Regulatory compliance is an important consideration for fintech companies operating in today’s complex financial landscape. In this post, we will explore what regulatory compliance is, why it’s important in fintech, and how fintech companies can stay compliant.

Regulatory compliance refers to the process of ensuring that a company is adhering to all applicable laws, rules, and regulations that govern its business activities. In the fintech industry, regulatory compliance is particularly important because of the sensitive financial and personal data that fintech companies handle. Additionally, fintech companies often operate across borders and are subject to different regulatory regimes in different jurisdictions.

One of the primary reasons why regulatory compliance is important in fintech is that it helps to protect consumers. By adhering to regulations and standards, fintech companies can help to ensure that their customers’ personal and financial data is kept secure and that their financial transactions are conducted in a safe and reliable manner.

Another reason why regulatory compliance is important in fintech is that it can help to prevent fraud and other types of financial crime. By following regulations and standards, fintech companies can help to prevent criminals from using their platforms to engage in money laundering, terrorist financing, or other illegal activities.

So, how can fintech companies stay compliant with all the applicable regulations? Here are a few tips:

Stay up-to-date with Regulatory Changes

Fintech companies need to stay on top of any changes to the regulations that apply to them. This can be a challenge, as regulations can change frequently and may vary by jurisdiction. However, it’s important to make sure that your compliance team is aware of any changes to the regulatory landscape so that you can adjust your policies and procedures as needed.

Implement a Robust Compliance Program

Fintech companies should have a comprehensive compliance program that includes policies and procedures for identifying and mitigating risks, as well as regular training for employees on compliance issues.

Conduct Regular Risk Assessments

Fintech companies should regularly assess their risk exposure and identify any areas where they may be at risk of non-compliance. This can help to prevent issues before they arise and ensure that the company is always operating in compliance with applicable regulations.

Engage with Regulators

Fintech companies should maintain open lines of communication with regulators in the jurisdictions where they operate. This can help to build a positive relationship with regulators and ensure that the
company is operating in compliance with their expectations.

Think about Compliance during Product Design

By considering compliance during product design, fintech companies can ensure that compliance risks are identified early and can be addressed in the product design phase. This can help to prevent costly and time-consuming compliance issues from arising later in the development process.

For example, when designing a new product that involves the processing of personal data, fintech companies should consider how the product will comply with data protection regulations such as the UK General Data Protection Regulation (UK GDPR). This could involve incorporating data protection features into the product design, such as data minimisation or encryption.

Similarly, when designing a new payment product, fintech companies should consider how the product will comply with payment regulations such as the Payment Services Directive (PSD2). This could involve incorporating features such as two-factor authentication or fraud detection into the product design.

At Finxone, we have considered regulatory compliance from the first product design meetings. Because of this we have not only reduced the risk of costly non-compliance issues arising later, but  we have also gained the trust of our customers that we are committed to compliance and security.