Although essential, financial services compliance can be difficult for scaling businesses to manage. Without the firepower of larger organisations, which may have a dedicated team overseeing compliance, mistakes are easily made. And that’s part of the reason why Fintech was developed. Intended to support the better management of financial operations and processes, it has the potential to streamline compliance by automating processes that have previously required lengthy human intervention. And ensure that every i is dotted and t's crossed. The remit of Fintech is growing, helping businesses through a variety of procedural sticking points, with scalability coming into sharper focus.

How can businesses use Fintech to help with compliance and scaling?

There are two main areas in which Fintech can be applied to support scaling businesses. 

Expanding into new territories

Until very recently, the only sensible path for businesses looking to make a start in a new territory was to work with local people. To find advisers who had the knowledge to steer your business through the various obligations specific to that region. Tax requirements, business registration cultural expectations and compliance throughout all of these areas. While that works in a way, it takes time and money to implement. And requires a lot of high-level trust. While – in most cases – your business will still need to recruit locally, Fintech can remove the burden of ensuring that your business adheres to all the relevant standards. Simply, and cost-effectively. With the use of algorithms and key technical processes, it’s possible to automate compliance and relevant procedural changes, to ensure an easy transition into your new territory. 

Process scaling internally

There are few business models unaffected by seasonal changes. Fluctuations in demand, and demand for different products and services. Managing those changes can be hard enough – although automation is beginning to ease the pressure. Overseeing the personnel to instigate those changes can be harder. 

Imagine you’re the manager of a delivery service at the beginning of the pandemic. You have to manage a rapid and unpredictable surge in demand, and the steps necessary to drive recruitment and onboard new drivers and processors. It would be overwhelming for a small number of back-office workers faced with processing each of these new drivers; managing payroll, handling HR, taking care of compliance, dealing with staff sickness. For the companies that had already invested in Fintech, this rapid scaling – and slow decline as we move out of Covid restrictions – was managed automatically. Those that hadn’t, faced the hurdle of yet more recruitment and yet more admin, as new team members were brought in to help. 

By leveraging fintech, HR and accounting teams can scale rapidly without overexertion. A compliance trail can be easily audited in case it is required. By using HR management software, for instance, can do all of this automatically, removing the stress - and tedium - associated with integral corporate roles.

What are the challenges Fintech companies face when working with compliance?

Changing legislation is probably the greatest challenge for all Fintech businesses. Something that may be perfectly fine right now, can require another level of checking or certification, or simply be turned on its head a few short years down the track. So, for the Fintech industry, the onus is very much on adaptability. And that means building flexibility into the solution right from the very start. Ensuring that current compliance issues are catered for, while any future changes won’t derail the entire solution. And for Fintech businesses that work in more than one territory, or have plans for future expansion, that means taking steps to ensure infrastructure changes can be applied across a whole range of scenarios, to suit the compliance demands of every destination, every legislation, and every legal system. Both now and in the future. 

And the problem with that is that there are always new areas to consider. Whether it’s the requirement for manual checking – not something you can easily do with an algorithm – or certification. But there are Fintech brands searching for solutions to handle both. 

The whole point of Fintech is to give small and medium-sized businesses the chance to enjoy the benefits that larger enterprises take for granted. Allowing the chance for simple scalability and growth, and complication-free compliance.