# Fintech and compliance: Managing the eternal balancing act
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-03-29
Category: BUSINESS
Category URL: https://financedigest.com/category/business
Meta Title: How Fintech Overcomes Compliance Challenges
Meta Description: Learn how Fintech solutions can streamline compliance processes, support scaling, and remove the headache of industry regulations for businesses.
URL: https://financedigest.com/fintech-and-compliance-managing-the-eternal-balancing-acthtml

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_By_ **_Kris Simpson,_** _Head of UK B2C for_ [_Cool Company_](https://coolcompany.com/uk/)

Any proposition that relates to finance is going to come under scrutiny. And rightly so. After previous, multiple scandals, the [banking sector](https://www.financedigest.com/board-report-highlights-complex-decision-making-process-across-banking-and-finance-sector.html "Board Report Highlights Complex Decision-Making Process Across Banking and Finance sector") has got itself together, providing manifold layers of regulation, protection, and compliance. But for Fintech companies, this can prove problematic. While ethically minded entrepreneurs have no wish to flout the rules, regulations hold the potential to stifle creativity, scalability, and change. Bringing hurdles to the development of new products and solutions, slowing adoption, and making onboarding a far more complex matter than most businesses would like.

And yet, ironically, it is Fintech that may [hold the answer to supporting customers through the obstacles of industry](https://www.financedigest.com/holding-a-mirror-up-to-the-finance-industry-on-diversity-equity-inclusion-dei.html "Holding a mirror up to the finance industry on Diversity, Equity & Inclusion (DEI)") compliance. Supplying a growing catalogue of [services to help manage](https://www.financedigest.com/managing-the-hidden-security-gap-in-financial-services-the-office-printer.html "MANAGING THE HIDDEN SECURITY GAP IN FINANCIAL SERVICES: THE OFFICE PRINTER") compliance while supporting scaling.

**How can** [Fintech help businesses with compliance?](https://www.financedigest.com/fintechs-must-remove-security-and-compliance-friction-to-unlock-new-growth.html "Fintechs Must Remove Security and Compliance Friction to Unlock New Growth")

Fintech was developed to smooth the technical stumbling blocks of [financial services](https://www.financedigest.com/wrapping-financial-services-in-a-security-blanket.html "Wrapping Financial Services in a Security Blanket"). Helping [SMEs and startups to benefit](https://www.financedigest.com/5-benefits-of-iso-9001-certification-for-smes.html "5 Benefits of ISO 9001 Certification for SMEs") from the advantages that the larger, more established companies already enjoyed. And as it has evolved it’s become key to [supporting scaling businesses across](https://www.financedigest.com/fintechs-support-of-ukraines-digital-businesses-can-be-used-as-blueprint-across-the-world.html "Fintech’s support of Ukraine’s digital businesses can be used as blueprint across the world") many established sticking points. Automation, onboarding, reporting, checks, and other historically manual processes.

**Territorial expansion**

Traditionally, [providing services](https://www.financedigest.com/red-box-and-bloomberg-partner-to-provide-comprehensive-record-keeping-and-trade-reconstruction-services-for-financial-compliance.html "Red Box and Bloomberg Partner to Provide Comprehensive Record Keeping and Trade Reconstruction Services for Financial Compliance") in different countries has presented many difficulties for scaling businesses. From navigating unknown legislation and [cultural changes](https://www.financedigest.com/business-is-changing-is-your-culture-changing-with-it.html "Business is changing – is your culture changing with it?"), to tax, business processes, registration, and many more, and diverse issues.  Previously, when moving to or operating in a new region, these issues have been tackled by hiring local people. Relying on local knowledge to [guide your business](https://www.financedigest.com/the-definitive-guide-on-how-to-get-a-bad-credit-business-loan.html "The Definitive Guide on How to Get a Bad Credit Business Loan") through the maze of legislation and compliance. It works, to a degree. But it requires trust, and leaves you at the mercy of the people that you are working with.

Tech has both [made the world](https://www.financedigest.com/in-a-stadium-of-their-own-migrant-workers-say-their-sweat-made-world-cup-happen.html "In a stadium of their own, migrant workers say their sweat made World Cup happen") much smaller and expansion much easier, while removing the reliance on others. Replacing sharp learning curves with simple processes.

**Internal process scaling**

Tech also allows for the simplification of scaling. Take document checking for new employees during the onboarding process. If you have a [steady number of employees requiring checking](https://www.financedigest.com/the-electrophysiology-ablation-market-check-through-steadiness-between-2018-2026.html "The Electrophysiology Ablation Market Check Through Steadiness Between 2018-2026"), it’s entirely feasible that a small, in-house team will be able to manage the process. But what happens during peak periods? When your workload increases and there is [greater demand](https://www.financedigest.com/stocks-with-greater-socially-responsible-investor-demand-saw-weaker-losses-during-the-covid-19-crash.html "Stocks with greater socially responsible investor demand saw weaker losses during the COVID-19 crash") on your team. Hiring more people to handle the checking increases the workload of those already struggling and adds to your company’s expenses.  With the right technology, working 24/7, the problem is easily resolved and scaling up and down becomes a streamlined process, removing the [need to add additional](https://www.financedigest.com/need-additional-funding-but-not-sure-how-to-go-about-it.html "Need additional funding but not sure how to go about it?") headcount in peak times. And [ensuring that all compliance](https://www.financedigest.com/dont-let-compliance-trip-you-up-how-tech-can-ensure-youve-tied-up-your-contracts-2.html "Don’t let compliance trip you up: how tech can ensure you’ve tied up your contracts ") issues are successfully managed – with an easily auditable trail.

