“A key element of a startup’s viability is its banking relationship. Not just the operational account, which handles checking, bill pay and payroll, but also the transactional account that enables the startup’s users to do business with that money.
Although not the de facto regulators of clients, banks are responsible for the risks their clients represent in the overall financial system and therefore must have a high level of confidence in their clients’ risk management and compliance operations.
To onboard a FinTech startup, a bank must gain a comfort level with the company, its owners, its commitment to risk mitigation, and its overall transparency as an organization. That means the bank’s executive management team, risk managers and compliance operations leaders all have to agree the company is an acceptable risk.”
“Best practice dictates the building of foundational risk management and governance frameworks from the get-go. Know and own your risk exposure. In the very early stages of launching a business venture, current and future risks should be estimated based on the product roadmap and revenue growth plan.
At the same time, processes must be implemented for continuous risk monitoring, reporting on key metrics, and mitigating identified threats. Additional risk oversight at the board level—mandated at later stages—can serve as a bonus asset early on in the trajectory of a startup.
Some startups create advisory boards to make introductions, provide business acumen or enhance brand influence. A board seat is not a passive duty without implications. A FinTech board seat can turn into a “hot seat” if the startup runs afoul and the board lacks the expertise to recognize the issue before it’s too late. Selecting knowledgeable board members early on can provide a startup with critical experience-based insights that can be leveraged for a successful exit strategy.”
“With advances in technology, financial services continue to move towards a digital experience. Now, under COVID-19 conditions, there is an ongoing public concern about the cleanliness of cash and cards at point of sale systems, which inherently require person-to-person contact or surface contact to execute a transaction.
As a result, we will see a global acceleration in the shift from cash to cashless digital experiences in payments for goods and services that provide for a completely contactless financial transaction.”
RISK | STRATEGY | CYBER COMPLIANCE MANAGEMENT
