Beyond the Checkbox
Compliance is more than just a checkbox; it’s a vital component of running a successful embedded banking business. Whether you’re a fintech or a company embedding financial products into your platform, partnering with a regulated financial institution is a necessity. With regulation comes the need for a thorough and well thought out compliance program.
Our latest webinar gave top compliance insights from several different perspectives, including those of a fintech, bank, and modern compliance tool partners. Our panelists included:
- Moderator: Sheetal Parikh, Associate General Counsel & VP of Compliance, Treasury Prime
- Emily Reisig, SVP, Innovation Development Manager, Emprise Bank
- Jeremie Beaudry, Manager of Strategic Accounts, Unit21
- Aditi Shekar, Founder and CEO, Zeta
- Natasha Vernier, Co-Founder and CEO, Cable
Here is what we learned:
There’s not a right or a wrong way for fintechs to approach compliance
“The first call [with the bank] is not to pass a compliance test,” says Emily Reisig, Emprise Bank’s SVP, Innovation Development Manager. There’s no one-size-fits-all approach to compliance and fintechs don’t necessarily need to be the experts on day 1. However, they do need to be willing to be part of the journey. Reisig notes that she typically refers to it as the “crawl, walk, run” model. Eventually, fintechs should feel empowered to take over more of the day-to-day compliance operations.
Leverage the community of fintech professionals
The fintech community is unique and, as experienced by the panelists, most people are willing to have conversations to help expose where you should focus and how you might operationalize these new ideas. As Reisig notes, “if you’re not sure where to start, there are many banks that will have conversations with you.” You don’t have to limit your network to just banks. There are other founders who are either going through the same experience or ahead of you. There are also consulting agencies and law firms that may be willing to lend 30 minutes of their time to share their own experiences. As Sheetal Parikh says, “We’re all in it. We have a responsibility to [lend time and share advice with] each other.” Shekar agreed and explained how it’s really important to leverage the community you have access to. Even banks are forming their own community groups to discuss best practices and bring ideas back to their own regulators.
Technology can bridge the gap between fintechs and banks
Modern compliance tools have flipped the dynamic between companies and their compliance teams. As Natasha Vernier, Cable’s CEO and Co-Founder, puts it, technology “enables compliance officers to start saying “yes” by giving them the right tools and enabling them to understand how well controls are working, how compliant their partners are, and what the risk is in real time.” The conversation internally shifts from “ugh, we have to go to compliance now” to “let’s bring compliance in early because they can help us move even faster,” says Vernier.
These compliance technology tools have been built with the bank-fintech relationship in mind. The risks we see in the traditional bank-customer relationship are much different than the risks in a bank-fintech relationship. Jeremie Beaudry, Unit21’s Manager of Strategic Accounts, says “you have the bank mandates to do things the way they’re regulated,” but Unit21 helps balance these with the experience fintechs are building for their customers.
Tell a good story so your company can become a boring one.
Financial crime is happening around us daily and the more we expose these stories the easier it is to build a culture of compliance. These stories of organized financial crime and sophisticated frauds allow individuals to reflect on their own banking experience or even things they see on the television. “It’s a soap opera,” says Shekar. You want to communicate these exciting stories to your team so you become a boring compliance story externally.
Reisig adds that the “tone from the top” is significant when it comes to creating a culture of compliance. Leadership at fintechs and other companies should actively discuss compliance and set it as part of their company’s vision. In doing so, it makes the early discussions with your bank partner easier and more effective.
Watch the full webinar to hear more insights, including a Q&A portion. To learn more about Treasury Prime’s compliance model or our compliance tool partners, get in touch with our team.
Don’t Offload Compliance to a BaaS Provider