From Risk to Reward: Is Compliance the Secret Weapon to Fintech Success?
As the Vegas lights dim on this year’s Money 20/20 conference, we take a moment to breathe and reflect on the lightning pace of the event and key messages. For those not familiar, Money 20/20 is a leading global conference that focuses on the future of money, payments, and financial services. The US event takes place annually in Las Vegas, Nevada, and brings together industry leaders, innovators, and disruptors from various industry sectors including banking, fintech, technology, and retail.
Compliance is Technology
This year’s conference provided a formidable platform for networking and knowledge sharing exploring the future of digital banking, blockchain technology, mobile payments, artificial intelligence, cybersecurity, and more.
Money 20/20 attracts thousands of attendees from around the world, including executives from major financial institutions, startups, venture capitalists, regulators, and government officials and offers opportunities for startups and established companies alike, to showcase their products and services, announce new partnerships, product launches, and industry initiatives.
The event covered a myriad of topics and discussions related to the future of money with the following key themes.
1. Partnerships and Collaboration – and the emphasis and importance of this between traditional financial institutions and fintech startups to drive innovation, improve services, and create new business opportunities.
2. Digital Transformation – and the pace of change in the financial industry, with a focus on the adoption of evolving technologies such as blockchain, artificial intelligence, and machine learning.
3. Fintech Innovation – and the latest innovations and disruptions in the fintech space, including new payment solutions, mobile banking apps, robo-advisors, and other emerging technologies.
4. Customer Experience – and improving and personalizing the journey that leverages data analytics, AI, and other technologies to enhance customer engagement and satisfaction.
5. Regulatory Landscape – and its impact on financial institutions and fintech companies with focus on open banking, data privacy, compliance, and regulatory challenges.
Can Compliance Deliver Real Change?
One of the many sessions we sat in on resonated deeply with our mission and gleaned insight from all key themes, asking the question, “Can Compliance be a Competitive Advantage?”
The overarching implications were that firms expect their technology providers to continue to innovate and leverage the perceived benefits offered from Artificial intelligence (AI) to remain competitive while enhancing their operational effectiveness and efficiency.
As regulators scramble to understand the impact of AI and the measures required to ensure responsible use of the technology, the guidance for tech companies is to 'continue to innovate', don't wait for regulation, but to engage regulators in the process. By doing so you can build technology that is aligned to the regulator’s way of thinking, taking guidance that will ultimately help you to offer solutions that are compliant by design, and in the process building trust with the regulators that will serve you as you continue to innovate.
As compliance becomes more of a forethought for fintech companies. Taking a compliance first approach and getting it right from the outset will only serve fintechs as they grow, ‘short term pain for long term gain’.
However, according to a recent Fenergo study conducted in anticipation for Money2020:
“Despite the numerous obstacles faced by risk and compliance officers in fintech payment companies, all respondents reported challenges in securing sufficient funding for investing in new technology and enhancing compliance efforts. For 43%, the struggle lies in predicting future compliance needs amid regulatory shifts, while 30% say their company prioritizes sales-driven projects over compliance, risking regulatory fines and long-term reputation damage.”
That said, the collective sentiment of the panel was that compliance does not need to be a blocker to progress and growth but in fact it can ensure sustainable growth when approached with consideration and a client centric imperative.
Leveraging relationships with the banks, services providers and regulators can go a long way to ensuring safe business practices, minimizing impact to your business, and building a strong reputation in the market.
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