Early stage Fintech businesses may struggle to deliver a successful and profitable product if they do not do more to prioritise compliance in the product development phase, according to the specialist in ultra-secure data storage and managed services, The Bunker.
Many companies quite naturally obsess about customer need and designing a product or service that solves their requirements. Only after the core product has been developed do they then mould around compliance factors. Fintech businesses that make compliance a priority throughout the product development lifecycle reduce the risk of discovering gaps in compliance and having to rebuild their products, avoiding costly downtime during the Software Development Lifecycle (SDLC).
The highly-regulated financial services sector features several significant regulatory hurdles – such as the European Union’s Revised Payment Services Directive (PSD2), which will force banks to open their data and infrastructure to third party developers, and the Payment Services Regulation 2009, which places strict conditions on any business operating within the payment industry to ensure maximum consumer protection and establishes the maximum processing times for payments in Euro and other EU currencies.
Commenting on the issue, Phil Bindley, managing director at The Bunker, said: “Prioritising compliance gives early-stage Fintechs a significant head-start in getting to market faster. To comply with the financial services sector’s strict regulations, Fintechs must use data centres that not only guarantee UK data sovereignty, but conform to the most demanding industry standards. Navigating this landscape can be particularly challenging as many Fintech businesses while heavy in technology innovation can benefit massively from service providers that are experienced in delivering technology and cyber security services in the financial services sector. That’s why it is crucial that they seek out partners with the relevant experience and expertise who can help them overcome these potential obstacles.”
It is also not just about financial regulatory compliance but also about data security, ensuring the overlap between compliance and security remains the most important facet of a business’s development life cycle.
“Security is a critical aspect of compliance. Fintech platforms handle billions of dollars’ worth of financial transactions and capital, and any breach in security could be catastrophic for businesses and individuals throughout the financial sector and beyond. It is therefore crucial that every early stage Fintech business make security a priority, as part of their approach to compliance. Any financial institution considering adopting a fintech product will, first and foremost, consider the security of that product. Early stage Fintech businesses that prioritise security will stand a much better chance of delivering a successful product and building their market share.”
Bindley concluded: “At The Bunker, we believe that regular assessment of both security and compliance, throughout the SDLC, is critical to helping early stage Fintech businesses experience smooth growth as they on-board new customers or receive additional funding. Being able to say that you’re confidently in control of your business’s compliance and security speaks volumes for any potential customers. If data management processes are compliant with the relevant regulations and legislation, hosted on a dedicated, ultra-secure, managed infrastructure, the risk of business failure due to regulatory and compliance issues is dramatically reduced.”