Synchronizing Fintech and Banks with Compliance Management Platforms

Fintech has emerged as one of the most exciting domains in the financial sector. Businesses are coming out with new innovative services and service delivery mechanisms. Customers love using apps to transfer money, pay bills, and make payments quickly. However, there is still one area where Fintech businesses are struggling: working with banks.

Fintech apps and platforms can deliver many of their services because they often operate outside of the banking regulatory framework. This limits the type of services that Fintech businesses can provide because many financial services can only be provided by organizations complying with financial regulations. Regtech has emerged as a great solution for both Fintech solution providers and the banking network.

Fintech Needs Banks

Fintech solution providers do not want to enter domains that would subject them to intense financial regulations directly. There are many reasons they want to avoid those domains. If they operate in those domains, they will have to comply with all the financial regulations that apply, which could end up fundamentally changing their business processes. Many Fintech service providers will need to slow down their processes for financial regulatory compliance, which would eliminate their raison d’etre.

It is much easier for Fintech service providers to instead partner with banks. Banks already have dedicated risk, and compliance departments and also have decades of experience in regulatory compliance. Such a partnership would mean that only the services that a Fintech cannot provide itself will be provided by banks. Banks can also act as the secure layer beneath the Fintech service delivery layer, providing a more solid foundation for Fintech businesses.

Bank Concerns about Working with Fintech Businesses

Banks are concerned about the risks they will be exposed to if they work with Fintech service providers. Fintech service providers are not experienced in regulatory compliance; this means that the bank will have to ensure that everything is done by the Fintech provider is kosher from a financial regulatory compliance perspective. This is a major liability for banks. However, it is also important to note that banks want to partner with Fintech service providers. Bankers understand the importance of Fintech solutions and their role in the financial sector over the next few decades.

What is needed here is a medium that allows banks and Fintech service providers to work together efficiently, and that is what Regtech platforms promise to deliver.

How Regtech Platforms Help Banks and Fintech Work Together

Modern risk and compliance management platforms provide an easy way for banks and Fintech service providers to work together. These platforms bring all risk and compliance functions under one platform, simplifying the process for everyone involved.

Banks need to be aware of the risk and compliance issues being caused by third parties such as Fintech service providers. Risk and compliance management platforms continuously monitor risk metrics and compliance issues to provide a real-time view of risk and compliance operations throughout the enterprise.

Banks can also easily outline all the compliance requirements and provide them to the Fintech service provider on the platform, significantly simplifying compliance for the Fintech service provider. Instead of explaining how everything is connected and why each compliance and risk reporting requirement exists, the Fintech service provider can access the platform. The platform will display all the responsibilities and tasks that the Fintech service provider must complete. Each task is connected to regulations, controls, and risks, which makes it easy for the Fintech service provider to understand the goal of each activity.

Risk and compliance platforms are very beneficial to Fintech providers because it helps them manage risk and compliance in a way that is easy for them to understand. Fintech service providers may not be experts in regulatory compliance, but their expertise does lie in using technology for financial processes. Risk and compliance platforms operate in a manner similar to many cloud solutions that Fintech service providers will be used to, meaning that they will require only a little bit of training for risk and compliance.

Any business that wants to ensure that it can work with Fintech service providers needs to ensure that its risk management framework is ready for such an undertaking. The Predict360 Third Party Governance platform enables banks to ensure compliance and manage risks when working with third parties to deliver financial services and expertise.

Predict360’s Third Party Governance platform enables financial technology firms and the banks that serve them to control and monitor their third-party relationships on a single platform. For streamlined communication with Third Party Fintech partners to register, track, escalate, and manage complaints, ad reviews, change requests, and monitoring activities that the bank is ultimately responsible for through the relationship.