Any regulated business knows that compliance is one of the most critical aspects. But keeping up with the constantly changing landscape of laws, rules, and regulations can present a challenge for early-stage Fintechs looking to grow and scale.
While managing an effective Fintech compliance program may feel like pushing a rock up a mountain at times, it can be done successfully with the right framework, resources, and mindset in place. That’s why we’ve pulled together insights from several leading industry voices on the topic of growing and scaling a Fintech Risk and Compliance team.
Here, you’ll discover 6 tips and best practices for building a culture of compliance at your Fintech from experts who have been there and seen what it takes to be successful.
Let’s get to it.
6 Expert Tips for Scaling Your Fintech Compliance Team
1. View Having a Compliance Framework as a Competitive Advantage
“At the heart of establishing a scalable regulatory compliance program is effective risk management. Fintechs that are proactively involved in not only understanding its respective risk profile, but working with bank partners and other providers (like a BaaS provider) to establish appropriate controls to mitigate the risk, will be best positioned to grow and scale their business.
It is understandable for an early-stage fintech to not want to invest in compliance efforts at the outset of its launch, but it is impossible for any business offering financial services to scale appropriately without a fundamental understanding of the highly regulated financial services industry.
We see that the fintechs that proactively take control of its compliance culture are the very businesses that thrive and grow responsibly. Rather than seeing regulatory compliance as a burden, fintechs should view having a compliance framework commensurate to its size, risk and complexity as a competitive advantage.”
Sheetal Parikh, Associate General Counsel, VP of Compliance Solutions, Treasury Prime
2. Champion Risk and Compliance at the Leadership Level
"The most impactful action senior leadership can take to grow and scale a fintech risk and compliance team is to focus on building a strong culture of compliance. Culture requires more than just words and empty promises.
A management team that demonstrates, through their actions, the importance of ethical conduct and openly supports partnerships between the business and compliance will succeed because teams want to be led by example.
Risk and Compliance teams have a place within every fintech organization; having a leader that champions that function financially and via sponsorship will enable it to grow, scale, and retain top talent to ensure its sustainability."
Anne Walton, Compliance Director, Global Outsourced Compliance, Chartwell Compliance
3. Build and Optimize Your Fraud Stack with True Thought Partners
“Focus on your strengths. You know your customer base and business objectives better than anyone else; team up with experts and providers who can build and optimize a fraud stack for you based on those parameters.
Choose true thought partners for these functions who will work with you hand-in-hand rather than give you hammers and expect you to know where the nails are. As your org scales, those experts will come in-house, and the tool stack will be refined, but fraud and compliance will remain a purely operational problem instead of the added headache of reinventing the wheel—so that you can focus on actually building your business.”
Vamsi Varanasi, COO, Sora ID
4. Enforce Process and Optimize Based on Key Insights
“Deploying a workflow-enabled Operating Model will enforce structure, process, governance and responsibilities across the team while systemic update workflows and process are are key to codify knowledge and insights gained from the process and people. As the team and process mature, new workflow steps are added, analysis are performed, and new insights are derived to future enhancements.”
5. Strike a Balance Between Customer Experience and Risk Management
“Customer experience and risk management don't have to be at odds with one another. Striking the right balance will allow you to move faster, explore more opportunities, and align everyone around a common goal.
Start by mapping out the jobs to be done for each stakeholder, including external parties like your banking partner. Consider what must happen during onboarding and what you can manage post-onboarding.
Partner with vendors that offer creative solutions to meet each objective. Use data to bring new, educated perspectives on how different onboarding requirements could improve business outcomes while maintaining or improving risk management. Form your culture around maximizing customer experience and value so everyone can connect back to a shared north star.”
Kyle Mack, CEO & Cofounder, Middesk
6. Invest in the Right People and Resources
“Growing and scaling a Fintech risk and compliance team starts with investing in people resources. It is critical to employ a risk management perspective where you build and scale as the operations grow.
The risk and compliance team should exhibit a culture of compliance as established by the Board. Additionally, one key for success is ensuring the compliance team is not known as the ‘no’ department but one that supports the business.”
Brandi B. Reynolds, Managing Director AML & Compliance, Bates Group
Growing a Powerful Fintech Risk and Compliance Team: Closing Thoughts
There’s one common thread running through these responses: Compliance can’t be an afterthought.
At the end of the day, building a strong internal culture of compliance is a critical step when growing and scaling a successful Risk and Compliance function in Fintech (and beyond).
To do this, leadership must build the proper framework from the beginning by investing in infrastructure, process, people, and technology while acting as a champion and leading by example.
We hope you enjoyed this collaboration featuring insights from several of our Unit21 partners.
Get in touch here to learn more about how Unit21 and our partners can help you scale your Risk and Compliance program. Or, click here if you want to learn more about becoming a partner.