FinTech organisations slow to embrace strategic risk navigation in compliance, study shows

By Puja Sharma

Survey of global CFOs and compliance professionals reveals the adoption of a strategic risk navigation approach may be critical to greater business agility. FloQast, an Accounting Transformation Platform created by accountants for accountants, announced the results of Exploring Strategic Compliance: The Next Frontier, the company’s latest research initiative aimed at shedding light on the trends and challenges facing compliance teams.

The survey reveals that 47% of compliance professionals are focused on simply finding a better, easier way to alleviate the burden of the legal requirements of compliance, while only 16% are ready to go beyond checking a box and adopt a strategic approach to compliance. This survey further investigates the “how” and “why” behind this discrepancy, exploring how organisations can move beyond traditional risk mitigation to instead adopt compliance programs that embrace a more strategic approach focused on risk navigation – otherwise known as “risk orchestration.”

The survey highlights a key finding: three distinct approaches to compliance, with strategic navigation of risk emerging as this new frontier. This approach empowers organisations to shift from merely handling risks to gaining valuable insights from them that may help steer organisational strategy. The ultimate goal is to move towards risk orchestration, an approach that helps determine when and how risk information is necessary, optimising decision-making and maximising outcomes. In addition to these better business outcomes, survey data indicates compliance teams that have adopted this strategic approach report more positive feelings of value and respect in the organisation– and may even make more money.

“Today’s business environment is dynamic and competitive – we all know that much,” said Mike Whitmire, CEO and co-founder of FloQast, CPA. “Trust is more important than ever, and compliance with an eye on risk is key for maintaining an ethical image in the eyes of stakeholders. Risk navigation and orchestration provide a necessary strategic approach to both pursuing and mitigating risks, that empower companies to better navigate various external factors, including the economy and different compliance environments. By structuring the compliance function to navigate risk strategically, organisations can respond effectively to all these external factors, thereby honouring that carefully placed trust.”

As more companies recognise that compliance is more than just a regulatory requirement but a dynamic tool for navigating risks, they can make smarter decisions about when to advance and when to hold back.

In the FinTech sector, compliance is becoming increasingly critical. A recent report highlighted that 80% of FinTech firms are investing significantly in their compliance teams and technologies, including AI, to meet evolving regulatory requirements. Additionally, according to World Economic Forum, 63% of FinTech companies view their regulatory environment as supportive of their operations and growth. This proactive approach is essential as FinTech firms navigate complex compliance landscapes, balancing growth with risk management. By leveraging advanced technologies and strategic risk navigation, FinTech companies can enhance their agility and maintain trust with stakeholders.

Key findings:

• Struggling with Administrative Burdens: 47% of compliance professionals reported they were focused on finding an easier way to satisfy the legal requirements of compliance. Compliance currently feels like an administrative burden, coupled with stringent external requirements.
• Compliance Drives Strategic Insight: 80% of compliance professionals in strategic roles are focused on helping their organizations identify appropriate risks, while 79% are dedicated to providing greater visibility to senior management, highlighting the growing importance of compliance in driving strategic decision-making and risk management.
• Navigation has a Leg Up Over Mitigation: Strategic navigation professionals are 7 points more likely to be viewed as advisors than risk mitigation professionals.