Key Insights on Regulatory Pressure for Fintechs

The Indian government is gearing up to introduce the Banning of Unregulated Lending Activities Bill in the upcoming Monsoon Session of Parliament (July 21 to August 12, 2025). This move signals a significant shift in the regulatory landscape for lending activities, and it’s time for #fintechs in this space to take notice. 📜 What’s Happening? The government aims to ban any lending activity not authorized by the Reserve Bank of India (RBI) or other stakeholders. This bill, which has been in the works with final consultations involving the Law Ministry, is a follow-up to the Unregulated Deposit Schemes Bill of 2019. The new legislation will not cover informal lending among relatives but will target unauthorized lending apps and predatory practices. The government is also working with the Securitization Asset Reconstruction and Security Interest of India to create a centralized database of deposit takers, aiming to tighten oversight. The Crackdown on Fake Loan Apps Between September 2022 and August 2023, Google suspended or removed over 2,200 fraudulent loan apps from the Play Store. This underscores the scale of the issue with digital #lending platforms. The government is now addressing concerns raised by digital lenders, ensuring that regulated entities (including non-banking finance companies) aren’t unfairly impacted. However, the message is clear: unregulated lending will not be tolerated. What Does This Mean for Fintechs in the Lending Space? Regulatory Compliance is Non-Negotiable 🚨 Fintechs operating in the lending space must ensure they are fully compliant with RBI regulations. The proposed bill aims to plug loopholes and streamline activities, meaning unregistered players will face severe consequences. If you’re a fintech, now is the time to double-check your licensing and operational frameworks. Opportunity for Legitimate Players 🌱 While the bill targets unregulated entities, it creates a safer environment for legitimate fintechs. With fraudulent apps being weeded out, consumer trust in digital lending platforms could improve, paving the way for growth for compliant players. Collaboration with Regulators 🤝 The government’s push for a centralized database of deposit takers suggests increased scrutiny and data-sharing requirements. Fintechs should proactively engage with regulators to align their operations and contribute to shaping a fair regulatory framework. Focus on Ethical Practices ⚖️ The crackdown on predatory lending practices (like those highlighted in the 2,200+ app removals) emphasizes the need for transparency and ethical lending. Fintechs should prioritize fair interest rates, clear terms, and robust grievance redressal mechanisms to build long-term credibility. The Bigger Picture This bill is part of a broader effort to clean up India’s financial ecosystem. For fintechs, this is both a challenge and an opportunity to innovate within a regulated framework.

Why Fintech CEOs must speak Regulator-ese As a CEO in regulated fintech for over two decades, I've learned that speaking the language of regulation isn’t optional—it's essential. But let’s face it, speaking regulator-ese isn't exactly everyone's first choice of second language. It’s dry, complicated, & often about as exciting as watching paint dry...in slow motion. Yet mastering it can be your competitive superpower. Here’s why: Speaking the language of regulators doesn’t mean becoming a bureaucrat—it means becoming fluent in success. A 2024 Deloitte report highlights that over 78% of fintech failures are linked to regulatory missteps, not a lack of innovation. The reality is that regulators aren't here to ruin your fun; they're here to keep the playground safe. Navigating regulation well gives you trust, speed, & scalability—three golden tickets in fintech. Why you should become fluent in regulator-ese: 1. You move faster: Deloitte (2023) found fintech companies aligned with regulations launch products up to 45% faster than those playing catch-up. 2. You win customer trust: Edelman Trust Barometer (2024) revealed that fintech customers rank regulatory transparency as their #1 deciding factor when choosing whom to trust with their money. 