Major Banking Challenges for Fintech Companies – What Are the Solutions?
The fintech landscape is dynamic and complex, with payment service providers, remittance companies, and other fintech firms facing evolving challenges. One recurring question from stakeholders is: Can you set up banking for us?
Addressing these challenges often requires a bespoke combination of licenses, banking relationships, and advanced software integrations. These solutions are underpinned by robust compliance mechanisms, AI-driven tools, and sophisticated treasury management systems—either in-house or outsourced.
The reality is that while there is no one-size-fits-all solution, tailored approaches do exist. Here’s a deep dive into the key challenges fintech companies face and how they can be tackled effectively.
What Does a Fintech Company Need Today?
1. Bank Accounts
Fintech companies operate at various transaction scales, from early-stage startups processing $5–$10 million monthly to mature firms handling $100–$200 million or more. This growth has been both a boon and a challenge, as large transaction volumes often attract intense scrutiny from banking institutions.
Even established players like Wise and Mercury experience regulatory oversight due to concerns about compliance lapses. These issues can ripple down to smaller entrants in the field, forcing banks to scrutinize every transaction meticulously.
The Problem: The challenges stem from:
- Stringent Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements.
- Legacy issues caused by failed or non-compliant fintech predecessors.
- Hesitancy from banks to onboard or maintain relationships with FinTech’s perceived as high risk.
The Solution: To mitigate these risks, fintech companies are increasingly opting to register in multiple jurisdictions. This strategy diversifies regulatory exposure and secures access to region-specific banking services. For example:
- Canada and the US: Money Services Business (MSB) licenses.
- UK and Poland: Electronic Money Institution (EMI) licenses.
- Asia-Pacific: Registrations in Singapore (MAS), New Zealand (FSP), and Australia (AUSTRAC).
- Emerging Markets: Mauritius, South Africa, and Comoros licenses.
These setups not only meet jurisdictional requirements but also enhance operational flexibility. Among the most popular options are New Zealand’s FSP registrations for their adaptability and US/Canadian MSBs for their robust banking ecosystems.
2. Jurisdictional Challenges
Operating across multiple regions introduces complexities related to marketing, client onboarding, and compliance with local regulations. A multi-jurisdictional presence ensures fintech companies can:
- Cater to diverse markets.
- Align their products and services with local expectations.
- Mitigate regulatory risks through geographic diversification.
However, localized banking solutions, while effective in certain respects, often remain siloed. This creates a new set of challenges:
- Dependence on local banking relationships.
- Vulnerability to policy shifts by individual banks.
- Fragmented oversight across jurisdictions.
Enhancing Banking Resilience: Some FinTech’s form joint ventures with local banks to align interests and mitigate risks. While this strategy can strengthen local relationships, it isn’t universally applicable and requires careful negotiation.
3. Treasury Management
The growing complexity of managing multiple accounts, currencies, and jurisdictions necessitates sophisticated treasury solutions. This is especially critical for companies processing high volumes of international transactions.
The Challenge:
- Balancing local and global banking needs.
- Maintaining regulatory compliance without compromising operational efficiency.
- Avoiding disruptions in cash flow caused by regulatory or banking uncertainties.
The Solution: An outsourced treasury model leveraging institutional forex providers offers a practical path forward. These providers, with decades of experience in trade finance and currency management, can:
- Centralize forex operations for global subsidiaries.
- Facilitate seamless cross-border transfers through Tier 1 banks such as HSBC, Citi, Bank of America, and ICBC.
- Hedge currency risks and optimize liquidity.
By outsourcing treasury functions to experts, fintech companies can streamline operations, reduce overhead, and focus on core competencies.
Beyond Banking: Building Resilient Fintech Infrastructures
While multi-jurisdictional registrations and outsourced treasury solutions address key pain points, fintech companies must remain agile. The ever-shifting regulatory landscape requires continuous adaptation. At Business Listings Group, we specialize in crafting tailored solutions, including:
- Turnkey company setups with pre-established banking solutions.
- Licensing across key fintech hubs like New Zealand, Canada, the UK, and Singapore.
- Treasury management strategies for optimizing global financial operations.
Additionally, through Silverbear Capital, we offer services to scale businesses further:
- Capital raising for fintech, AI, and IT platform companies.
- Listing support for NASDAQ and other global stock exchanges.
Get in Touch
If you’re ready to navigate the complexities of banking for fintech, expand your presence across key markets, or streamline your treasury operations, reach out to Ryan Gibson for tailored advice. Whether you’re looking for company registrations, banking solutions, or capital-raising support, we can help.
📞 WhatsApp: +27 794 910 225
📧 Email: Ryan@businesslistingsgroup.com | Ryan.Gibson@SilverbearCapital.com
Your fintech’s success lies in strategic partnerships and informed decisions—let us guide you there.