Fintech Risk Management

From Open Risk Manual


Fintech Risk Management is the emerging field of risk management practices associated with the new types of financial activity falling under the banner of Fintech'. As both the scope and size of the fintech activities is growing, so is the associated requirement for commensurate risk management.

Fintech Segments

The currently major recognized segments of the fintech sector are (categorized by type of service provided):

  • Peer-to-peer (or marketplace lending, or crowdfunding) platforms for equity or debt investment (also insurance)
  • Payment systems and technologies for established currencies or cryptocurrencies (bitcoin, Blockchain)
  • Automated investment advice (digital wealth management)

These segments are sufficiently different to each other (e.g., in terms of business models, clients, products and intrinsic risk profile) so that their core risk management requirements are also differentiated.

One common aspect of all three segments is that they are significantly based on the use of (new) digital technologies (albeit not necessarily of the same type). Therefore all three segments would pose also some uniquely new respective challenges, e.g., in terms of IT systems risk or cybercrime risk.


Fintech activity is currently largely growing within national confines. Therefore it inherits characteristics (also from a risk perspective) from the economic, financial and regulatory environment of each relevant jurisdiction.

Issues and Challenges

The main issue with fintech risk management is that the novelty of the various activities may have built-in emerging risks, risks not fully understood in the current context. At the same time many of the relevant risk factors are simply reflections of similar risks already faced by the "traditional" financial industry.

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