On Risk and Compliance in the World of FinTech

May 13th, 2023 by inflectra

On April 5, 2023, Inflectra hosted an enlightening panel discussion on Understanding Risk and Compliance in the World of FinTech. Experts in the field - Jan Guido and Raymond Strecker* were joined by Dr. Sriram Rajagopalan in this installment of the Inflectra Expert Series, focusing on the dynamic intersection of fintech, blockchain, cloud computing, and big data. The conversation shed light on the advantages and risks associated with these technologies, emphasizing the critical importance of risk management and compliance in the rapidly evolving world of finance.

Let's delve into the key takeaways from this thought-provoking discussion. Risk and Compliance in the World of FinTech: Insights from Inflectra's Expert Series

The Power of Blockchain: Ensuring Transparency and Security:
The panelists began by acknowledging the immense potential of blockchain technology as an immutable source of truth. They emphasized its ability to provide transparency and cryptographic proof, bolstering trust and eliminating the need for intermediaries in transactions. By leveraging blockchain, fintech companies can establish secure and tamper-resistant systems, enhancing the reliability and integrity of financial operations.

Cloud Computing: Enabling Agility and Rapid Growth:
The participants recognized the advantages of cloud computing for fintech companies. The conversation highlighted its ability to reduce lead times and facilitate rapid growth without the need for extensive infrastructure setup. By harnessing cloud infrastructure, businesses can focus on their core competencies, adapt swiftly to market demands, and scale their operations effectively.

Big Data's Significance: Fueling AI and Large Language Models:
Big data emerged as a critical factor in driving technological advancements in the fintech industry. The participants emphasized its significance, particularly in the development of artificial intelligence (AI) and large language models. Recognizing that the computing power and vast amounts of data required for these technologies often exceed the capabilities of individual firms, the discussion underscored the importance of harnessing big data to unlock valuable insights and gain a competitive edge.

Navigating Risks in the FinTech Landscape:
The conversation shifted to the risks associated with fintech and technology in general. Participants stressed the importance of distinguishing between fintech companies solely providing technology and those entrusted with handling people's money. Financial institutions face licensing and regulatory requirements, while technology providers must prioritize information security. Robust measures, including data protection, code audits, and encryption, were highlighted as essential for mitigating risks and ensuring the security of assets and user data.

Compliance and Product Design: Essential Considerations:
Compliance requirements and product design emerged as crucial aspects for fintech companies. The panelists emphasized the need to align products with regulatory frameworks and industry standards. With the exponential growth of data, businesses must secure and govern it effectively, adhering to regional and global regulations. By prioritizing compliance and designing products with security in mind, fintech companies can build trust with customers and regulators, fostering long-term success.

Drawing Lessons from the Past: Governance and Internal Controls:
The discussion concluded with an exploration of past financial crises and the lessons learned from them. The recent Silicon Valley Bank scandal prompted reflection on historical events like the Enron scandal, leading to the implementation of Sarbanes-Oxley regulations. The participants stressed the significance of governance, compliance, and internal controls in maintaining industry integrity and preventing misconduct.

Inflectra's panel discussion provided valuable insights into the world of financial technologies, highlighting the interplay between blockchain, cloud computing, big data, risk management, and compliance. As fintech continues to reshape the finance industry, businesses must navigate regulatory landscapes, prioritize information security, and ensure compliance. By leveraging technologies and implementing robust risk management strategies, companies can thrive in this ever-evolving landscape while delivering innovative solutions and building trust among stakeholders.

Panel Discussion Recording

* The Expert panel:

Moderator: Sriram Rajagopalan - Enterprise Agile Evangelist at Inflectra Corporation.

Expert: Jan Guido - Enterprise Risk Management Consultant certified with FFIEC-based Certifications CBRITP, CBRM, and CBRA.

Expert: Raymond Strecker - Managing Director at Promontory, advising clients in the financial industry on large-scale program design and management at the intersection of regulation, risk, and technology.