In an in-depth discussion this month with The Fintech Times, experts including Lucy Huntley from FullCircl, addressed some of the most pressing challenges that compliance teams face in the FinTech sector. They also explored potential solutions that could ease the compliance burden and enhance fairness and safety within the industry.
The regulatory environment in the FinTech industry is continuously transforming, introducing new rules at a relentless pace. Olympe Leflambe, general counsel at Mangopay, highlighted the difficulties for compliance teams in adapting swiftly to these changes. “The regulatory framework evolves constantly, and it can be challenging for compliance teams to change their operations so frequently,” Leflambe explained. This rapid evolution forces compliance teams to remain agile, even as they grapple with the challenges of integrating technology that often outpaces legislation.
Technological advancements, while streamlining operations, also bring significant challenges in monitoring their application, as Matthew Franzyshen from Ascendant Technologies noted. “The pace at which technology is evolving is a double-edged sword for compliance teams,” he stated. Innovations like AI can significantly aid compliance processes but also introduce new vulnerabilities and potential for misuse, thereby complicating the compliance landscape.
In the US, compliance teams face a fragmented regulatory framework, particularly when dealing with both state and federal regulations. Gale Simons-Poole, chief risk officer at BHG Financial, shed light on these challenges. “We are a non-bank lender that works with banks, so we interact frequently with federal and state regulators,” she said. This interaction requires a robust regulatory team to navigate the differing requirements across states.
The EU presents its own unique challenges with impending regulations such as the Digital Operational Resilience Act (DORA), as discussed by Guy Mettrick from Appian. DORA, effective from January 2025, will necessitate extensive updates to risk management processes and third-party relationships, further complicating compliance efforts.
The escalating costs of compliance are a major concern for many firms, according to Daniel Bedford, a research analyst at Juniper Research. These costs include not only operational expenses but also investments in new technologies needed to meet changing regulatory demands effectively.
Lucy Huntley from FullCircl emphasized the importance of adopting a balanced approach to compliance. “New rules and updates are continually being introduced, and staying on top of them is no mean feat,” Huntley remarked. She advocated for leveraging technology to transform traditional compliance methods, which can significantly enhance both regulatory adherence and customer service.
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