By Sascha O'Sullivan
[Re: Fintech lenders have failed to educate FCA on financial crime, August 23]
The knowledge gap between financial regulators and digital banks is no surprise. Traditional financial institutions’ largely ineffective financial crime protections make mutual understandings between regulators and providers a rare occurrence. So, when digital banks are called out for their lack of transparency, the root of the problem is lost.
Traditional banks have had ample opportunity to lead by example, yet the sector remains blighted by illicit financial activity. The suboptimal transparency standards between traditional banks and regulators needn’t be mirrored by emerging fintechs. Instead, banks’ inconsistent compliance with regulatory demands provides an opportunity for digital banks to claim increased market legitimacy.
If traditional banks cannot lead by example, digital banks can garner increased consumer trust by promoting their own transparency and compliance.
Whether digital banks recognise this opportunity remains to be seen. Regardless, traditional or challenger providers that build customer trust through transparency with regulators will be the ones reaping the rewards.
Shane Riedel
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