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The fringe benefits of fintechs in-housing regulatory roles

Bloomberg recently identified an uptick in ads for in-house compliance roles at influential fintechs. Positions at the likes of Betterment LLC, Coinbase Inc and the Wealthfront Corp started to crop up, suggesting a wider trend towards in-housing regulatory roles.

Cynics might say this latest trend is simply a PR exercise, but there are other benefits to hiring a compliance expert, aside from pacifying the regulators. 

1. Making Venture Capitalists feel safe

VCs are understandably nervous about investing in fintechs that don’t have their house in order. Especially in light of Coinbase, Robinhood and Wealthfront all having high profile run-ins with the law.

Having a team of in-house regulatory staff demonstrates a willingness to cooperate with law makers. And it reassures VCs that their investment is going towards a start-up that’s mature and preparing for the future.

All this solidifies relationships and will ensure that VCs keep parting with their cash and putting their faith in fintech.  

2. Bolstering trust

According to Rachel Botsman, an influential trust expert and professor at Saïd Business School, consumers have become distrusting of traditional institutions.

If consumers are dubious of governments and corporations then businesses are up against it to prove they have their customers’ best interests at heart. And for startups building trust is even more critical and challenging than it is for more established business. But managed effectively, moving to in-house regulatory teams projects a powerful message that customers overall financial wellbeing is in safe hands.

3. Driving cultural change

No startup CEO finds compliance sexy. That's why a fintech’s first instinct is often to put these newly hired compliance people into hibernation until a regulatory issue rears its ugly head. But it’s foolish to hire experts and then prevent them from helping to shape the business.   

Hiring people to manage regulation and compliance only works if there’s buy-in from the entire organisation. Smart fintechs will see this as an opportunity to review their ways of working, not as a threat to their agile development process and thirst for hustling.  

Unintended consequences

In-housing compliance staff might be a reaction to regulatory scrutiny, but there are multiple fringe benefits if fintechs lean into the trend.

Only time will tell if fintechs embrace change or fight against it. In the meantime, it’s the equivalent of a bull market for compliance officers looking for a move in-house.  

 

 

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This post is from a series of posts in the group:

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.


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