These [solutions remove the headache of compliance for Fintech](https://www.financedigest.com/meet-tilak-joshi-the-fintech-ceo-building-modern-solutions-for-the-gig-economy.html "Meet Tilak Joshi: the fintech CEO building modern solutions for the gig economy") customers. While laying it firmly on the [Fintech solution](https://www.financedigest.com/why-a-liberated-cfo-and-fintech-solution-are-a-dream-partnership-for-navigating-economic-uncertainty.html "Why a liberated CFO and fintech solution are a dream partnership for navigating economic uncertainty") providers.

**How can Fintech companies [face the challenges](https://www.financedigest.com/under-saved-and-underprepared-women-face-challenges-saving-for-retirement.html "UNDER-SAVED AND UNDERPREPARED: WOMEN FACE CHALLENGES SAVING FOR RETIREMENT") of compliance?**

The key challenge in using [tech to solve compliance is that you need](https://www.financedigest.com/tech-awakening-needed-across-uk-workforce.html "Tech awakening needed across UK workforce") to get it 100% right in the build phase. Otherwise, it will always be wrong. That means not only [working current legislation into product](https://www.financedigest.com/the-psychology-of-long-term-remote-working-productivity-vs-inclusivity.html "The psychology of long-term remote working: Productivity vs. Inclusivity") builds, but allowing for easy infrastructure changes at a later date, should it become necessary.

**Why is compliance an issue for Fintech firms?**

The difficulty for Fintech [businesses is that creating solutions that won’t fall](https://www.financedigest.com/julius-baer-2022-profits-fall-as-it-hits-business-cycle-targets.html "Julius Baer 2022 profits fall as it hits business cycle targets") foul of compliance requires a degree of foresight. Because [compliance regulations frequently change](https://www.financedigest.com/the-lego-blocks-of-saas-how-microservices-can-help-ensure-compliance-with-changing-financial-regulations.html "The Lego blocks of SaaS: how microservices can help ensure compliance with changing financial regulations") over time. And for a solution to offer any degree of longevity, it has to be flexible enough to change as the rules change. But rules change in different ways. Some compliance requires a certification [process](https://www.financedigest.com/solvency-ii-pushing-existing-systems-and-processes-harder-is-not-enough-for-compliance.html "Solvency II: pushing existing systems and processes harder is not enough for compliance") to gain market compliance – identity document validation technology (IDVT) is the latest example seeking to address this issue. Other areas of legislation call for a manual element for checking purposes, which is always difficult to replicate with tech. And, of course, businesses with products that may be suitable for more than one territory [need to ensure that the regulations](https://www.financedigest.com/regulators-need-to-strike-the-balance-between-protection-and-strangulation.html "REGULATORS NEED TO STRIKE THE BALANCE BETWEEN PROTECTION AND STRANGULATION") of each area can be accommodated.

For Fintech companies [aiming to provide products for regulated](https://www.financedigest.com/activision-aims-to-help-uk-regulator-better-understand-our-industry.html "Activision aims to help UK regulator ‘better understand our industry’") systems, these issues can prove hugely prohibitive. And finding workarounds can be the most challenging aspect of any [platform launch](https://www.financedigest.com/newly-launched-quintessential-to-provide-prestige-living-management-platform-for-prs.html "Newly launched Quintessential to provide ‘prestige living’ management platform for PRS").

Fintech and compliance go hand in hand. The one feeds the other. And as Fintech advances, providers are finding more and more inventive ways to serve SMEs as they scale. Helping with compliance, while finding new ways to [ensure that their solutions](https://www.financedigest.com/vias-cloud-based-solutions-ensure-painless-office-move-for-insurance-body.html "VIA’S CLOUD-BASED SOLUTIONS ENSURE PAINLESS OFFICE MOVE FOR INSURANCE BODY") remain flexible and scalable in the ever-changing financial environment.

**_About Author_**:

_Kris Simpson is the Head of UK B2C for_ _Cool Company and_ _is responsible for operational and compliance in the UK.   With over 10 [year’s experience](https://www.financedigest.com/2021-the-year-of-buyer-experience.html "2021: The year of buyer experience") in Umbrella Payroll and the Recruitment sector. Kris is [Cool Company’s go-to person when it comes to changes in the UK and providing](https://www.financedigest.com/recovery-bus-provides-cool-relief-for-s-koreas-covid-19-testers.html "‘Recovery bus’ provides cool relief for S.Korea’s COVID-19 testers") solutions that our customers need._


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