As a FinTech startup founder, you are likely to have a customer-friendly mental image of what the financial services industry should look like: A world in which transactions are instantaneous and transaction fees are low; a world where technology helps include humans (billions of them!) into the global financial system; and you – the founder – provide a way for people to access and share the benefits that have – until recently – been opaque, expensive, exclusive or otherwise discriminatory. You are on a mission – and the word is your oyster.

This mental image is what gets you out of bed every morning. But it also constitutes a crucial component in how you differentiate between friend and foe – whether it’s industry developments, business models, other startups, regulations, or people. If someone (a person, an institution, a regulator) shares your worldview or assists you on your mission – they’re a friend. But if they don’t – you might filter them out as “noise”, or even classify them as a hindrance or a foe. 

Having worked in FinTech compliance (@Amazon, @PayPal, @bitFlyer, @TenX, @AZA, @Lirium @LCX, and more) for about a decade now, I have witnessed how founders and leaders desire to drive projects forward but get bogged down by what they perceive as a never-ending list of regulatory requirements, or contradictory audit reports and recommendations – on more occasions than I can count. This, naturally, generates friction – you’re on a mission to change how the world’s finance operates, and some girl or guy in a suit, with little to no technological understanding of your business, tells you that you’re non-compliant with Article 8, paragraph ii. subsection F of the most recent anti-money-laundering circular. You didn’t sign up for this shit.

As a founder, you don’t really want your service or your customers to break the law but when you feel that you’re dealing with ever-changing legal standards, consultants whose only answer to your questions is “it depends”, potential partners who don’t recognize the potential of your business, and auditors who change their opinion all the time from one meeting to the next, you might just start feeling comfortable with a homicide or two.

When founders confront these difficulties, two possible reactions are observed, statistically speaking: 

1. The first, less common, is driven by pride: You’re “gonna show it to them”, so you bring in the big guns – an expensive Big4 consultancy firm, you create 30 policies and procedures “just in case somebody asks”, and you’re preparing to fire all of this at the unsuspecting regulator or a poor compliance analyst to demonstrate how awesome you are. The downside? There are way too many documents for you to double-check, let alone get a comprehensive understanding of, as you’re dealing with customers, investors, your growth strategy, hiring, and 42 other things.   
2. The second, more frequent, is driven by prejudice: “They don’t get it either way”, so you and your team will do your best to check off the minimal compliance requirements, and reason your way through any future due diligence. And when you get more resources, you can run compliance cleanly. After all, no one is able to sell your vision as well as you do, right? Why pay intermediaries who probably understand neither your users nor the market dynamics at play? The downside is that you are, in all likelihood, not a compliance expert, you may not understand how regulators or partners reason – or indeed what their mission is, and how it is not necessarily on a collision course with yours. And then, there is the question of time that you will spend drafting and reviewing these documents, instead of taking care of your business in fields where your added value is much higher.

Both approaches are cost-ineffective: A Big4 consultancy does not care about your need to grow the business. Their mission is to de-risk everything as much as possible (including the possible reputational damage to themselves) and move on to the next client or assignment. A Big4 consultancy also does not care about what state your product is in, nor how many customers you have – they have their own mental image of the industry, and they do not have a scarcity / lean mindset that a startup is constrained to.

On the other hand, if compliance success were proportional to available resources, large banks would be 200% compliant, all the time. Spoiler alert: They are not. They actually compete for who pays the biggest fines in the industry for NOT being compliant. 

And there are FinTechs out there who are subject to the same regulations, but seem to get away with murder all the time – Revolut, Binance, Crypto.com, even Amazon… how do they do it? And what can you as a FinTech founder learn from them? 

Now that you’re being REALLY intrigued – you will find the answers in the FinTech CEO Guide to FastTrack Compliance HERE!

My next article in this series will be here in a few short days and answer the question on “how to get away with murder” – stay tuned!