Compliance Challenges in Fintech in the United States
The Future of Fintech: A Complex Landscape
The future of fintech looks promising, but it also brings increased exposure to regulatory requirements, sanctions, and legal actions. As fintechs navigate this complex landscape, they must prioritize compliance to remain competitive in a rapidly changing market.
Blurring the Lines between Fintechs and Traditional Banks
Historically, the mantra of the fintech industry has been: “We are not financial institutions.” However, recent regulatory and industry developments suggest that the future of fintech will see a blurring of the lines between fintechs and traditional banks. Some fintechs are considering or pursuing bank charters, while banks are partnering with fintechs to leverage their disruptive capabilities.
The Growing Concern of Fintech Risk
Despite the promise of innovation, fintech risk is a growing concern. Recent regulatory actions against fintech companies highlight the risks of non-compliance, including:
- Regulatory risks
- Operational risks
- Reputational risks that threaten the safety and soundness of financial institutions
- Consumers’ expectations for regulatory protection associated with fintech products and services
Regulatory Voices Rising
Regulatory voices are rising in response to these challenges. The Office of the Comptroller of the Currency (OCC) has initiated a “vision for responsible innovation” in the federal banking system, while the Financial Stability Board (FSB) has published a report on the financial stability implications of fintech firms.
Prioritizing Compliance and Risk Management
To thrive in this more regulated environment, fintechs must prioritize compliance and risk management. A compliant company may be more attractive to:
- Consumers
- Stakeholders
- Regulators alike
- By implementing effective risk management controls, fintechs can differentiate themselves from competitors and achieve market share and revenue growth.
Staying Vigilant in a Changing Regulatory Landscape
As the regulatory landscape continues to evolve, fintech companies must remain vigilant and proactive in their approach to compliance. Deloitte’s Regulatory and Operational Risk practice offers expertise and guidance to help businesses navigate these complex challenges and turn them into opportunities for growth and success.