Can You Trust Fintech Apps with Your Money? What Every User Should Know

There is no doubt that fintech apps have effortlessly revolutionized global finance, making financial management more accessible to everyone. From mobile banking and international money transfer apps to investment, P2P payments, and budgeting apps, there is a good chance you have a fintech app on your smartphone right now.

For context, an S&P Global Market Intelligence’s U.S. consumer survey in 2024 found that 83% of internet adults have used a fintech app for digital payments. After a quick look at that number, you might want to conclude that if that many people could trust their fintech apps with their money, maybe you could too.

But, should you?

Well, to answer that, you have to understand some critical contexts surrounding fintech apps.

What Are Fintech Apps, and How Do They Work?

Fintech apps are mobile applications that use technology to provide financial services, including but not limited to banking, money transfer, lending, insurance, and investment services.

Compared to most traditional banks with bank branches and limited operating hours, fintech companies are fully digital and operate around the clock.

The Benefits of Using Fintech Apps

Since fintech companies generally operate in niche markets, they are often able to maintain low overheads and maximize their resources for the best possible outcome for their customers. There is also the fact that to snatch chunks of the market from long-standing traditional banks, they have to come up with better services and offers.

The competitive nature of fintech apps works out well for the users in every aspect. The users essentially get to enjoy:

• Faster transactions.
• Far cheaper service costs
• More convenience and accessibility.

Talking about service costs, the World Bank points out that banks take up to 12% of the transaction amount for international transfers.

Meanwhile, with BOSS Money, you can send money abroad without fees for your first few transactions. Better still, the money gets to the recipient nearly instantly. That’s something you will hardly get from a traditional bank.

Given these benefits, it’s easy to see why internet users prefer fintech apps for their everyday financial needs.

However, one might still argue that since traditional banks are heavily regulated, they are safer. This line of argument generally assumes that fintech apps don’t offer tangible protection for users’ data and money.

That’s not the case.

What Protections Are in Place?

Just as fully regulated and licensed banks exist, fully regulated and licensed U.S. fintech apps also exist, and most popular fintech apps are fully regulated and licensed.

What this means is that there are federal protocols in place to ensure that these fintech apps provide technological, procedural, and regulatory protections for their users (including their personal data and money).

As with banks, this means some degree of insurance/security on customers’ deposits, regular security audits, and adherence to compliance like KYC and anti-money laundering (AML) standards.

On the app level, secure APIs and machine learning play a huge role in real-time threat detection, data encryption, multi-factor authentication, and transaction integrity. For additional security, fintech companies often work with legacy institutions to safeguard users’ money.

The Risks You Need to Know

Since fintech apps are fully digital, like traditional banks and traditional bank apps, fintech apps may also be prone to phishing attacks, data breaches, identity theft, and fraud.

So while fully licensed fintech apps provide advanced security, true safety is a matter of duty on both the fintech companies and the users.

One thing to also note is that all fintech apps are not equal. There are some barely licensed fintech apps that are operating outside regulatory radars. While these fintech apps might offer juicy offers, you will always be better off with fully regulated apps.

So it’s important to vet any app under your consideration.   

How to Vet a Fintech App Before You Use It

At this point, you have probably figured out that compliant fintech apps are your best bet for safe and secure transactions.

But then, how would you know that a fintech app is compliant?

Generally, most apps will tell you that they are regulated, but how much so is what you would have to find out for yourself by reading Terms and Conditions, as well as the Privacy Policy provided on the app’s platform.

Look out for apps with detailed State Notices, highlighting regulatory compliance across the various states in the U.S. In terms of user data protection, CCPA compliance is usually a good first step in the right direction.

Additionally, as much as avoiding KYC might sound convenient to you, you should avoid any app that has minimal to no KYC.

Lastly, you should check out what other users are saying about the app. Also, check out what niche fintech aggregators may provide great insight into how a fintech app fairs among others.

FXC Intelligence, for instance, provides an interesting, across-the-board overview of customer perception of international money transfer apps.

Smart Practices for Staying Safe

As indicated earlier, you have a role to play in ensuring safety with fintech apps, even with those that are fully regulated.

Thankfully, there are lots of things you can do without much effort to protect your account, especially from cyberattacks, including:

• Using strong, unique passwords and a password manager.
• Turning on two-factor authentication (2FA).
• Monitoring your account regularly for irregular activities.
• Setting transaction alerts to get real-time notifications about any unauthorized transfer.

You should also know how to revoke access or file complaints with the company or higher authorities to block unauthorized activities promptly.

Conclusion

All this is to say that, yes, you could trust fintech apps with your money.

However, you should know that just like traditional banks, there are some risks attached. Even when you find that seemingly infallible fintech app, you still have to do due diligence to protect yourself and the contents of your account.

Only then should you start thinking about trusting them and their services wholeheartedly.