The financial technology (Fintech) industry continues to invest in innovations that create exciting new products and support based on customer preferences. The industry is continuously weaving in emerging technologies such as robotics, artificial intelligence, machine learning in fintech products and customer interactions. Consistent with this, the fintech industry requires elevating risk management capabilities.
Firms that have an interest in becoming a bank or willing to expand their portfolio from basic bank services will be expected to have the right risk and compliance framework. When a risk and compliance framework is implemented effectively by a fintech, it can immensely help in revenue generation and put them in an advantageous position for collaborating with banks and other financial institutions.
There are too many companies that are still taking the old school approach when it comes to the management of compliance risks. Businesses need to change the strategy and process as per the speed of changing business scenarios.
Following are the ways to handle compliances in a different yet practical way:
1.Accept a unique compliance strategy
This strategy calls for anticipating industry trends of future across businesses, products, services, and geographies. It will help organizations to create a well-planned compliance management program, which, in turn, will give them a competitive advantage.
2.Better collaboration
Those who all are involved in the compliance and risk management teams, including the executives and senior managers, have to collaborate. There should be an automated workflow in place to deal with the complete compliance process. The workflow is typically created by compliance risk management and development teams.
3. Technology and tools
The right combination of tools and technology and best practices can make the compliance method more effective. Since there are many tools and technologies available for a user’s access; it is not difficult to remain ahead. An efficient approach for managing compliance risks is to use tools that help in extracting data and suggest you the right steps.
4.Structure to manage compliance risk
One conceptual way to improve the way you manage compliance risks is to build a framework and methodology for the assessment of risks. The framework should be comprehensive and customizable. It should consist of a set of guidelines and policies that discusses ways in which an organization abides by the compliance regulations. Also, the set of guidelines should be developed by risk and compliance management teams.
5.Risk management process throughout
The two major terms of risk and compliance should be integrated into a complete risk management process. The process must include all the activities related to risk management and compliance. Also, it should constitute a framework that can be leveraged to assess an organization’s exposure to risk. Ultimately, the framework and process help in making timely and well-informed decisions.
Employees ranging from senior managers to risk practitioners should be a part of this process. To initiate, establish a risk structure that tunes in with your organization’s structure.
6.Training and development
For the entire enterprise to be on the same page, the leaders should communicate procedures and guidelines. It is imperative that training help makes everyone aware of the laws, regulations, and also the company policies. Also, periodic checks should be conducted to make sure that people are taking a strict note of the rules.
Forward-looking approach
As the Fintech industry evolves, the finance firms will face challenges, which will, eventually make it difficult making risk and compliance framework even more complex for the business operations. There can also be limitations related to capital and manpower, but fintechs can respond effectively by establishing an effective risk framework that helps enable their operating model.
For more information and paraphernalia on fintech and their risk and compliance strategies, you may find some relevant data here Risk & compliance latest whitepapers
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