Fintech 'lifesaver' for banks in risk management
Bcg and Politecnico di Milano: almost a third of fintechs focused on risk management (234 out of 814) directly support the needs of chief risk officers of financial institutions
2' min read
2' min read
An unexpected change in trade policy revolutionises the supply chain, a wave of drought or apocalyptic floods impact crops by imposing inflationary pressures, fraudsters with deepfakes and fake AI-generated identities put business at risk.
Whether stemming from geopolitical fragmentation, technological disruption or environmental volatility, the threats affecting business today make risk management increasingly complex and challenging for banking institutions, transforming it from a support function into a strategic role. New technological complexities have the effect of accelerating risks and amplifying challenges for which banks and insurance companies are today ill-prepared and increasingly hampered by outdated and slow procedures.
Within this framework, fintech is the solution. Although many traditional players tend not to use them, perhaps due to regulatory constraints or third-party risks, the growing number of challenges that banking institutions face today is pushing them to overcome these resistances.
The numbers
.Thus, almost a third of fintechs focused on risk management (234 out of 814) directly support the needs of chief risk officers of financial institutions. The fintech-bank partnership model has reached critical mass: almost a quarter of these companies were founded in the last five years and have collectively attracted capital of $7.2 billion, with the United States dominating with $4.2 billion. Doing the math is the report developed by Bcg in collaboration with the Politecnico di Milano, which calls from the outset for "redesigning risk management through fintech partnerships".
Start-up solutions
.Indeed, start-ups are able to offer solutions that use automation and predictive analytics to identify and mitigate risks, and do so in a turnkey mode that dramatically accelerates time-to-market. "It is a powerful combination that can transform risk management from a costly necessity to a strategic advantage," the Bcg report points out, providing dedicated teams with "a unified, understandable and effective view of their data assets, the ability to quickly deploy regulatory-compliant, transparent and flexible models, and the transformation of regulatory complexity into proactive, data-driven control.
