November 27, 2024
From Hesitation to Implementation: Unpacking the Pain Points of Fintech Adoption in Finance
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Change is never easy. It can put people on edge. But change is inevitable. As we stand on the cusp of 2025, finance is poised for a dramatic shift. The convergence of advanced technologies like AI and machine learning with traditional, manual practices creates exciting opportunities and hindering challenges for finance professionals.
PayEm surveyed 270 professionals to gather critical insights on their roles and industries and how that influences fintech adoption. The main goal was to capture secret data demonstrating the challenges and opportunities faced by finance as they navigate transformative industry changes.
What did the survey reveal about the pain points of fintech adoption?
Pervasive Manual Processes
The first and most obvious challenge is that traditional (and manual) processes are pervasive. Even the most forward-thinking companies still have legacy manual systems in some places. People are just hesitant to give up their beloved spreadsheets.
The PayEm survey found that almost 90% of finance professionals still use Excel for budgeting and forecasting. Despite the benefits of automation, many teams still manage tasks manually, like:
- Data entry
- Invoice approvals
- Reconciliation
Fintech solutions offer a way out of these inefficiencies by eliminating the need for manual intervention and automating routine and tedious tasks. By freeing up teams from manual processes, fintech enables them to focus on more high-value tasks like financial analysis, strategic planning, and forecasting.
Integration with Legacy Systems
Many finance teams still rely on legacy systems implemented years ago. These programs are deeply ingrained in day-to-day operations, making it difficult to adopt new fintech solutions without disrupting the existing workflows. Integration challenges create costly delays, which result in financial teams reverting to manual methods or putting fintech plans on hold.
77.5% of respondents in the PayEm survey found ease of integration with existing systems to be a challenge. Integrating with other departmental systems, such as customer relationship management (CRM) software and enterprise resource planning (ERP), can also be an issue.
Successful fintech adoption requires careful planning and collaboration, especially between finance and IT. Some fintech providers offer customizable solutions and robust API (Application Programming Interface) capabilities, which allow their systems to connect smoothly with a company’s legacy infrastructure.
Resistance to Change
Despite their inefficiencies, financial functions have long been characterized by manual, paper-based workflows, often seen as reliable. Even when fintech solutions present clear benefits, many teams and individuals resist change because they are familiar with traditional processes.
18.35% of those surveyed mentioned resistance to change within the organization as a major challenge in fintech adoption. This common resistance to innovation stems from various factors, including:
- Fear of job displacement
- Uncertainty about mastering new skills
- A simple preference for the status quo
Leadership plays a vital role in this dynamic. When finance leaders are hesitant about change, it snowballs downhill. Teams will often follow suit with their sentiment.
Cultivating a change-positive culture is critical for successful fintech adoption. Finance leaders should actively communicate the value of adoption and emphasize how automation can complement, rather than replace, their skills. It’s crucial to make people comfortable during the transition and practice total transparency.
Cost Concerns
79.40% of financial professionals in our survey claim cost-effectiveness is the most critical element when implementing new technology. However, this can be a perceived cost. Finance teams, known for their abject focus on cost control and budgets, may see fintech adoption as an expensive investment with uncertain returns.
There are a multitude of costs that can appear daunting, including:
- Initial setup
- Licensing fees
- Implementation costs
- System upgrades
However, when it comes to fintech adoption, it’s really about the bigger picture. Moreover, the long-term return on investment (ROI) for fintech software can be challenging to measure. This is particularly the case in the early stages of implementation. Finance leaders may find it difficult to justify the expense without clear metrics demonstrating how fintech will directly impact the bottom line.
To overcome these cost concerns, teams need an understanding of the long-term benefits of fintech adoption and implementation. While the initial investment may seem high, point out advantages like:
- Lower invoice processing costs
- Reduced operational inefficiencies
- Eliminating manual errors
- Real-time visibility into cash flow
- Minimize human error
Regulatory Compliance
This is more applicable for highly regulated industries, but it still poses quite a concern for many finance professionals. Introducing new fintech tools will often raise concerns about meeting regulatory requirements. This is especially true in data privacy, anti-money laundering (AML), and know-your-customer (KYC) regulations.
Finance teams may fear that adopting new technologies may inadvertently lead to non-compliance, resulting in penalties or reputational damage. In our survey, 6.37% of respondents had security and compliance concerns about fintech adoption.
Navigating different regulatory frameworks across multiple jurisdictions can be complex, particularly for global companies operating in multiple markets or regions, which can add to the hesitation in fintech adoption.
However, if this is important for your business, look for fintech providers that ensure their solution complies with all local and international standards. Finance teams will still need to be responsible for overseeing total compliance. A fintech solution that offers compliance as it’s core feature is probably your best bet.
Moving from Hesitation to Implementation
According to Deloitte, global Fintech industry revenue was approximately $90.5 billion in 2017, which has grown by over 100%. While fintech adoption for finance presents many challenges, these pain points are not insurmountable.
By fostering a change-positive culture, addressing security issues, managing integration with legacy systems, and ensuring regulatory compliance, companies can transition from hesitation to successful implementation.
The truth lies in a strategic approach. One that emphasizes collaboration, transparency, honesty, and a clearer understanding of the long-term advantages. By embracing fintech solutions wholeheartedly, finance teams will streamline operations, reduce costs, and unlock new growth opportunities.
In the end, fintech adoption is not just about implementing new technology. It’s about transforming the way finance teams think and operate. Companies can leverage fintech to achieve greater agility, efficiency, and innovation by overcoming initial hesitation and addressing challenges head-on.
