Here Are Your Regulatory Change Management Best Practices

Regulatory change management is a huge challenge for any fintech or financial services company, but it’s one that must be met or companies face harsh penalties for failing to adhere to regulatory requirements. For example, Lendup, a subprime lender fintech in San Francisco, has been fined $6 million following regulatory investigations. Other fintech companies have struggled to keep up with anti-money laundering (AML) regulations, which apply to fintechs just as they apply to banks and other financial institutions.

Managing regulatory change successfully can help your company avoid fines and sanctions. You need to keep your eye on the regulatory landscape to monitor ongoing changes. Keep track of regulatory obligations across different jurisdictions with a regulatory taxonomy model. Assign regulatory change management responsibilities to accountable team members. Assess the impact of regulatory changes on your business long before they occur, and leave yourself plenty of time to make the changes needed to meet regulatory requirements.

Monitor Ongoing Regulatory Changes

Your organization needs to be on the lookout for regulatory changes as they begin to appear on the landscape. It shouldn’t be too difficult to keep up with ongoing changes. You can:

• Monitor agency websites for regulatory updates
• Attend industry conferences
• Participate in industry organizations
• Subscribe to industry blogs and newsletters
• Add agency websites to your RSS feed
• Follow regulatory agency social media accounts
• Develop relationships with the relevant regulators
• Engage with colleagues

If you’re paying attention to what’s going on in the fintech space, you should be able to keep up with upcoming regulatory changes easily. They’re not kept secret, so you should know when they’re coming.

Use a Standardized Taxonomy for Your Regulatory Obligations

A regulatory taxonomy provides a consistent structure for regulatory terminology that can help your fintech company deal with regulatory inconsistencies as they apply across multiple jurisdictions and business operations on a global level. A regulatory taxonomy is simply a hierarchical index of regulatory terms and areas that affect your organization’s operations. It breaks regulatory obligations into categories, starting with regulatory bodies at the top of the hierarchy and working its way down through the documents that need to be filed with each agency, the sources of regulatory information that your company will be availing itself of, characteristics used to classify the different regulatory obligations and documentation, and the regulatory events and rules that your company needs to follow. Buy a good regulatory change management software to help you create and manage a regulatory taxonomy.

Delegate Responsibilities

You can’t do everything yourself, so you’ll need to delegate regulatory change management responsibilities based on which subject matter experts (SMEs) in your organization best understand your different regulatory obligations. These SMEs need to be familiar with regulations and have the expertise to understand which regulations apply to the company. 

Keep SMEs accountable by making sure everyone is clear on their responsibilities within their regulatory change management roles. Regulatory updates will need to be assessed for applicability before they can be implemented by your company. You will need to rely on some staff members to perform this assessment and other staff members to perform a more granular assessment of the business impact of regulatory changes. 

Assess Regulatory Business Impact

Any regulatory changes that occur in the fintech space are going to have an impact on your business. As soon as you catch wind of an upcoming regulatory change, you need to assess whether it applies to your company and how implementing it will affect your business. Identify the risks associated with any given regulatory change, and then develop ways to manage those risks as well as new policies, trainings, and processes that can help your company maintain compliance with the new requirements. Your company needs to understand the business impact of any pending regulatory changes and have the ability to see how those changes will affect your business at any time.

Make Changes as Needed

Making changes to bring your company into compliance is one of the most challenging parts of regulatory change management. It can take a large organization months, or sometimes as long as a year or more, to implement widespread regulatory changes. You’ll need to delegate tasks, standardize workflows, and develop escalation procedures that you can use to expedite overdue implementations. Stakeholders will need real-time views of how new regulations are being implemented in the company and on what schedule. 

Managing regulatory change can be a real challenge for fintech and financial services companies, especially as they face new regulatory obligations imposed by government agencies. Make sure your company makes regulatory change management a priority, so you can continue giving your customers the service they need.