Online and alternative lending have opened up credit to a wide range of individuals and businesses who may not meet the traditional definitions of creditworthiness laid out by banks and traditional lenders. They have also brought valuable innovation and new efficiencies to an area of finance that had stayed very close to its face-to-face, paper-based history, even as other banking services modernized.
Imagine the following nightmare scenario. At 5 AM, you get a call letting you know your company has just experienced a cybersecurity incident. Your clients cannot access their accounts. Your employees are also locked out. As you investigate further, you discover that your client data has been breached: names, addresses, account numbers, social security numbers.
Registered Investment Advisors must comply with the extensive provisions of the Investment Advisers Act of 1940 (also called the “Advisers Act”).
Fintechs must take a good look at compliance considerations as they go through the process of making business-critical technology choices. When evaluating and selecting partners or technologies needed to deliver an innovative client experience, there is a high risk of making mistakes. These mistakes can jeopardize fintech firms’ ability to operate correctly either as regulated firms or as partners of regulated providers. Careful technology review and consideration of fintech compliance outsourcing can mitigate these risks.
Running a supervision and compliance program for a regulated business can require managing hundreds of tasks, spread across multiple functional areas.