3. You avoid costly 'Oops' moments: Non-compliance cost global fintechs nearly $6 billion in fines in 2023 alone (Fenergo). Think of it this way—regulators aren’t your enemy; they’re the referees. Sure, you might occasionally dispute a call, but without them, the game descends into chaos (ever played football without a ref?). Learning to speak regulator-ese means you can: • Anticipate & adapt rather than panic & react. • Influence outcomes proactively rather than reactively. • Unlock innovation by clearly seeing what’s possible within the lines instead of guessing & getting benched. The fintechs winning big right now aren’t fighting regulations; they’re leveraging them. So, don’t let regulatory language intimidate you. Dive in, master it, & watch it become your unexpected competitive advantage. After all, who knew fluency in regulator-ese could make you the fintech MVP? Not bad for a second language you never wanted to learn. #Fintech #Leadership #Regulation #Compliance #Crypto #Blockchain #LeadershipMatters #Innovation #FinancialServices #Regulations

This Housing Ramp Photo Just Went Viral – And Every Product Manager Needs to See It A wheelchair ramp abroad that's "technically compliant" but completely unusable. Steep slope, impossible navigation, pure checkbox thinking. Product Managers: 📌 SAVE this for your next compliance discussion. This ramp screams the same problem I see in fintech products daily: ✅ KYC implemented = compliant ❌ 47-step verification flow = user nightmare The brutal truth: Regulatory compliance can either kill your product or become your competitive edge. I've launched many fintech products. EVERY single one hit regulatory roadblocks. But here's what I learned: >>Compliance-first design isn't slower – it's faster. My 3-Step Framework: 1/ Design Integration - Embed compliance into UX from day one - Make verification feel seamless, not punishing - Test with real users, not just legal checklists 2/ Cross-Functional Collaboration - Get legal/compliance teams brainstorming solutions - Use data to show user impact, not just regulatory risk - Build bridges, not barriers between teams 3/ Validate Early & Often - Test compliance flows with actual users - Get regulator feedback before launch - Document everything, demonstrate impact Golden rule: Build WITH regulations, not around them. Because users can spot fake compliance instantly. But thoughtful regulatory design? That creates product differentiation and user trust. The companies winning in fintech aren't avoiding compliance – they're making it invisible. What's your biggest fintech compliance challenge? Share below in comments Like 👍 if this resonates, Share 🔄 to your network Follow me (Monica Jasuja) for more product insights that actually ship.

Cambridge Centre for Alternative Finance, Cambridge Judge Business School - The Next Frontier in Digital Asset Market Infrastructure: Lessons from Digital Public Infrastructure (DPI) - The latest report from CCAF maps the global transformation of market infrastructure through the lens of DPI — from real-time payments to digital IDs and consent-based data sharing. - The implications for the future of digital assets and tokenized finance are massive. Five Insights on the Infrastructure Shaping Digital Markets: 1. DPI Meets Traditional Financial Market Infrastructure (FMI) - DPI like India’s UPI and Brazil’s Pix are converging with FMIs such as RTGS and clearing houses — redefining how value moves in a digital economy. - The ability for non-banks to directly settle in central bank money, as seen in Brazil’s Pix, shows how market rails are opening up. 2. Modular & Open-Source Infrastructure as a Competitive Edge - Open APIs, modular infrastructure, and consent-based data sharing create composable financial ecosystems. - Think of it like Lego blocks for finance — enabling fintechs, banks, and DeFi protocols to build faster, more tailored solutions, but governance and interoperability will be key to prevent fragmentation. 3. Emerging Markets Are Proving Grounds for Infrastructure Innovation - With 113 jurisdictions deploying at least one DPI pillar, emerging markets like India and Brazil are setting global precedents. - For example, India’s UPI processes over 17 billion transactions monthly, outpacing even Visa and Mastercard domestically 4. Regulatory Coordination is Lagging Infrastructure Development - The report warns of a regulatory "knowledge gap" — the pace of market infrastructure innovation is outstripping regulators' capacity to oversee risks like data misuse, concentration, and exclusion. - Coordinated, cross-border regulatory frameworks will be critical as DPI and tokenised markets mature. 