This week I had the pleasure of attending ‘The Makers Live Podcast: The Future of Fintech’ for a thought-provoking discussion on how new market players are challenging traditional paradigms in financial services.
Guest speakers included Ricky Knox (CEO and founder of Tandem), Cristina Alba Ochoa (CFO of OakNorth), Aritra Chakravarty (CEO and founder of Dozens) and Carlo Gualandri (CEO and founder of Soldo). The well-rounded panel, moderated by Ollie Forsyth, offered a balance of views from the perspectives of different licence holders, each with distinct supervisory models and business models.
Speakers shared insights on capital raising – with crowdfunding emerging as a successful route for UK fintechs; as well as on how fintechs are growing their customer base through community-focused approaches (for example, ‘open office’ events), referrals and the more traditional advertising campaigns (we’ve all seen the tube ads!).
A standout topic of discussion was the regulatory and supervisory environment, where speakers agreed on the importance of adopting a 'philosophy' that, from inception, aligns regulatory compliance and risk management with strategy, and prioritises supervisory interaction.
Growth without this philosophy, and a range of additional vital ingredients, including the right governance and controls, systems and technology stack, as well as data management framework, may be unsustainable, costly, or worse, destructive. Weak risk management and controls frameworks, for example, may expose fintechs to a wide array of risks, including cybercrime, fraud, and money laundering – all potential contributors to regulatory fines, reputational damage and the threat of losing correspondent banking relationships. Furthermore, the absence of a well thought out IT and data strategy may lead to future problems in regulatory reporting and costly transformation and compliance programmes.
Effectively, the right philosophy helps avoid the situation whereby a growing firm would have to look back and retrofit the business within the boundaries of compliance. Adopting the right mindset and getting things right from the start are therefore critical factors to the future of fintech!
Weak risk management and controls frameworks, for example, may expose fintechs to a wide array of risks, including cybercrime, fraud, and money laundering – all potential contributors to regulatory fines, reputational damage and the threat of losing correspondent banking relationships.