FinTechs that have invested in compliance, security and solid partnerships are well-positioned as regulation increases, Priority Technology Holdings CEO Thomas Priore writes in a new PYMNTS eBook, “Beyond the Horizon: How to Identify Unexpected Threats That Could Impact Your Business.”
In the fast-paced world of FinTech, wild cards can emerge suddenly, reshaping the industry overnight. As we look ahead, one potential game-changer looms large: increased regulatory requirements.
Recent events — from state-level money transmission changes to reconciliation and compliance failures and high-profile cybersecurity breaches — have put regulators on high alert. The resulting regulatory focus could redefine the competitive landscape, creating both challenges and opportunities for FinTechs.
Key areas likely to face stricter oversight include:
For some FinTechs, especially younger startups, navigating these new regulations could prove overwhelming. Companies that have prioritized rapid growth over robust compliance may find themselves scrambling to meet new standards imposed by bank partners and their regulators, potentially facing fines, restrictions or even closure.
But added oversight doesn’t have to spell disaster. In fact, for well-prepared companies, it could be a golden opportunity. FinTechs that have invested in compliance, security and solid partnerships are well-positioned to emerge with best-in-class platforms.
At Priority, we’ve long recognized that offering banking services demands precision and discipline. Building systems with compliance and security at their core isn’t just about meeting current standards — it’s about being a trusted partner and future-proofing your business.
The coming regulatory changes will likely raise barriers to entry in the FinTech space. New entrants may face increased licensing requirements and scrutiny, and associated additional operating costs. This trend could favor established players who can provide stability and scale.
While these changes won’t be without challenges, even for well-prepared companies, they also present opportunities. As less prepared competitors struggle, those with robust compliance and security measures will be positioned to gain market share and build trust with regulators, bank partners and customers.
Moreover, the approach to bank partnerships could become a key differentiator. While some FinTechs have pursued strategies to disintermediate banks, those who recognize the value of collaboration may find themselves at an advantage. Banks remain a significant pool of assets globally, and coordinating with them — rather than working against them — allows for solutions that augment customer relationships while maintaining regulatory compliance and capitalizing on what banks do well.
As the regulatory landscape evolves, the FinTech industry faces a critical juncture. Those who have invested in compliance and security won’t just survive — they’ll be poised to lead the charge in creating a more stable and trustworthy FinTech ecosystem for all.
In the face of this regulatory wild card, the question for FinTechs isn’t just “Are you prepared?” but “Are you ready to seize the opportunity?”
We’re always on the lookout for opportunities to partner with innovators and disruptors.
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