5. DPI as a Catalyst for Tokenisation and Digital Assets - By embedding digital identity, instant payments, and secure data sharing, DPI creates the foundation for broader adoption of tokenised assets, programmable finance, and embedded financial services. - Without such infrastructure, digital asset markets remain siloed and friction-laden. Real-World Parallel - In tokenisation, the European Union’s DLT Pilot Regime is laying new rails for trading digital securities — but it’s jurisdictions with mature DPI that will have a competitive advantage in scaling these markets. So What? - For digital asset innovators, policymakers, and financial institutions: DPI is not just about financial inclusion — it’s the infrastructure layer for the future of digital markets. - The race is on to build, govern, and standardise this infrastructure globally — those who lead will define the next era of finance. Great work Pavle Avramović, Sanya Juneja, Yue Wu, krishnamurthy S and Bryan Zhang

6 weeks into the build of another fintech start-up, this time in the remittances, cards, and payments space, I realise that key learnings from previous start-ups have been reinforced. 1. Clarity on Strategic Priorities Product/Market Fit is Everything: Early success depends on clear validation of a real customer pain point, robust feedback loops with initial pilot users, and continual adaptation to the regulatory environment. Hyper-localisation and Differentiation: The UK remittance and payments space is crowded. Standing out requires hyper-localisation of service, strict compliance, and unique value-adds to compete against big names like Revolut. 2. Operations & Governance Establishing Governance Frameworks: Even as a start-up, regulators and partners expect robust governance - from a “3 lines of defence” risk model to strong oversight and decision logs. KPIs and Programme Discipline: Typical KPIs for Programme Directors and build teams revolve around delivery speed, stakeholder management, cost control, compliance achievements, and measurable progress against milestones. 3. Understanding and Navigating Risks Risk Management is Broad and Deep: Fintech start-ups face regulatory risks such as AML/CTF, safeguarding customer funds, product misfire, tech stack immaturity, fraud, and operational risks including vendor management and talent gaps. Guardrails for Growth: Defining the business’s risk appetite, especially regarding compliance versus speed, sets expectations for the team and stakeholders. 4. Organisation and People Building the Right Team: Success depends on quickly assembling a team of builders - people comfortable with ambiguity, speed, and regulatory demands. Managing Change Fatigue: Ambitious targets and startup pivots can be draining. Recognising this early helps us to  support and energise the team. 5. The Value of Feedback and Iteration Listening to Customers and Partners: Collect actionable feedback early, particularly from initial pilot customers and key banking and payment partners, to avoid investing in features that don’t add value. Iterate Fast and Document Decisions: Maintain transparent programme decisions logs to track why choices were made and support accountability. 6. The Importance of External Perspective Competitor Awareness: Watching how players like Currency Cloud, Wise, or WorldRemit operate  in respect of fees, features and regulatory approaches, informs the product roadmap and helps us differentiate from the competition. Liked this post? Want to see more? Ring the 🔔 on my Profile 🔝 Connect with me

