Compliance Issues in Fintech: A Rising Concern for Swedish Companies
As the fintech industry continues to grow and expand, it’s becoming increasingly clear that compliance issues are a major concern for companies in Sweden.
Regulatory Scrutiny Intensifies
The Swedish Financial Supervisory Authority (Finansinspektionen) has been taking a closer look at the sector, highlighting the need for greater regulation and oversight. Historically, fintechs have prided themselves on being agile and innovative, operating outside of traditional regulatory frameworks. However, recent developments suggest that this approach may no longer be tenable.
Regulatory Initiatives
- The Office of the Comptroller of the Currency (OCC) has launched an initiative to grant special purpose national bank charters to fintech companies.
- The Financial Stability Board (FSB) has published a report highlighting 10 supervisory and regulatory issues that need attention.
These moves have significant implications for Swedish fintechs. Compliance issues are no longer just a concern for traditional financial institutions; they’re now a major worry for fintech companies as well. The risk of regulatory action, sanctions, and legal actions is increasing, making it more important than ever for fintechs to get their compliance houses in order.
Recent Examples
- Varo Money, a mobile-only fintech company, filed an application with the OCC for a full national bank charter and a complementary application with the Federal Deposit Insurance Corporation (FDIC) for deposit insurance.
- Social Finance Inc. (SoFi), another fintech company, filed an application with the FDIC to establish a Utah-chartered industrial loan corporation (ILC).
These developments highlight the need for fintech companies in Sweden to prioritize compliance and risk management. While it may be tempting to focus on innovation and disruption, neglecting compliance issues can have serious consequences.
Proactive Approach to Compliance
To thrive in this increasingly regulated environment, Swedish fintechs need to take a proactive approach to compliance. This means:
- Investing in robust risk management controls
- Ensuring that they’re treating customers fairly
- Being transparent about their operations
In the coming months, we’ll be exploring the implications of these changes for Swedish fintech companies. Stay tuned for our next article, which will examine the governance and business considerations for fintechs planning to pursue a bank charter.