Your FinTech solution is going to disrupt the entire financial services community! That’s right; your technology gurus have figured out how to improve a system, save the client money and streamline a cumbersome process. The investors are lined up, your investment deck looks slick, and you have spent hundreds of thousands or millions of dollars in development. But wait, you may have forgotten something! For many FinTech companies, they forgot to consider the regulatory element.
I am frequently contacted by FinTech companies who want to show me the next greatest software, because of my strong background in financial services, technology, sales, and compliance. To be honest, I get pretty excited to check it out, because I am a technology nerd at heart. Then, my bubble bursts when I see the inherent flaws of the solution from any number of compliance regulations. This is so sad when you consider that the solution could be a wonderful addition to a financial service’s practice if only the developer had considered the regulatory issues in conjunction with the business problem they are trying to solve for!
Here are my 10 Best Tips for FinTech Developers:
- If you are going to sell your solution to any financial services company, the solution must consider compliance regulations. Compliant workflows are essential to the lender buying it and ultimately sticking with your solution. Unfortunately, I’ve seen technology developed, purchased and then dumped when regulatory issues were revealed. What a waste of time and money.
- The Sales division may salivate over your solution and tell you that they will buy it. If you do not consider the compliance implications of the solution, you will never make it past the onboarding process, as compliance should vet all new FinTech solutions.
- Engage a compliance professional from the very beginning. They can help you identify the regulatory tripwires in your solution.
- The use of technology is meant to promote benefits to the business and the consumer. If you forget one for the sake of the other, it may create compliance risk for the business.
- As you develop your roadmap and workflow consider what regulations will be touched by the software. This will involve the services of compliance and legal professionals. Generally, legal professionals can interpret the regulation, and the compliance professionals can interpret the use of the software in the operational workflow.
- AI (Artificial Intelligence) and Big Data are creeping into every facet of our lives which likely means that your FinTech solution is relying on a database of information from somewhere. Investigate your data sources and their adherence to regulations, because they can pull your solution down if their ship starts to sink due to regulatory issues.
- Security of the data that flows in and out of your solution must be addressed well, as this is an ongoing issue for financial services companies; especially when consumer data is involved.
- Social Media interconnectedness can be a great way to sell your solution, but it can also be your biggest enemy if configuration of the messaging is allowed by the wrong people. Regulators are always watching social media and pulling examples for exam purposes. You do not want to be the example of the “poor solution” that they all have in common.
- When using data for predictive analysis, such as loan approvals or denials, or lead strength and weaknesses, strong consideration must be given to how those algorithms create disparity or disparate impact on a prohibited basis. Fair Lending issues can bubble up fast and furiously when not considered upfront.
- Prepare for change! Consider how you can implement the ongoing regulatory changes into your technology solution because change is inevitable. Change has been a real problem for many legacy technologies as they are forced to evolve their solution.
Existing FinTech solutions and FinTech developers, we are a great resource to help you establish great compliance protocols to your solution. Contact Tammy Butler @ tammybutler@fairlendingdiversity.com if you would like to discuss our services.
