes may outpace risk management practices, impacting business continuity.

What is FinTech? Definition: Financial Technology (FinTech) refers to technology-driven innovations that aim to improve and automate the delivery and use of financial services. Examples: Digital banking platforms (e.g., Chime, Revolut) Payment processing solutions (e.g., Stripe, PayPal) Cryptocurrency exchanges (e.g., Coinbase, Binance) Peer-to-peer lending platforms (e.g., LendingClub) Robo-advisors for automated investment (e.g., Wealthfront, Betterment)