🏦𝗡𝟮𝟲 𝘃𝘀. 𝗕𝗮𝗙𝗶𝗻: 𝗪𝗵𝗲𝗻 𝗚𝗿𝗼𝘄𝘁𝗵 𝗢𝘂𝘁𝗿𝘂𝗻𝘀 𝗚𝗼𝘃𝗲𝗿𝗻𝗮𝗻𝗰𝗲 Today, 𝗕𝗮𝗙𝗶𝗻 𝗮𝗻𝗻𝗼𝘂𝗻𝗰𝗲𝗱 𝘀𝘂𝗽𝗲𝗿𝘃𝗶𝘀𝗼𝗿𝘆 𝗺𝗲𝗮𝘀𝘂𝗿𝗲𝘀 𝗮𝗴𝗮𝗶𝗻𝘀𝘁 𝗡𝟮𝟲 𝗕𝗮𝗻𝗸 𝗦𝗘 following a special audit that identified serious deficiencies in the bank’s risk management, complaints handling and lending organisation, especially in the way mortgage business was managed. As a result, BaFin: ➡️Restricted #N26 from originating new mortgage loans in the Netherlands. ➡️Appointed a special monitor to oversee remediation and strengthen compliance. In a separate matter, BaFin had already imposed a fine of €15,000 on N26 Bank SE by order dated March 18, 2025. ❗️This is the second time BaFin has appointed a special representative under similar circumstances since 2021. We often talk about technical compliance , i.e., checklists, controls, dashboards. But what BaFin underlines here is governance in action: how decisions are made, how risks are escalated, how customer concerns are resolved. Regulatory compliance without robust operational embedding is fragile. 💡If you are offering #fintech products, legacy compliance thinking won’t cut it. Supervisors are watching deeper layers of governance, and they will act when they see systemic weakness, not just isolated errors. 💡What to expect? This will not be the last intervention we see in 2025 and 2026. Supervisors are no longer asking whether governance frameworks exist; they are asking whether they actually work under pressure. As someone who works closely with founders and executive teams, I see this again and again: governance is often treated as something to “fix later.” But later is exactly when it becomes expensive: financially, reputationally, and strategically. For anyone building or scaling regulated financial products in Europe: now is the time to rethink risk, governance, and accountability - not when the regulators is already at the door. #Compliance cannot be a checkbox exercise. It must be woven into governance, culture, and operations from day one. We work with teams to turn robust compliance into a visible trust and positioning advantage - ping me to learn more. (Getty Images / Andreas Rentz, Collage: Dominik Schmitt / Gründerszene) #banking #regtech #finserv #governance

This is something I tell every founder. Never skip the hard conversations at the start of a partnership. Because tension doesn’t disappear. It sinks into the foundation. And as the business grows, those tiny cracks get wider. Eventually, something gives. That’s why talking about equity, roles, decision-making, and exits early matters. Not because you expect things to go wrong. But because clarity holds when stress shows up. Fintechs partnering with Indian banks or NBFCs? Same thing. But bigger. Faster. The RBI is watching. And vague “we’ll figure it out later” thinking doesn’t fly anymore. Before lawyers draft a single clause, there are five questions you need to answer with your partner: 1) Who actually bears regulatory risk? “The NBFC handles compliance. We just do tech.” Sounds neat. Works... until the RBI looks at onboarding flows, underwriting, or data handling. So ask: if there’s an audit, who responds? Who coordinates? Who pays the fines? NBFC = lending compliance. Fintech = tech and data security. Anything in between is a grey zone. Grey zones get notices. 2) Who owns the data? And is consent clear? “Sharing data” is not enough. Consent has to be granular, traceable, and purpose-driven. Who collects consent? For what? KYC? Underwriting? Collections?  Marketing? Where does the data live? Is it in India? Skip this now, and fixing it later is slow, expensive, and regulator-unfriendly. 3) Who handles grievances? Customers complain. They get bounced around. RBI sees that as weak oversight. Ask: who runs the portal? Whose name is on acknowledgments? What’s the SLA? What’s the escalation path? Clear timelines. Clear responsibility. No blame games. 4) What happens if the partnership ends? Exits matter as much as entries. What triggers a breakup? SLA breach? Regulatory violation? Who can pull the trigger? How is data returned? Loan books, KYC, consent artifacts - all of it. Clean exits protect customers and reduce risk. 5) Audit rights and frequency? “How do you oversee your fintech partner?” That’s the question the regulator asks. “We trust them” is not an answer. Mutual audits. Quarterly. Data, KYC, transactions. Documented findings. Fixes tracked. That’s oversight. The point is simple: these aren’t legal technicalities. They’re alignment questions. Vague answers today = chaos tomorrow. Founders who last? They have the tough conversations early. About risk, data, complaints, exits, and oversight. Because difficult conversations now prevent foundation cracks later. --- ✍ Do you also do tough conversations early on? Share below!

