The growing pains: Why payments firms are struggling to scale in 2023

The rise of the digital age has brought a plethora of growth opportunities for FinTechs and non-banking financial institutions (FIs). However, many of these entities find themselves ill-prepared to harness these potential gains fully.

In a recent webinar, industry experts from FINTRAIL, Guide House and Fenergo delved deep into the strategies FinTechs can adopt. They explored the nuances of client lifecycle management (CLM) processes, particularly focusing on efficient client onboarding and AML practices.

For payments services providers (PSPs), profit margins remain precariously thin. These companies are grappling with an unstable economic landscape, diminishing fees, and an increasingly tough investment environment. Beyond these economic challenges, PSPs and other FinTech firms are also under the magnifying glass of stringent regulatory bodies. This necessitates continuous adaptation to meet evolving compliance requirements.

A startling statistic underscores the challenges these firms face: in the first half of 2023, FinTechs bore the brunt of 33% of fines imposed for anti-money laundering (AML) compliance violations. This data point strongly suggests a difficulty in staying compliant with ever-changing regulations.

The stakes are high for payments companies. Their choices boil down to two paths: either streamline their compliance processes or risk missing out on growing their customer base and venturing into new markets.

To capture the promise of future revenue, FinTechs need to strategise. The path forward involves embracing digital transformation, which means doing away with outdated, manual systems. By focusing on digital advancements, PSPs and FinTechs can significantly reduce operational costs.

Achieving growth and keeping investors pleased requires FinTechs to prioritise these areas of improvement. It’s not just about expansion but doing so in a way that’s sustainable and efficient.

What to expect from the webinar:

  • A deep dive into the primary challenges hindering payments firms from scaling up.
  • Insight into why revenue growth and scaling largely depend on the digitalisation of CLM processes.
  • Discussion on which compliance processes FinTechs should focus on to set the stage for growth.
  • Exploration of how cutting-edge technologies can significantly cut operational costs, paving the way for increased revenues in the future.

Watch the full webinar here.

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