The global fintech market is expanding rapidly and expected to reach $460 billion by 2025, yet total fraud losses have reached a staggering $42 billion worldwide in the past two years alone – cash taken straight from businesses’ bottom-line. This has been exacerbated by the pandemic, which while accelerating e-commerce and the growth of digital services, has also accelerated payment fraud, with COVID-19 related scams costing U.S. consumers more than $13.4 million.
A PwC report found that internal and external perpetrators are equally responsible for fraud, meaning the world’s 58 fintech unicorns must focus on ensuring both the strongest in-house due diligence whilst maintaining robust security measures. The hasty unravelling of one of Europe’s leading fintechs has cast a light on those who should have held it to account, the crucial role of corporate governance, and the need for the industry to restore trust and transparency in the overall financial services ecosystem.
Advancements in the digital payments sector over the last decade have made transactions faster, more convenient, and more cost effective for customers. However new financial technology comes with risks, and must be implemented with a strong safety net of internal policies in order to be sustainable long term. According the Ning Wang, Co-Founder and Chief Business Officer at global payments unicorn ($1.1bn) PingPong Payments, “emerging trends such as social commerce present huge opportunities for the payments sector, but the strong governance required around data handling is an immense challenge all fintechs must be equipped for – or face a perilous future.”
Ning Wang comments: “Fighting fraud is a never-ending battle, and the fintech industry presents many opportunities and challenges for regulatory compliance and supervision. The best practice for securely managing these organizations is by setting internal standards and policies of transparency and trust within the entire organization – from the IT systems to Know Your Customer (KYC) processes, in order to mitigate fraud and money laundering risks.”