Regulatory compliance and risk management in fintech

Monica Peethum-Nanoo, Senior Manager: Risk and Compliance, Altron Fintech. (Image: Altron Fintech)

---

The digitisation of payments has evolved the financial landscape, and regulatory compliance and risk management have become critical challenges for fintech companies. With the increasing complexity of global regulations, the stakes for non-compliance are higher than ever, posing significant legal, financial and reputational risks.

Altron FinTech, which positions itself as a leader in the fintech industry in South Africa, is at the forefront of navigating these challenges. In this in-depth discussion, we sit down with Monica Peethum-Nanoo, a seasoned expert in risk and compliance, to explore how Altron FinTech is pioneering innovative strategies to ensure regulatory adherence while leveraging advanced technologies like AI and machine learning to enhance its risk management framework. From tackling cyber security threats to staying ahead of ever-changing regulatory landscapes, Peethum-Nanoo sheds light on the proactive measures that keep Altron FinTech compliant, secure and future-ready. 

What are the key regulatory challenges that fintech companies face today, and how is Altron FinTech addressing them?

The regulatory landscape in South Africa is continuously evolving, posing significant challenges for fintech companies. Altron FinTech is proactively reviewing and assessing risk, going through the necessary process changes to stay compliant. While there are hurdles, the company is committed to overcoming them.

One of the biggest challenges for fintech companies is navigating the complex regulatory environment. Financial services are highly regulated, requiring fintech companies to comply with a wide range of regulations, including anti-money laundering laws and data privacy regulations. Failure to comply with these regulations can result in fines, reputational damage and even legal action. Altron FinTech helps solve these challenges by ensuring compliance with all relevant regulations and industry standards, which are particularly critical in the financial services industry. For example, NuPay provides businesses with payment processing solutions that are fully compliant with regulations such as PCI DSS and EMV. Additionally, Delter offers compliance assistance with reporting to the National Credit Regulator (NCR), accounting and ensuring correct calculations based on NCR rules and regulations.

As financial services become increasingly digital, cyber security becomes a critical concern for fintech companies. The risk of cyber attacks is high, and companies must take steps to secure their systems and protect customer data.

How does Altron FinTech ensure data privacy and security in compliance with global regulations such as GDPR or POPIA?

Currently, Altron FinTech is focused on compliance with local regulations like POPIA, but as the company ventures into international markets, we will integrate GDPR compliance into our operations.

What role does AI and machine learning play in enhancing regulatory compliance and risk management at Altron FinTech?

AI and machine learning are integral to Altron FinTech's compliance and risk management strategies. These technologies are used in process development to meet regulatory requirements, providing valuable insights and enabling the automation of compliance processes. AI-driven tools are also employed to model directives and pre-empt emerging risks, offering a proactive approach to risk management.

AI drives compliance programmes by offering compliance officers actionable intelligence and insights. This enhances decision-making and ensures adherence to regulations with greater precision and speed. While AI brings numerous benefits to compliance, such as increased efficiency and cost reduction, it also presents challenges that organisations need to navigate carefully.

There are various benefits of AI in compliance. AI speeds up regulatory data processing and analysis, which are core components of compliance tasks. This leads to more accurate compliance reporting and decision-making. AI’s predictive analytics capabilities allow organisations to anticipate potential compliance risks before they materialise. By analysing trends and patterns in data, AI identifies areas of concern, enabling proactive risk management. Over time, AI can lead to significant cost savings in compliance operations by automating routine tasks, reducing the need for manual oversight and improving accuracy. AI systems can be updated to stay compliant with changing regulations and standards, ensuring organisations can quickly adjust to new regulatory requirements.

Can you discuss a recent example where Altron FinTech successfully navigated a regulatory challenge? What lessons were learned from that experience?

A recent example is the National Payments Cyber Directive, where Altron FinTech implemented CIS and PCI modelling to meet the requirements. This experience highlighted the importance of being adaptable and proactive in compliance efforts.

International expansion requires compliance with a variety of regulations, which may vary across countries but share certain similarities. Acquiring new licences, such as moving from an e-money licence to a full banking licence, brings greater regulatory scrutiny and compliance requirements, as well as expanding into new technologies and services, such as AI, machine learning and crypto-currency, often requires additional regulatory compliance. Compliance is essential for offering a superior customer experience. Customers demand robust, secure interactions but also expect fast and friction-free experiences. A compliant KYC and onboarding process ensures this balance.

How does Altron FinTech stay ahead of evolving regulatory requirements, and what proactive measures are in place to anticipate future regulatory changes?

Altron FinTech employs various methods, including tools from Gartner, the World Economic Forum and LexisNexis, to stay informed about legislative changes. The company also actively participates in industry bodies and seminars to stay ahead of regulatory developments.

Looking ahead, Altron FinTech is committed to pioneering the implementation of generative AI in its operations to enhance efficiency and customer service quality. The company’s strategic focus includes advancing towards a green economy, bridging the gap in scarce and skilled resources and ensuring sustainable growth. These initiatives, alongside continued efforts to refine the product suite and deliver outstanding service, position Altron FinTech for long-term success.

On the cyber security front, the increasing prevalence of threats within the financial sector demands constant vigilance. Altron FinTech's comprehensive cyber security strategy is continuously refined to address the sophisticated risk landscape, heightened by the emergence of AI-enhanced threats. Proactive measures to safeguard systems and data are paramount, and the company remains vigilant in pre-emptively countering vulnerabilities.

As a pioneer in the risk and compliance space, Altron FinTech is navigating an exciting era of change. With South Africa’s robust financial pillars, the company is well-positioned to lead in the industry, supported by active involvement from the South African Reserve Bank (SARB) in building enablers for financial inclusion and diversity. It’s a thrilling time for the company as it stays ahead of the game in this rapidly evolving sector.

Want to know more about risk and compliance from Peethum-Nanoo? Listen here to her insights on the All Things Altron FinTech podcast, where she delves further into the South African Reserve Bank, regulation and compliance and all things Altron FinTech.