Scaling Fintech Platforms While Managing Risk and Compliance

Digital payments, online banking, lending and embedded finance are becoming the new normal and are driving rapid expansion in fintech platforms. Although scaling allows fintech companies to access new markets and customers, it also exposes them to regulatory requirements, operational risk and financial crime. 

To be able to handle such growth responsibly, the foundation must be solid based on governance, automation and system integration. In the case of fintech organizations, the key to success is the ability to scale rapidly without risking the management of risks and compliance.

The Increasing Complicatedness of Fintech Platforms

Technology environments in fintech platforms are getting more complicated as these platforms continue to grow. The various applications, third-party services, APIs, and distributed teams spread across the geographical location should collaborate smoothly. In case there is a disconnection between systems, they lose visibility, hence it becomes difficult to monitor the transactions, enforce policies and respond to risk events.

This complexity is both a problem for compliance teams as well as development teams and operations themselves. In the absence of integration, important data related to risks will still be spread out across tools, creating more chances of delays, failures and regulatory lacuna.

Incident Management: Why Risk Management Should Rise on Technology

Conventional methods of risk management are usually done manually and through individual tools. Although these approaches might be effective in smaller platforms, they soon fall apart due to the increasing levels of transactions and customers. Flexible fintech platforms demand a consolidated, technology-focused risk strategy.

A successful risk management system at scale is usually concerned with:

• visibility centralization of applications and data sources.
• workflow that is automated to minimize human intervention.
• harness end-to-end audit and compliance reviews.
• uniform policy implementation within teams and systems.

Enterprise integration platforms are essential in this process as they facilitate joining of the processes of development, operation and compliance in one controlled ecosystem.

Compliance Incorporated into the Software Lifecycle

Recent fintech organizations are integrating compliance into the software development life cycle as opposed to it as an independent operation. This strategy fits better with the DevOps and Agile practices, where the quality and speed should be balanced with the governance.

The integration platform solutions, like Kovair, Application Lifecycle Management (ALM) and DevOps, assist fintech teams in ensuring a traceable flow of requirements, code, testing, and deployment. This traceability is critical in showing compliance and risk management in the regulated environments.

In these workflows, it is possible to incorporate the AML screening as part of more comprehensive compliance processes, where regulatory controls keep pace with the platform expansion without interrupting the pace of development.

Automation and Integration as Controlling Enablers

Fintech platforms at scale do not have an option to be automated. Automated processes minimize the use of manual checks, minimize error rates, and bring consistency to processes. Automation can be combined with integration to offer real-time visibility and quicker response to risk events.

The integration and workflow automation functionalities provided by Kovair help fintech institutions to:

• Integrate information between various tools in the enterprise.
• artificialize compliance and governance checkpoints.
• Keep auditable records within the systems.

Such capabilities are particularly useful in executing the fraud prevention controls in large-volume transaction settings.

Enhancing Fraud Prevention by Using Integrated Platforms

With the increase in fintech platforms, fraud schemes are becoming advanced. Single fraud detection tools are also not that effective in providing the context to identify system-wide trends. Unified platform strategy enables companies to match information from various sources, enhancing accuracy and reaction times.

This is possible by integrating fraud prevention controls into the enterprise workflows, which will then have more effective supervision without creating operational burdens. This practice, when coupled with the AML screening processes, assists organizations in proactively handling risk instead of responding to incidents in such an eventuality.

Governance and Visibility to Long-Term Scalability

Fintech development must be sustainable by having governance mechanisms that are adaptable to the platform. Comprehensive solutions such as the Integration Platform offered by Kovair can give the visibility and control required to manage the change, track the risk, and assist regulatory audits.

The integration is made through governance, such that once new tools, markets or services are introduced, they do not give rise to new silos, but rather integrate with any existing compliance and risk strategy already in place.

Final Thoughts

The control of a fintech platform is equal to its growth. Increasing in complexity, the fintech organizations need to be dependent on integrated systems, automation, and technology based on governance to handle risk.

With the help of enterprise integration, AML, and DevOps solutions, the fintech platforms will be able to incorporate compliance, AML screening, and fraud prevention into their main processes. This will allow it to scale securely, have confidence of regulation, and long-term resiliency in an ever-competitive financial environment.