A new study has warned that fintechs face challenges as they begin to utilise data and data-driven technologies.

According to new research published by data specialists InterSystems, 81% of global fintechs cite data issues as the biggest technical challenge they face.

The company surveyed over 500 senior decision-makers at fintechs across 12 countries, including the UK and Ireland.

These groups include 74% of fintechs with solutions in the early adoption phase, and 85% of companies that already have established offerings, or whose products have large-scale adoption.

For the different technologies on offer, 41% said their struggles are to leverage data for analytics, machine learning, and artificial intelligence, while 40% noted they see challenges with connecting customers’ applications with data or legacy systems.

Security was also a concern, with 40% of respondents calling it a significant challenge, followed by cloud support/multi-cloud deployment and administration for 39%.

“While the majority of fintechs currently face significant data challenges, it’s encouraging to see many of them are looking to implement data management technologies like data fabrics to overcome them,” said Head of Financial Services Solutions at InterSystems Mike Hom.

“This is an important step for both established and emerging fintechs, as getting their data in order will ensure any new data-related initiatives they undertake, such as implementing AI or ML, prove effective and worthwhile. By picking the right data management solutions, fintechs can also gain access to those more advanced technologies and analytics capabilities that are so desirable.”

The survey found several reasons why companies are investing in data-driven technology. Customer demand and the desire to improve competitiveness drove 55% of companies, while 52% want to improve scalability and reliability.

A further 48% hope to increase agility and 47% want to enable better integration with customers and third parties.

The study found that that 51% of respondents are considering adopting cloud technology in the next 12 months. This is the most popular technology on the list.

“While the complexity of cloud and its costs are major challenges for fintechs, especially as they grow, if they take the right approach to cloud deployments, these organisations can reap significant rewards and deliver those back to their end customers,” added Hom.

“Boosting training and knowledge, along with building their offerings on cloud-first solutions that avoid vendor lock-in and which can be implemented within a hybrid environment will allow fintechs to increase agility, scalability, and security and ensure that their solutions appeal to a wider customer base.”

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In addition, 48% of companies said they plan to invest in data management technology, 45% in artificial intelligence and machine learning, and 42% in data fabric technology.

Among the different fintechs, mature companies are focusing more on data management (49%), cloud (54%) and data fabric initiatives (44%).

Early-stage fintechs, meanwhile, are prioritising investments in AI and ML (51%).

According to InterSystems, this shows that more established organisations aim to overcome the data issues they are facing before considering implementing new technologies like AI/ML, which rely on data.

However, when it comes to implementing the technology, fintechs still face barriers. The main one was a lack of flexibility within their current environment to integrate new technology, cited by 54% of companies. In addition, a lack of internal expertise or skills was holding back 51% of the surveyed companies.

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