Jan 21, 2019

Boosting Compliance and Customer Privacy through Constant Monitoring and Technology Upgrades

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Rising customer expectations, changing regulations, and technology-driven influences are buffeting the financial service industry at large. Unsurprisingly, traditional financial companies are increasingly partnering with Fintech organizations to improve efficiency and facilitate game-changing innovation. The global investment in Fintech ventures reached US$97.7 billion by 2017, with US-based start-ups accounting for more than half of all investments. The writing on the wall is clear: Fintechs will drive new business models, enabling traditional players to drive down costs and deliver exceptional customer experience.

However, with regulators putting new and innovative financial technology solutions under increased scrutiny, Fintech players need to be careful about ensuring regulatory compliance, and customer security and privacy. Digital distribution platforms such as The App Store and Google Play have increasingly tightened their policies and guidelines to protect customer privacy.  Case in point: Google Play’s new policy that calls for increased transparency on how apps utilize customer data. Google now vets apps that request for permission to access call log and SMS data, and allows access only to those applications that belong to a very limited group (apps must be actively registered as the default SMS, Phone, or Assistant handler before prompting users to accept any of the above permissions). Google Play may provide an exception to apps with no alternative method to provide the core functionality.

So what can Fintechs do to stay abreast with such development to ensure compliance and data protection? The answer lies in constantly monitoring the regulatory environment and data privacy policies to ensure timely technology upgrades.

Adhering to Evolving Regulatory and Policy Changes

Companies that take a strategic approach to monitoring and meeting regulatory needs are often better equipped to protect customer confidentiality and interests.  Regular monitoring of regulations and policies helps take corrective actions in sync with policy changes issued by regulators from time to time.  In addition, organizations that regularly collaborate with regulators in policy making for the digital world, gain competitive advantage. For instance, CredoLab constantly interacts with monetary authorities to educate the Fintech industry and help implement policies that drive financial inclusion.

Moreover, Fintech solutions can retain their relevance only if they are in tune with the latest and the best technologies available. Be it AI, machine learning or any other advanced analytical model, routine trials are crucial for success, making it imperative for Fintechs to stay up to date through relentless product improvement. Let’s take the case of CredoLab’s smartphone-based credit scoring app. The company continuously experiments with different mobile device metadata to improve the predictive power of its scorecards and optimize performance.

Finally, having an ear to the ground in the market can help gauge if the solution is current enough to meet expectations in the real world. Staying in touch with clients and engaging them in conversations around their requirements and end consumer experiences can offer a goldmine of insights to stay ahead of the game.

Scoring responsibly in a dynamic compliance environment

As regulatory compliance and customer privacy become the cornerstones of success in the financial industry, it’s important for industry players to assess customer credit worthiness responsibly - in compliance with local data privacy regulations. For example, when using smartphone data for credit scoring, CredoLab uses non-identifying smartphone metadata and ensures that the accessed data is never moved out of the phone or stored anywhere for third party use. Clearly, Fintechs that take proactive measures to meet local data security and privacy laws and regulations will be better positioned to build superior compliance transparency, mitigating customer privacy risk and building trust.