Cracking the Compliance Code for Fintech with Eva-Lotta Hokkonen | Fintech Daydreaming S10E08
P?l Krogdahl
Executive Banking Consultant & Director of Advisory Services @ Samlink | Co-host @ Fintech Daydreaming Podcast | Keynote Speaker and Author (All views expressed are my own and do not represent those of my employer)
In this week’s episode of Fintech Daydreaming , Ville Sointu and I had the privilege of diving into one of the most complex and crucial topics in fintech - compliance. Joining us to decode this intricate world was Eva-Lotta Hokkonen , an attorney and senior associate at Dittmar & Indrenius , and a seasoned expert in fintech compliance. Together, we peeled back the layers of what it takes for fintechs to navigate the regulatory maze and explored how compliance, often seen as a necessary evil, can actually become a strategic advantage.
If you’ve ever wondered why compliance feels like scaling Everest for fintechs, this episode was packed with insights, both practical and philosophical. Here’s a deeper dive into the discussions, complemented by some of my own reflections on this ever-relevant topic.
Compliance: A Daunting but Crucial Journey
Eva-Lotta kicked off by addressing the elephant in the room: why compliance feels so much harder for fintechs than for traditional banks. The answer lies in the very DNA of fintechs. Unlike established banks, which have decades of experience working within regulatory frameworks, fintechs are often born out of innovation, disruption, and a desire to do things differently. They’re lean, fast-moving, and focused on delivering exceptional customer experiences, qualities that don’t always align with the slower, more methodical pace of compliance.
For startups, the challenges begin with a lack of resources. As Eva-Lotta noted, fintechs often start with small teams and limited budgets, which makes it difficult to allocate the time, money, and expertise required to tackle compliance from day one. Yet, as they scale, the stakes grow exponentially. Neglecting compliance isn’t just a legal risk, it’s a business risk. A single misstep can lead to fines, operational disruptions, and, perhaps most damaging of all, a loss of trust.
From my perspective, this points to a critical tension in the fintech world, the balance between moving fast and staying compliant. The fintech mantra has long been “fail fast, learn faster,” but when it comes to compliance, failure isn’t an option. This is where many fintechs struggle, how do you maintain the agility that defines your business while meeting the stringent requirements of regulators?
The Compliance Conundrum: Fintechs vs. Banks
Another fascinating point of discussion was how compliance obligations shift when fintechs partner with traditional banks. While partnerships can open up new opportunities, they also introduce new complexities. As Eva-Lotta explained, banks often have much stricter compliance requirements than fintechs, and when the two team up, those obligations extend to the fintech partner. It’s a bit like entering a business marriage, you inherit each other’s problems, risks, and expectations.
But there’s also an upside. Banks bring a wealth of compliance experience that fintechs can learn from, and partnerships can serve as a crash course in regulatory rigor. For fintechs that see compliance as a barrier, these collaborations can be a valuable opportunity to strengthen their internal processes and build the trust needed to scale.
This dynamic is emblematic of a broader trend in fintech, the growing interdependence between disruptors and incumbents. While fintechs bring innovation and speed, banks bring stability and trust. Together, they can create a more resilient and customer-focused financial ecosystem, but only if they can navigate the regulatory challenges that come with collaboration.
Making Compliance a Competitive Advantage
One of the most thought-provoking parts of the conversation was Eva-Lotta’s argument that compliance doesn’t have to be a burden. In fact, it can be a competitive advantage. This might sound counterintuitive, especially for startups already stretched thin, but the logic is compelling.
Compliance, at its core, is about trust. In a heavily regulated industry like financial services, demonstrating that you can operate responsibly within the rules isn’t just a legal necessity—it’s a powerful signal to customers, partners, and investors.
For example, fintechs that embed compliance into their business models from the start can use it as a selling point. By proactively addressing concerns around data privacy, security, and transparency, they can differentiate themselves in a crowded market. Similarly, fintechs that leverage compliance technologies (or regtech) to streamline their processes can reduce costs, improve efficiency, and scale faster, all while staying ahead of regulatory changes.
Personally, I find this perspective refreshing. Too often, compliance is framed as a roadblock to innovation, but it doesn’t have to be. With the right mindset, it can become a catalyst for growth, helping fintechs build more resilient, sustainable businesses.
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Emerging Trends in Compliance
As we look ahead, the compliance landscape is only going to get more complex. Eva-Lotta highlighted several emerging trends that fintechs need to prepare for:
These trends underscore the importance of staying proactive. Compliance isn’t a one-and-done task—it’s an ongoing journey that requires constant vigilance and adaptation.
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Personal Reflections: Beyond the Rules
While our conversation with Eva-Lotta focused on the practicalities of compliance, it also raised some deeper questions about the role of regulation in shaping the future of finance. From my perspective, compliance is about more than just following the rules, it’s about creating a financial system that works for everyone and based on trust and transparency.
This means striking a balance between protecting consumers and fostering innovation. It means addressing systemic risks without stifling creativity. And it means recognizing that compliance isn’t just a responsibility, it’s an opportunity to lead by example and build a better, more inclusive financial future.
The Bottom Line
Compliance is hard. It’s complex, resource-intensive, and, let’s be honest, not the most glamorous part of running a fintech. But as Eva-Lotta so eloquently put it, it’s also non-negotiable, and it can even be an advantage if approached strategically.
For fintechs looking to navigate the regulatory maze, the key is to embrace compliance as part of the journey rather than an obstacle to overcome. By building strong foundations, leveraging technology, and staying ahead of emerging trends, they can turn compliance from a burden into a strength.
If you’d like to explore these ideas further or discuss how compliance can support your fintech’s growth, feel free to reach out. And don’t forget to tune into the full episode for more insights.
Ex Syndicate bank/Ex LVB/Senior Associate at Dbs bank India ltd (retd.)
4 个月Compliance is an ongoing journey that requires vigilance and adaptation. Excellent narration for fintech prosperity through compliance throughout its journey. 'Better compliance better growth' philosophy made lucid. Tq.