𝐁𝐚𝐥𝐚𝐧𝐜𝐢𝐧𝐠 𝐈𝐧𝐧𝐨𝐯𝐚𝐭𝐢𝐨𝐧 𝐚𝐧𝐝 𝐒𝐭𝐚𝐛𝐢𝐥𝐢𝐭𝐲: 𝐑𝐁𝐈 𝐏𝐨𝐥𝐢𝐜𝐢𝐞𝐬 𝐔𝐧𝐝𝐞𝐫 𝐭𝐡𝐞 𝐋𝐞𝐧𝐬 Navigating the fine line between fostering innovation and safeguarding stability is no small feat—and few embody this challenge more acutely than the Reserve Bank of India (RBI). Recently, I had the privilege of joining an engaging discussion with fintech founders, bankers, and regulators to explore this balancing act. The conversation was as complex as it was enlightening, raising critical questions: Are RBI’s policies enabling or constraining innovation? How can we strike the right balance between growth and stability in today’s rapidly evolving financial landscape? Here are the standout insights: 1️⃣ 𝐑𝐁𝐈 𝐔𝐧𝐝𝐞𝐫 𝐭𝐡𝐞 𝐌𝐢𝐜𝐫𝐨𝐬𝐜𝐨𝐩𝐞 Critics expressed concerns about RBI’s high interest rates and sudden regulatory changes. These were seen as hurdles for industrial borrowers while the unchecked growth of unsecured loans poses systemic risks. One participant candidly described the approach as "too rigid," questioning its adaptability to evolving market needs. 2️⃣ 𝐈𝐧 𝐑𝐁𝐈’𝐬 𝐂𝐨𝐫𝐧𝐞𝐫 On the flip side, defenders pointed to RBI’s critical role in maintaining financial stability and protecting depositors. Strategic moves like diversifying reserves into gold were highlighted as measures of resilience. A compelling argument was made: fraud growth often stems from consumer behavior rather than regulatory lapses—a reminder of shared responsibility in a digital-first ecosystem. 3️⃣ 𝐂𝐨𝐦𝐦𝐨𝐧 𝐆𝐫𝐨𝐮𝐧𝐝 Despite differing perspectives, there was consensus: the unsecured loan market demands closer scrutiny, and frequent regulatory shifts create challenges for businesses. There is an urgent need for regulation that evolves in step with innovation rather than inadvertently stifling it. 4️⃣ 𝐌𝐨𝐯𝐢𝐧𝐠 𝐅𝐨𝐫𝐰𝐚𝐫𝐝: 𝐂𝐨-𝐂𝐫𝐞𝐚𝐭𝐢𝐧𝐠 𝐚 𝐑𝐞𝐬𝐢𝐥𝐢𝐞𝐧𝐭 𝐅𝐫𝐚𝐦𝐞𝐰𝐨𝐫𝐤 India’s financial future lies in crafting dynamic yet stable regulatory frameworks. The discussion yielded actionable suggestions for achieving this: 𝑆𝑡𝑟𝑒𝑎𝑚𝑙𝑖𝑛𝑖𝑛𝑔 𝑅𝑒𝑔𝑢𝑙𝑎𝑡𝑖𝑜𝑛𝑠: Ensure consistency to reduce friction for businesses. 𝐹𝑒𝑒𝑑𝑏𝑎𝑐𝑘 𝐿𝑜𝑜𝑝𝑠: Foster regular dialogue between regulators and businesses to bridge gaps in understanding. 𝑆𝑒𝑛𝑠𝑖𝑡𝑖𝑣𝑖𝑡𝑦 𝑡𝑜 𝐵𝑢𝑠𝑖𝑛𝑒𝑠𝑠 𝑅𝑒𝑎𝑙𝑖𝑡𝑖𝑒𝑠: Regulations must account for practical challenges, while businesses must respect regulatory objectives. 💡 My Humble Takeaway RBI's role goes beyond regulation—it’s about driving inclusion, innovation, and resilience. Achieving this balance demands collaboration among regulators, businesses, and consumers to build a thriving financial ecosystem. India’s vast market and digital infrastructure offer a unique chance to set global benchmarks, requiring openness, adaptability, and a shared vision for growth and stability! #Fintech #Innovation #Collaboration #RBI #Banking #Regulations #DrRiteshJain

As we approach the end of 2024 and the change in administrations, let’s take a look at the impact of enforcement activity on the banking-as-a-service ecosystem. The chart below, initially published in Klaros newsletter #1 last weekend, shows the distribution of fintech partners by partner banks (counting only banks with five or more fintech partners), highlighting the banks under formal enforcement actions by their primary federal regulator. It’s a telling chart, especially when you consider the limitations of our data: ◼️ More partner banks are operating under enforcement actions than the chart indicates because we’re only showing formal enforcement actions (informal actions, which are common, are not public). ◼️ More fintechs are partnered with banks under enforcement actions than the chart suggests. Not only are we missing informal enforcement actions, as noted, but we’re also missing - for lack of reliable data - fintechs focused on merchant acquiring, gaming, and sweep programs. So if you think the chart paints a grim picture of how federal enforcement activity has impacted the banking-as-a-service ecosystem, remember that the reality of the situation is more grim than the chart indicates. By our estimate, about 49% of fintechs are partnered with banks operating under formal enforcement actions, a number that would surely be far higher if