Responsibility isn’t about rules
Responsive and responsible leadership: it’s not about rules
Mike Laven, CEO of Currencycloud, discusses what banks can learn from the fintech community when it comes to fostering a culture of innovation against a backdrop of regulation.
With the World Economic Forum closed for another year, I hope that “Responsive and Responsible Leadership” will stay in every attendee’s mind as a theme in 2017. Too often in the financial sector, the tendency is to see responsibility – and compliance – as a barrier to success, rather than its foundation.
Representing the UK’s fintech sector at the event, Lawrence Wintermeyer, CEO of Innovate Finance, stated that world leaders should look to the fintech sector for inspiration in this regard – “to see responsive leadership in action”. London’s position as a global fintech hub is often attributed to its extraordinary ecosystem of investors, government and accelerators. Equally important however, is the regulatory environment. The UK regulator, Financial Conduct Authority (FCA) is recognised as one of the most forward-thinking regulators in the world, promoting an open collaborative approach to encouraging competition and better consumer services, while minimising risk.
It’s not just at this ecosystem level, however, that we see this leadership in action. Any business based on moving money around has a duty of care to ensure that that cash isn’t being used to fund or sanction illegal activities. The purpose goes way beyond regulation. Regulation is just the mechanism – the set of documentation, processes and procedures that enforces the right thing to do. While “compliance” refers to the official set of rules to make sure this is the case, it’s really a question of culture.
A question of culture
So how do you create a compliance culture that is still agile enough to respond to change? The culture associated with driving agility and creativity seems to be at odds with the culture of driving compliance and regulation. One of the major challenges that FinTech businesses face is how to bridge that gap. It isn’t easy, but it can be done and we’re doing it.
Compliance should not just sit in the compliance team. It’s a responsibility that must be understood by everyone in the business. Customer service needs to know about the rules when speaking with customers, as does the business development team when closing a deal and the developers when designing a user interface. It’s a thread that must run through and be understood by the entire company.
The reason they know about the rules isn’t because they are rules, but rather because moving money is a sensitive thing and it needs to be taken seriously. As responsible business leaders, compliance is at the very heart of everything we do.
Every time I hear an aspiring fintech start up say “we have this great business model, if only we didn’t have regulation, we’d be off and running”, I feel frustrated. It’s clear I’m listening to someone who doesn’t understand what’s important or how things work. Any CEO of a business involved in money transfer who says this isn’t a key part of the job just doesn’t get it. It’s not “compliance”, it’s the job, it’s what we do. The leadership team must take this seriously, and take responsibility for instilling this as part of the organisation’s culture – “walk” and “talk” have to go hand in hand for compliance to “leap off the regulatory page”, and become a tangible part of all we do.
Banks have often scolded fintechs. The tone often implies “just wait until you grow up and live in our regulated compliant world, then you will learn about why we move slowly”. The culture at most banks is driven by a requirement to play by the rules, the need to judge every creative solution on if it meets compliance standards rather than how to make it a viable product.
Agility and regulation can go hand in hand
Contrast this with the culture at most successful fintechs. Compliance is key, but this cannot come at the expense of the ability to deliver agile responses, and allow creative team work. Beyond this, it cannot shake the relentless focus on the customer.
If business leaders want to foster a culture of innovation in a regulated environment, they must first understand why we comply. Communicating that responsibility to employees, in the greater context of being a good, ethical business, will pay dividends.
