ICQ Log - Talking Points 

Fintech 2021: Opportunities for Risk and Compliance Professionals

 

Last Updated: 01 June 2021

In this blog post, Andrew Quinn, Director of PAT Fintech and Paul Smyth, Managing Director at Top Tier Recruitment and Founder and Coach at Possible.ie look at how technology is and has changed the face of compliance within the Financial Services Industry and also look at the opportunities and challenges presented by these advancements.

The role - dare one say the image – of the compliance professional is changing in an increasingly technologically enabled financial services sector. In the short-term different and expanding roles are in demand, in the longer term, the strategic importance of the core compliance function is rapidly evolving. 


This article looks at the opportunities this dynamic is creating for current, and future, compliance professionals from the perspective of acquiring, and creating, the talent required to support the Irish Financial Services Industry. Current demand, in a very competitive marketplace, is being driven by a variety of factors including new (post-Brexit) entrants, and a constantly evolving regulatory environment. This demand is stretching the supply of experienced compliance professionals – for example, suitable Pre-Approved Control Functions (PCF’s) candidates - and whilst returners will address some of the imbalance, there are clear talent shortages. 


For new entrants and early stage startup’s, one of their first key hires will be a Head of Compliance and/or Risk. This starts a natural dynamic where the incumbent in this new role will need to be supported via internal promotion or an external hire, and as these companies expand the compliance and risk functions will need to be split. Ultimately, the Money-Laundering Reporting Officer (MLRO) becomes a stand-alone role, passporting through the CBI will require several regional compliance roles, and the cascade of new roles and backfills continues all the way to more junior levels.

From a recruitment perspective, it is critical that hiring companies are encouraged to think slightly outside the box. If they can hire for competence and potential in addition to ticking technical boxes, they will expand their talent pool and internally develop the adaptable and dynamic compliance professionals who can grow with the business and its regulatory changes. It is increasingly clear that given the dynamism of the regulatory market, hiring purely for technical competence can be a very short-term solution.


 Employers also need to think more than ever about their brand, and face the reality that in this marketplace the whole offer, aside from just compensation, needs to be competitive and honest. The domestic (Irishbased) compliance market has always been somewhat closely knit, and painting an inaccurate picture of your compliance culture, and where you are on your compliance and risk journey, will damage your ability to hire long term. Closely aligned to this is ensuring that your message and offer to prospective employees is communicated clearly and professionally to market, and sustaining real partnerships in the risk & compliance recruitment space is critical.

Beyond the hiring process, as referenced, nurturing talent is also key. Access to training and education can develop technical skills, but in developing the potential of employees, coaching is increasingly seen as adding a competitive advantage. Coaching offers tangible support for employees, it demonstrates a growth culture, and the ROI can be quickly realised. Interestingly, aside from companies directly accessing coaching for their own employees, demand from compliance and risk professionals who want to invest directly in their own career has increased exponentially.

 

 From the related perspective of the education/trainer provider more than ever it is critical to work with industry and clearly identify the skills in demand. By definition, gaining practical workbased experience takes more time, but providers such as PAT Fintech are attempting to bridge this with a commitment to industry/practitioner driven education/training.

 

 As regulation continues to adapt to innovation in the provision of financial services – the recent transition the 6AMLD and implications for Virtual Asset Service Providers (VASP’s) being a good example – it is imperative that education/training is agile and adaptive to the industry’s demands. And, aside from developing the requisite technical competencies, the focus must also be upon providing the ecosystem with curious, dynamic individuals who can communicate effectively and manage appropriate stakeholder relationships.

 

Looking beyond the current situation, from a longer-term strategic perspective, perhaps especially in a Fintech operating environment, the perpetually misconceived compliance function can no longer be seen as a back-office barrier to innovation. In a digitised, data driven environment, compliance cannot be seen to be a static, black and white (legalistic), rules based function. In an environment where the effectiveness of AML/CFT frameworks, all things Data Protection/Privacy, and the evolution of 3rd party integrations seem likely to dominate the horizon, the role of compliance is more critical than ever to financial service provider’s success.

At best, decision making – perhaps especially true at early stages of an organisation’s growth – balances the potential of returns versus the risks involved. In a heavily regulated, and rapidly evolving, financial services industry, compliance is critical to establishing trust and reputation. In this context, and enabled by evolving (regulatory) technology solutions, compliance will become integral to managing regulatory/reputational risks, fostering scalable innovation, and improving the bottom line. As Fintech-like operating models evolve across the financial services industry, compliance will increasingly be embedded in organisational strategic decision making, and compliance professionals will be critical to assessing and managing the risks inherent in the business model throughout the product/customer lifecycle.

 

To conclude, the confluence of ongoing innovation, an evolving regulatory environment, new sectoral opportunities, and the strategic realignment of the compliance function in Fintech operating models, creates a diverse range of career opportunities in financial services risk and compliance. The challenge is to equip both future graduates and current practitioners of varying experience with the skills to transition into these evolving roles. Collectively, stakeholders in the Irish Financial Services ecosystem need to support an environment of learning and development to provide the talent that is not just central to the compliant provision of financial services, but also to realise the potential risk-adjusted scalability of the whole sector.

Authors:

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Andrew Quinn

Director, PAT Fintech

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Paul Smyth

Executive Recruiter & Executive Coach (ACC) - FinTech & Financial Services

ICQ Summer Edition 2021

This article was taken from the ACOI's ICQ Summer Edition 2021