THE TRUST FACTOR: A PARTNERSHIP BETWEEN FINTECHS, REGULATORS AND CLIENTS

By Ibrahim Toyeeb, CEO and Co-Founder of Leatherback

 

As the world negotiates an increasingly challenging terrain, characterised by  pandemics, shrinking economies, unrest and invasions, fintechs have positioned themselves as agile, adaptable platforms to help facilitate money transactions in the most difficult circumstances.

Ibrahim Toyeeb

At the heart of the fintech industry is the need to drive innovation by using technology to develop new business models, distribution methods, and delivery channels aimed at providing value to individuals and businesses across developed and frontier markets.

But there’s a human truth that makes clients connect with innovation – the trust factor.

Think back to the first person who successfully bungee jumped, scuba dived or successfully completed their first electronic money transfer. Fundamental to taking the ‘leap’ was trust that the service provider would make good on the promise of a successful experience.

In a world of innovation and, in particular, financial technology, building trust with clients is critical and licensing and regulation plays an important role in building this trust. When Leatherback decided to position itself as a global payments and collections company, the decision was made to acquire licensing and regulation in each market it operates in. While this can be a cumbersome approach, it is not impossible and the positives far outweigh the negatives.

To date, fintechs have not been restricted by the many regulatory requirements expected of traditional banks, which has allowed them to become disruptors in the market and offer more agile services at lower prices. This has, however, come with challenges and the ability of fintechs to sidestep regulation has created distrust amongst clients, who are increasingly voicing their need to be assured that their money is safe.

To promote trust amongst clients technology, innovation, regulation and experience need to live side-by-side. Fintechs would do well to view regulation as their friend, rather than their enemy and take steps to become fully compliant in the countries they operate in.

Partnering with a fintech that is licensed helps build trust with clients, and provides them with the peace of mind that comes with knowing they are dealing with a fully regulated entity.

When Leatherback commenced the licensing process in the United Kingdom (UK), it was held to extremely high standards by the Financial Conduct Authority (FCA), which is the highest regulatory body in the world. All processes were benchmarked to the FCA and systems structured to adhere to all FCA requirements.

Despite the onerous processes involved in obtaining licenses, Leatherback’s UK-based and global clients are at ease knowing that the electronic money services that they use are provided by an Electronic Money Institution (EMI)-authorized in the UK.

The UK is one example and every regulator has specific technological requirements and partnership standards for its local market. Going through all of these regulatory processes and applications reassures clients that they are working with a properly structured and fully regulated organisation that will keep their money safe and offer them recourse if issues arise.

As the geographic reach of fintech companies continues to expand – whether from developed to frontier markets or vice versa or both – some markets may be more sophisticated than others. It is in the best interest of fintechs to build strong partnerships and liaise with regulators to ensure their clients are assured the best service.

Another key component in building client trust is the establishment of strong partnerships.  With this in mind, Leatherback joined hands with recognised and reliable solutions providers such as Currency Cloud, which provides account solutions in the United States and parts of Europe, and ClearBank, one of the largest clearing banks in the UK. It has also partnered with 4Stop, a Know Your Customer (KYC), compliance and anti-fraud solution provider, and Yes Bank in India, amongst others.

Today, Leatherback has more than 40 partners globally, and partnerships with about three banks in each country it operates in. Putting these partnerships in place has been critical to ensuring even greater client  trust in Leatherback’s global payments and collections platform.

While it is true that regulation, in one way or another, has to catch up with innovation, fintech pioneers can play a meaningful role in helping to bridge the gaps with various regulators in the sector and in turn ensure all the necessary checks and balances are in place to enable transactions without any hindrances.

 

 

 

 

 

 

spot_img

Explore more