Financial services has always been a slow dance, but fintech has upped the tempo. It’s like trying to keep up with your teenager’s TikTok feed – one minute it’s trending, the next it’s gone.
Fintech innovation doesn’t ask for permission; it launches and scales before traditional governance frameworks can even say “wait, what?” New payment rails, embedded finance, API-driven lending platforms… each promises efficiency and compresses friction. But with great power comes great complexity – operational and regulatory risks start to compound like a snowball rolling down a hill.
Disruption isn’t a single event; it’s a series of small integrations that add up. A bank integrates with a fintech partner for customer onboarding, which then connects with another for identity verification, and before you know it, your risk posture is dependent on entities three degrees removed from your own infrastructure. It’s like a game of financial telephone – the customer experience improves, but the risk map gets increasingly murky.
Fintech doesn’t eliminate intermediaries; it rearranges them. The governance challenge isn’t innovation itself, but traceability: can you map the transaction path? Can you identify which entity owns which control? Can you demonstrate oversight across the chain?
I recently experienced the stark contrast between working with a Fintech and a traditional big 4 U.S. bank when I needed to open accounts for my business. The account open process took a little over 1 week with my bank (I already had accounts this bank). What’s the point of having a relationship manager if they can’t even get you set up in under an hour? A few weeks later, I needed a way to accept credit card payments and I did not want to go the traditional bank route for this as it was costly and would be time-consuming to setup. I turned to a payment processing company that’s been around for a while but is definitely a fintech disruptor. After setting up my account there was a call to action to open deposit accounts with a caption that stated it would only take about 5 minutes. Curious, I bit and 5 minutes later, I had a new checking and savings account for my business. I did not have to speak to anyone, didn’t have to work with a relationship manager, just me and my computer. It was pure fintech magic. It’s like they knew exactly how to cut through the red tape – almost as if they’d been doing it for a while.
The irony is that the very innovation that’s driving a fintech forward – its speed and agility – often leaves its governance frameworks in the dust. Risk assessments are conducted but not recalibrated as the product evolves; contracts are negotiated under time pressure; and control frameworks are left to play catch-up.
This isn’t an argument against fintech; it’s an argument for disciplined integration and vendor oversight that goes beyond onboarding checklists. Governance must learn to run faster – not by slowing innovation, but by tightening structure.
Disruption is not inherently destabilizing; unmanaged disruption is. And that’s a risk worth managing.