Regulatory compliance

Emerging fintechs are growing quickly, with ambitious goals. Using data and digital technology, they can rapidly onboard customers, expedite transactions, and provide easy access to services through apps.

With such bright prospects, some fintechs want to expand from, say, 6,000 customers today to 26,000 in two years. But this kind of growth ambition requires investment not only in the business model but also in the compliance model.

Global regulators are holding fintechs to higher levels of scrutiny in financial crime, consumer protection, cross-border transactions, generative AI, data security, and operational resilience. Noncompliance can lead to fines, reputational damage, and revocation of licenses—not to mention loss of the customer and regulator trust that’s required for bold expansion.

An as-a-service approach

That’s why some savvy fintechs, especially those that operate in multiple jurisdictions, are using managed services to transform their compliance processes—and keep evolving them to meet fast-changing regulations.

Modern managed services go far beyond cost savings and efficiency. In financial crime compliance, for example, leading providers combine forensic expertise, advanced technology, and operational excellence to improve accuracy and stakeholder trust related to regulations such as customer due diligence (CDD) and know your customer (KYC).

These providers start by evaluating a fintech’s policies, risk methodology, and compliance technology. After creating new, automated processes—with compliance tech that’s integrated with core banking systems and provides a 360-degree view of customers—providers can use compliance analysts to continue running those processes as a service.

These analysts can be hard for banks to come by and, ultimately, can stand in the way of expansion into new jurisdictions. Leading managed services providers, on the other hand, are building—and continually upskilling—global teams of compliance professionals to help fintechs adapt to evolving regulations. It’s the quality of a provider’s people, not just its technology, that makes the difference in ongoing transformation.

Looking ahead

As fintechs chart a course of growth, progressive leaders are considering the effectiveness and scalability of their compliance processes. They know their ability to earn regulator trust, attract new customers, and adjust to constant change depends on it.

Learn more about KPMG Managed Services.

For an archive of past blogs, please visit Going Beyond: Managed Services.