It starts with people: 4 top tips to build a compliance function in the FinTech industry

Back in December, Clausematch had the pleasure to host a very interesting discussion on how high-growth companies can build effective compliance programmes. 

My colleague, Freddie Frith, moderated a panel with five seasoned professionals from the FinTech and RegTech industries: Ade Haffner from PensionBee, Anna O’Shaughnessy from Griffin, Anna Velvet from RegTech Canada, Olus Kayacan from bpost bank, and Shelley Schachter from Mode.

The objective of the session was to assess the main pain points faced by high-growth companies looking to build a compliance programme and share possible solutions to overcome these hurdles, focusing on three key pillars: people, processes, and technology.

In this first post, I’ll share a snippet of what this A-team have named as the most pressing challenges faced by compliance officers in FinTech organisations and their suggestions on how to manage the people pillar to tackle them.

Top challenges faced by high-growth organisations

In addition to the common challenges faced by organisations of all sizes, such as the costs and intense labour needed for an effective compliance function, and the fact that it requires clear evidence and traceability, start-ups and scale-ups have to establish a compliance programme from scratch, with scarce resources - more often than not, a one-person team. 

While this represents a challenge, as the compliance officer needs to be a multi-subject matter expert and will certainly be stretched too thin, it is also an opportunity to get it right from the beginning, as these companies have a clean slate at compliance. Companies such as Mode, operating in the Bitcoin space, also struggle with the fact that most compliance professionals aren’t prepared to work in such a new, quickly evolving, industry.

Another challenge discussed was that most of the compliance technology solutions in the market have been developed with large financial institutions, who have big, multi-layered teams, in mind. 

Building an effective people pillar

So, how can you work the people pillar to tackle these pain points? Here are 4 top tips:

1. Build your team right

Establishing a compliance function takes a lot of effort. In a FinTech company, it means creating processes, governance and policies to apply for licences that, quite often, will already be out of date when the licences are granted. Having people with a broad spectrum of compliance knowledge will be key, as they will need to be able to jump from one subject to another in the early days of the organisation. However, as you start to grow, you will also need people with good analytical skills that can research, learn, and adapt to new landscapes, geographies or products, as the company matures and takes shape. 

2. Pick your battles

Map your organisation’s biggest risks back to your compliance priorities, don’t try to boil the ocean in one day. A risk register that is mapped to the company’s risk appetite means that you don’t have to guess what your biggest risks are. You’ll have to match the risk appetite with the layers of priority in compliance. This allows you to make a fact-based decision on what risks need to be mitigated first. You should spend your energy on what is going to bring more value and mitigate the biggest risks, according to the company’s strategy. You can’t - and shouldn’t - do it all at the same time. 

3. Allow your people to spend their time wisely

As companies grow, recruiting is almost behind the curve in compliance. It tends to be looked at when the team is already at a breaking point and tasks are constantly behind from a volume perspective. Automating time-consuming, admin tasks such as regulation reporting, and policy review, approval, and distribution will allow your team to focus on building a strategic compliance programme. As an example, automating policy management can lower costs by 30% and reduce approval time by 15%, as experienced by Barbican Insurance Group.

4. Make information easily available to your first line team

All relevant policies and procedures should be at hand for those who need them, when they need them. In a growing FinTech organisation, you won’t have a big compliance team, so you can’t rely on the knowledge of a few individuals to know what to do. You have to empower your first line team to figure things out and reach out to your compliance team only when needed. This is one of the reasons why PensionBee decided to invest in a policy management and distribution platform.

Here is a bonus tip from Shelley Schachter for compliance professionals interested in entering the trendy Cryptocurrency sector: DYOR - do your own research, invest in building your skill set. Your compliance experience is definitely transferable but you’ll need to leave your comfort zone. If you are excited about building something new, this could be a great opportunity.

In my next post, I’ll bring top tips on how to build a strategic processes pillar. In the meantime, I’m sure you’ll find value in our upcoming free webinar, 10 Trends Shaping Compliance Technology, on 26 January.