A stylized picture of a magnifying glass looking at ID documents for KYC purposes.

Keep Your Compliance: The Fintech’s Guide to KYC

Knowing Your Customer – It’s the key success factor for any business. 

But not only sales managers and marketing agents need a good idea about who sits on the other side of the online shopping cart or B2B contact form.

KYC, meaning Know Your Customer, is as much a regulatory requirement for fintech companies and financial institutions. After all, laws oblige them to verify the identities of their clients. The goal: Prevent fraud and constrain the service access of users, who don’t fulfill certain standards of credibility.

But Know Your Customer policies are not just boundaries. They also act as competitive factors. KYC yields insightful data on one’s own services and customers.

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A lamp shining on an open book and revealing the writing '8 Must-Read Books for Fintech Founders'

8 Must-Read Books for Fintech Founders

Fintech books? Are they really a thing?

Modern financial technology is inextricably linked with the Digital Era. Mobile payment, personal finance management, and cryptocurrency trading are major application fields of fintech startups.

Thus it’s only fitting that the fintech community relies on the internet for exchanging views on the topic, too. There are fintech news platforms like Finextra or Financial News. Networking communities like Holland Fintech and meetups like Finfinity invite people to share their insights. Blogs centered around experts like Chris Skinner react on developments on short notice. It’s obvious: In-depth knowledge of financial technology is readily available and easily found online.

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A drawing of a wallet which is digitally connected to internet of things devices like smart cars or fridges

All the Smart Things — Fintech, Blockchain and the Internet of Things

If the rooms had ears and the furniture had mouths … oh, how would they slander about our habits behind our backs?

Well, they can already talk to us for once: Voice-controlled assistant devices like Alexa and Siri inhabit our private spaces just now. And we can easily picture them having a conversation with each other, too (even though it would be a funny one for sure). But what if our clock radio told our food processor to get that smoothie ready, for we are about to leave for work? Or our watch told our bathtub to run us a remedial bath because we’re leaving our workplace with the first stirrings of a common cold? And think of a fridge, buying food articles once it runs out of them, using its own ewallet…

That’s where we enter the domain of the Internet of Things – a domain ripe with opportunities for fintech companies. 

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An electric brain in a jar, symbolizing artificial intelligence and robo-advisory, from which currencies and financial assets branch off

Robo-Advisory, Fintech and AI

Looking around the world, we can see a growing interest in the application of artificial intelligence, especially in financial services. Major fintech events like the Money20/20 US and the Hong Kong Fintech Week gave it the pole position, inviting machine learning experts and futurists to debate it before giant audiences. That said, the practical application of AI in fintech is not a dream of the future, but a present reality.

Robo-advisors, using artificial intelligence to analyze data and manage a user’s portfolio accordingly, have been around for a while in the financial industry. They promise easy accessibility and less need for human interaction, thus providing services at reduced costs. One step further and we enter the domain of trading bots. Such bots make actual business decisions based on previously accessed market data and gainings while circumventing human errors.

But how far have we come already? Let’s take a look.

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Drawing of two planets, circled by a rocket, symbolizing challenges faced by fintech companies.

What Challenges Are Fintech Startups Facing Today

In an industry which is known to be slow to adapt to current digital trends, it feels like financial technology or more commonly known as fintech, is experiencing a renaissance lately.

Fintech startups are emerging from around the world. In a previous post, we listed some from Germany worth keeping an eye on. But that only provides a snapshot of what’s happening globally and what solutions are being developed. Technologies such as blockchain, machine learning, and artificial intelligence are being used to build products that improve the customer experience for financial services.

While all of this sounds great, behind the scenes there’s a number of unique challenges when starting up. Here, we take a look at what they are based on our experience working in fintech.

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The Compliance Factor in FinTech

FinTech – or – It takes more than a few lines of code and an API to crack the bank-dominated world open.

We started online payment systems and eMoney wallets all the way back in 2001. Looking back at the past decade and the development that took place in the financial technology sector during this time, with certainty we can tell: Now is the right time to be in FinTech! All eyes are on FinTech startups – but not just on the innovations it brings. Regulators are watching the innovative startups closely as they fall into the trap of underestimating “The Compliance Factor“ one after the other.

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