we could consider informal actions as well. With the pending change in administrations, the temptation to think we are at some sort of enforcement high water mark is strong. And maybe we are. But don’t expect the floodwaters to recede quickly. ◼️ First, getting out from under federal enforcement actions takes a long time. Two to three years is typical - when things go well. Simply because of the magnitude of operational and culture change required to meet regulatory expectations, many fintech partner banks operating under formal orders today will need significantly longer. ◼️ Second, federal bank enforcement activity almost always flows up from the field examination process, not down from the agency head. Once the examiners have documented clear regulatory violations or imprudent risk-taking, few agency heads will deem it a good use of political capital to interfere with the enforcement process. ◼️ Third, federal bank examiners are slowly losing their blind spots. They’re getting steadily better at focusing on the risks of banking as a service. Fewer examiner blind spots predictably mean more matters requiring management and board attention, some portion of which will inevitably mature into new enforcement actions, formal or otherwise. For more charts like this, sign up for our newsletter in the comments. #BankingasaService #Fintech #Regulation #Partnerbanks

I've spent $2M+ on legal fees and worked with 15+ law firms building fintech. Most founders know how to work with engineers but are lost when it comes to legal/compliance. Here's the untold truth about building fintech startups. The reality most fintech founders face: You raise money on an amazing vision. Build a waitlist. Ready to launch fast. But then you hit the legal wall: • Hire expensive lawyers • They say it's never been done • Give complex advice • Kill your innovation • Delay launch by months Your investors get impatient. Sound familiar? Here's what actually works: 1. CEO mindset Regulatory compliance needs to be the CEO's top focus. More important than product or engineering. Why? No fintech has succeeded without great regulatory and compliance. Even Stripe's founder John Collison said hiring great counsel was crucial to their success. 2. The Art of Managing Lawyers Most lawyers excel at one thing: Making everything sound like an existential risk. Not because they're malicious. It's how their brains are wired. They have to cover all bases. But don't fall into the "everything is a risk" trap. 3. Hiring the Right Firm Look for these qualities: • Deep specific experience • Understanding of regulatory goals • History of creative solutions • Track record of simplifying products • Asking the right questions on day 1 • Focus on making progress Bad lawyers push paper. Great lawyers unlock innovation. 4. Getting Results (Without Slowing Down) Remember: You're in the driver's seat. If a big-name lawyer isn't working, you can always find a bigger one. Key principles: • Never ask for yes/no answers • Don't outsource your thinking • Keep product strategy in-house • Focus on probability, not possibility • Start simple, then add complexity • Study competitor implementations 5. The Hidden Truth Most lawyers will give you 10 reasons why everything needs to be built from scratch. But here's what they won't tell you: • Most solutions already exist • Risk levels are often exaggerated • Creative alternatives are available • Progress matters more than perfection 6. Making Hard Calls As CEO, you'll face tough decisions with high uncertainty. Sometimes that means: • Not following lawyer advice • Firing firms that slow you down • Taking calculated risks • Trusting your instincts It takes courage as a first-time CEO. But that's what separates successful fintech founders from the rest. The winners aren't those who avoid all risk. They're the ones who: • Understand the regulations • Make informed decisions • Move fast despite uncertainty • Build amazing products Don't let legal fears kill your innovation. Find lawyers who help you build, not just avoid risk. The future of fintech belongs to founders who master this balance.