How can Fintech provide the answer to industry compliance?

By Kris Simpson, Head of UK B2C for Cool Company

Financial services compliance is one of the greatest hurdles for scaling businesses. It’s integral, but it can be difficult to manage for startups and SMEs without the power of the larger, more established companies. If you don’t have the wherewithal to employ a dedicated team able to oversee compliance, it’s easy to trip up. And that’s one of the reasons why Fintech was developed. With a growing collection of services available, Fintech has the power to support businesses of all sizes as they navigate growth. Providing bridges over pain points and stumbling blocks, through the automation of what have previously been manual processes – from onboarding, to checks and reporting.

Where can Fintech support businesses with scaling and compliance?

When taken back to its bare bones, the role of Fintech is to support the better management of financial operations and processes, for both businesses and their customers. On the themes of scaling and compliance, Fintech can help in two main areas.

Internal process scaling

Internal scaling is a regular process for a full range of businesses faced with seasonal fluctuations in demand. But it puts significant pressure on existing employees, especially those working within HR and payroll as new or temporary employees are onboarded and later offboarded. With Fintech, processes become streamlined, enabling scaling without dramatically increasing the workload of those working within the relevant departments. Compliance is managed and scaled up or down automatically, with an easily auditable trail to support you should it ever become necessary.

Territorial expansion

Taking a business into a new territory raises an almost endless round of complexities. As well as new legislation, there are the issues of cultural differences, tax requirements and procedures, business registration and processes, and many more besides – including compliance. Until recently, hiring and working with local people was the only real way to steer a business through these areas. But first, you have to find the right people to work with. And that takes time and money that many businesses simply don’t have. With Fintech, you have the potential to condense that route, using algorithms and simple technical processes to cut out the middleman. Easing the transition into new territories.

Are Fintech companies immune to the challenges of compliance?

Short answer: no. One of the greatest challenges relating to compliance for Fintech firms is that none of us own a working crystal ball. And creating solutions that won’t be caught out by changing compliance requires a degree of foresight. Fintech solutions are only worth adopting if they can offer longevity, and this means building flexibility into any solution right from the very beginning. Enabling simple compliance with current legislation, while allowing for uncomplicated infrastructure changes should it become necessary in the future. And for Fintech companies looking to scale themselves, this means not only suiting products to the changing compliance needs of a single territory. But accommodating the needs and legislation of multiple legal systems.

One of the areas currently presenting problems for Fintech is manual checking. An issue that is essential for many forms of legislation compliance. In some areas, a certification process to gain market compliance – something that identity document validation technology (IDVT) is seeking to address – is mandatory. Providing products for regulated systems is part of the reason why Fintech has emerged and continues to evolve. Some of the issues faced are still in want of a solution. But the Fintech industry is taking ownership of these issues so that small and scaling businesses don’t have to.

The original aim of many Fintech enterprises was to level the playing field for businesses. Providing tools that allowed small businesses to grow, and removing the advantage from industry giants. Not all Fintech products are compliance-related. But with new and exciting products and services coming on to the market each day, it’s hard not to view Fintech as the answer to financial services compliance.

About Author:

Kris Simpson // Kris Simpson is the Head of UK B2C for Cool Company and is responsible for operational and compliance in the UK. With over 10 year’s experience in Umbrella Payroll and the Recruitment sector. Kris is Cool Company’s go-to person when it comes to changes in the UK and providing solutions that our customers need.