For most fintechs, compliance has been treated as a burden and only as a cost of doing business, not a potential competitive advantage. But fintechs now have an excellent opportunity to create strategic differentiation, operational excellence, and improved operations. 

As a result of placing more attention on their compliance program, fintechs can realize the following competitive advantages:

1. Improved Risk and Fraud Management

With the average US fintech losing over $50 million annually to fraud, a robust compliance program works in unison with reducing fraud and improving risk management. Without a robust fraud management system, companies are vulnerable to unsustainable losses. 

For fintechs, two critical compliance requirements are KYC and AML. Reducing risk and fraud starts with an effective onboarding process to thwart fraudulent accounts. Both programs should provide the basis for decreasing process vulnerabilities and improving the odds of apprehending criminals.

Utilizing leading AI tools with deep learning drives a faster and more thorough review, leading to less friction for customers. In combination with big data and advanced analytics, these models are a necessity for KYC/AML reviews.

2. Upgraded Data and Process Quality

With a combination of AI/ML-enabled tools and disciplined processes, achieving regulatory compliance can drive improved data and process quality. Whether a fintech startup or an established enterprise, poor quality in these areas cascades throughout the organization. Consequently, it undermines both compliance and operational efficiency. 

Compliance automation tools, such as case management, help to reduce unforced errors, one of the most common risks for organizations. While fraud and other outside forces are a lethal threat, without attention to internal discipline, the eroding of operational effectiveness will impact customers, partners, and the organization’s future. 

3. Reduced Reputational Risk

Running afoul of regulators, fraud, and privacy incursions can deliver a lethal blow to a fintech’s reputation. Conversely, compliance with governmental regulations helps engender trust and promote credibility with customers and business partners. Fintech’s niche in the market as a disrupter to traditional banking is attractive to consumers; however, it can be easily undermined through even the appearance of misconduct on the part of the company. 

4. Streamlined Growth

For startups and growing fintechs, efficiently ensuring compliance with legal regulations as the company evolves provides a compelling market advantage. Synchronizing compliance requirements to product development workflows helps ensure that new or updated products meet regulatory obligations. Consideration of compliance needs early on in the company’s development sets up easier scaling of requirement needs in the future. 

5. Better Customer Experience

Complying with KYC laws does not have to include a demanding onboarding process for customers. With effective AI tools, compliance with KYC occurs without harming the customer experience. For example, an irrefutable real-time identity verification model aids in complying with KYC while creating a frictionless process for customers. In addition, the model should support a comprehensive onboarding and due diligence process by verifying customer information against trusted data sources and ensuring the legitimacy of customer documentation.

6. Enhanced Operating Efficiency

Lastly, creating differentiation through compliance can result in lower costs, higher quality, and new revenue streams leading to an improved bottom line. Not only does improving compliance processes and technology lead to greater certainty regarding regulatory requirements, but it also has a positive operational impact across the organization. 

One of the overarching benefits is increased consistency throughout operations via greater automation resulting in embedded process discipline. Consequently, this enables faster transactions throughout because of process streamlining and removing manual interactions. Furthermore, AI-based technology tools also bring new data-driven insights that can yield previously unseen opportunities.

Compliance Technology Enablers

You need all elements of people, processes, and technology working in conjunction to elevate your compliance program. Technology tools are necessary for the AI/ML horsepower they bring to your company, along with the capabilities to automate and streamline processes. provides a unified KYC/AML compliance solution that combines proprietary and third-party data and advanced AI/ML models. The models are expertly engineered with the nuances of your business built in. Additionally, our dashboard offers data-driven insights to help proactively spot issues. These tools help your organization avoid costly penalties and reputational damage and improve operational efficiency. 

  • Transaction AI – Offers real-time, continuous AML and fraud transaction monitoring. The AI engine extracts billions of insights from your unique data sources to better detect anomalies in customer data. 
  • Application AI – Provides immediate risk assessments of applications to verify customers while flagging fraudulent ones before any harm. Authentication can include account openings, loan and credit card applications, and supplier onboarding.
  • Appstore – An innovative application for integrating leading data and technology solutions through one seamless connection. With a host of partners, you gain simplified management of your data and technology suppliers. Plus, you gain billions of insights and the flexibility to integrate your technology suppliers.

An effective compliance program is the result of the expert integration of  “little things” and technology enablers. A disciplined compliance program is essential to a fintech’s fraud and risk management efforts. In combination, these programs are a powerful force for helping build a sustainable and agile business model that will help drive a competitive advantage for your organization.’s Improved Compliance Toolset

Read more about the steps fintechs can take to create critical strategic advantages through improved regulatory compliance in our eBook: AML, KYC, and Compliance for Fintechs.’s solutions provide fintechs with a robust application toolset to improve KYC/AML and other compliance requirements. To learn more about our enterprise fraud and compliance applications, please contact our experts for a free demonstration.