AML Compliance Just Got Easier for Fintechs:Why fintech startups can build and grow up to 8x faster in 2022

AML compliance solutions have traditionally been cost and time intensive for fintech startups. Here’s why that’s no longer the case.


AML Compliance Just Got Easier for Fintechs: Why fintech startups can build and grow up to 8x faster in 2022

Fintech startups have had a love-hate relationship with compliance for years.

On the one hand, startups understand that anti-money laundering monitoring and other compliance procedures are necessary aspects of conducting business. However, the necessity of these procedures creates some friction.

One of the main reasons for this is that fintech compliance infrastructure has typically taken a long time and a lot of money to implement for companies.

Founders and product teams, on the other hand, have long feared that compliance checks will restrict user experience and growth.

This article explains why fintech startups can now adopt risk assessment and transaction monitoring tools up to 8 times faster and for less money than they could previously. While keeping an eye on risks in a way that supports user and revenue development.

Here’s what we’ll cover:

  1. Why The Status Quo Didn’t Work For Fintech Startups
  2. Why Fintech Compliance Just Got 8x Faster
  3. How To Get AML Compliant Without Killing Cash Flow
  4. AML Compliance vs Growth: Why Fintechs No Longer Need To Compromise

Why The Status Quo Didn’t Work For Fintech Startups

Fintech startups have traditionally faced two options when it comes to building an effective compliance infrastructure.

Choice A - develop an in-house solution. But unfortunately, this has a number of downsides for early-stage startups.

First, developing your compliance infrastructure takes several months and comes with serious extra personnel costs. For example, year-round maintenance will likely require a 3-4 person team. Which could easily lead to extra costs of 200-300k per year on average.

Another issue with developing in-house is that it saps resources from your startup’s core service offering.

The result is a lot of time, money, and energy being spent on compliance features that most users hardly notice. Rather than features that deliver visible value and drive user growth.

Choice B - outsourcing the compliance infrastructure - seems to be the more attractive option. But unfortunately, the majority of services are not made or priced with startups in mind.

Firstly, most fintech compliance solutions come with huge upfront fees. As well as integration timelines that can stretch to 2-4 months on average. Neither of which fit the ‘fail fast’ motto.

As a result, it’s clear that neither option fits the budget or lean mindset of an early-stage fintech startup. So why has this now changed?

Why Fintech Compliance Just Got 8x Faster

It’s clear that the old way of building a fintech compliance infrastructure didn’t work for fast-moving and budget-constrained startups.

This is why Flagright’s off-the-shelf monitoring platform is such a game-changer for fintech innovators.

First of all, Flagright’s solution reduces integration time by 70%. This is down to the fact that Flagright’s AML API is standardized and easy to implement. With modules that come pre-configured for your business and use-cases.

Flagright is API-driven, thus after the quick integration, no extra code is required. As a result, the fintech startup can move from zero to fully monitored in as little as 5-10 working days. In comparison to other outsourcing or in-house development choices, we can deliver a 400 - 900% return on investment.

This is a huge leap forward from the 2-4 month timeline accepted in the industry. But the benefits of no-code solutions like Flagright don’t stop there.

Get AML Compliant Without Killing Your Cash Flow

Flagright's solution is priced for startups, unlike other compliance infrastructures.

Instead of imposing large upfront expenses on fintech startups, Flagright has opted for a clear pay-as-you-go strategy.

Instead of imposing large upfront expenses on fintech startups, Flagright has opted for a clear pay-as-you-go strategy.

Fintech startups can use this to enhance their cash flow and pay for the benefits of good AML procedures as they use them. Instead of wasting money while their compliance infrastructure is being built or integrated, they should save it.

As a result, Flagright enables companies to build a stronger AML compliance infrastructure more quickly, effectively, and affordably than ever before.

Fintech Compliance vs Growth: Why You No Longer Need To Compromise

So far, we've discovered how Flagright overcomes three big AML compliance roadblocks: time, money, and assembling the right team.

But how can you make sure your AML compliance solution doesn't come in the way of your startup's expansion?

Fintechs have long been concerned about the possible conflict between regulatory requirements and revenue development.

This stems from two major sources:

  1. The potential impact of compliance checks on user experience and turnover.
  2. The potential for good transactions to be blocked as “collateral damage”

Let’s start with the potential impact of user experience.

After all, we live in a world where users expect instant feedback and near-instant transactions. This means a few extra seconds of compliance processing can put your fintech app at a huge disadvantage.

For startups, the problem isn’t that near-instant solutions aren’t available. The problem is they are traditionally very expensive and time-consuming to implement. Even if they are outsourced.

Flagright’s no-code and real-time monitoring API solves this problem. As it allows Fintech startups to provide faster checks and smoother experiences for their users. Without the huge investment of time and money before launch.

So that’s the user experience covered. But what about making sure your checks don't block growth altogether?

How To Balance Fintech Compliance and Growth

As you saw earlier, startups are often concerned that compliance checks will act as a weight on growth. Especially in the case that compliance could mistakenly block ‘good’ transactions and users.

At this point, it’s good to know that static and dynamic risk-scoring models have different risk profiles in the area. And in the case of solutions that use static risk scoring, this may come with the added risk of blocking good transactions.

Here’s a quick run-down on the difference between static and dynamic monitoring:

  • Static risk-scoring uses a “one and done” approach to risk profiling. Based on a rigid risk profile made of factors like location, age, etc.
  • On the other hand, dynamic risk scoring like Flagright's, uses a time-series algorithm that accounts for and adapts to a user’s behavior over time. While still taking into consideration the user’s initial risk profile.

This turns your compliance infrastructure into an enabler of healthy transactions and revenue that other monitoring services may have blocked. While at the same time being more responsive to new threats and risks as they evolve.

As an added bonus, Flagright’s compliance platform lets you dial your risk appetite up or down with one click.

This gives you the freedom to balance growth with full compliance and safety. Because in the world of no-code compliance, you don’t have to sacrifice one for the other.

Conclusion: Towards Faster And Healthier Growth For Fintech Startups

As we've seen in this article, having a good compliance solution in place makes it significantly easier for fintech startups to build and grow.

This is because Flagright's no-code solution was designed with startups in mind. Not simply in terms of the significantly lower initial investment. But in how quickly you can get up and running and concentrate on growth.

Explore our full features here to learn more about Flagright's AML compliance platform for fintech startups.

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