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Banking-as-a-Service, or BaaS, is changing the game in banking by allowing banks to grow digitally without major infrastructure overhauls. But it does come with its risks, including marketing compliance. Find out what these risks are and why they don’t need to keep BaaS providers up at night.
With the ever-evolving landscape and growth of digital technologies, marketing regulations are constantly changing. There’s a shift taking place; non-financial businesses can now offer financial products through partnerships with BaaS providers.
While this means huge opportunities for growth, it also comes with higher risks. Banks have less control, more volume to monitor and keep track of, and not the right infrastructure in place to achieve rigorous regulatory compliance, which is why there is an increasingly urgent need for BaaS banks to implement technology solutions to monitor, track and automate their partner’s content.
Common Pitfalls for Fintechs and BaaS Licensees
Neobanks and non-licensed entities that have chosen to partner with BaaS providers are entering a complex regulatory environment that can be difficult to navigate. Businesses need to comply with a range of rules and regulations to ensure they are protecting consumers, preventing fraud, and maintaining the integrity of the financial system.
When moving at the speed of “fintech,” these businesses can find it difficult to remain nimble and do what they do great while at the same time meet the obligations of their BaaS partners and regulatory requirements. The main risks for fintechs and BaaS licensees include:
Failure to meet regulatory requirements
This can include failure to properly identify customers, inadequate record-keeping, or failure to report suspicious activity to regulators.
Lack of transparency in marketing
This can include failing to disclose fees, charging hidden fees, or misleading marketing practices, which can damage the business’s reputation and lead to a loss of customers trust—and likely a loss of customers.
Insufficient risk management
These risks can come in many forms, such as legal, reputational, financial, and operational risks. Inadequate management can lead to regulatory violations, data breaches, and even financial losses.
Non-compliance with consumer protection laws
Truth-in-advertising laws and product safety laws require businesses to provide accurate information about their products and services and set standards for the safety and quality of products sold to consumers.
Non-compliance with industry standards and best practices
There are industry standards and best practices in place to ensure that operations are safe, ethical, secure, and reliable. Failure to comply with these standards can result in regulatory action and reputational damage.
With these major pitfalls, new solutions are emerging to support both the BaaS licensees and the BaaS providers to better manage the risks associated with these partnerships. This is why we’ve built our latest solution, Fintel Check for BaaS. Our AI-driven content monitoring and compliance tool puts BaaS compliance teams on the front foot with easy-to-use tools for managing, monitoring and policing fintech partner activity and marketing.
Key Pillars of Successful Partner Marketing Compliance
1. Conduct Automated Content Monitoring and Audits
There are ways to support your teams with tools to automate processes that will take the heavy-lifting off their hands. Ensure your partners’ compliance programs remain effective and up-to-date by reviewing their marketing and advertising materials, data handling practices, and other compliance-related activities.
Identify any issues that need to be addressed, track content changes, and edit accordingly. Regular audits and monitoring can provide valuable feedback to help both parties improve compliance practices and identify opportunities for optimization.
Set your brand up for long-term success
Learn how Fintel Check for BaaS enables growth with its tracking, monitoring, and content compliance solutions.
2. Monitor Changes in Regulations
Ensure your partners remain compliant with any new requirements by subscribing to regulatory alerts and engaging with industry associations.
Stay up-to-date with the ever-changing regulations by following institutions in the US such as the Consumer Financial Protection Bureau (CFPB), American Banker, Equal Credit Opportunity Act, CAN-SPAM, Truth in Savings Act (TISA). For those in Canada, check out Canadian Bankers Association, Financial Consumer Agency of Canada (FCAC). These organizations will help you and your partners adapt to new requirements to overcome potential compliance risks and maintain a competitive advantage.
3. Increase the Capacity of Compliance and Risk Management Processes
Monitoring and managing a large volume of data from multiple sources, including your business partners and regulatory bodies, is a time-consuming and labor-intensive process—which is why issues fall through the cracks.
Invest in advanced tools to protect your brand reputation and maintain your partners’ and their customers’ trust and confidence. Automated solutions can help you streamlining the data collection, processing, and reporting processes, identifying potential compliance risks, and generating alerts for further investigation.
- Prepare for audits
- Have tools to quantify potential flagged risks
- Implement tools to support with content remediation and management
Making Marketing Compliance Easy
Partner management no longer needs to be an arduous, complicated undertaking for bank compliance teams. As a BaaS provider, you can take a number of proactive steps to avoid compliance pitfalls from your third-party partners using Fintel Check’s Content Monitoring and Compliance tool.
Powered by AI technology, the Fintel Check platform offers several key advantages, including:
Usage auditing
Have a complete picture of where your fintech partners are mentioning your brand, and easily run reports to show new mentions, existing mentions, historical mentions, and related traffic stats to quantify and measure potential exposure when content issues are found.
Historic record-keeping
Automatically capture screenshots of mentions over time and download and export them for auditing purposes. Make things easy for your compliance team.
Content rule engine
Set clear guidelines and rules for content and brand mentions in the Fintel Check Rules Engine. Our AI-powered content monitoring tool will automatically scrape, scan, capture, and report content findings on your fintech partners’ websites and campaigns.
Content CMS and feed
Make it easy for your teams to proactively control the content on your partner’s pages. By pulling the feed code and placing it on their sites, partners will allow your team to update live content at any point via the Fintel Check platform.
Partner marketing compliance no longer needs to be a burden for your BaaS business. Instead, with the right tools and systems, it can become a competitive advantage that sets your brand up for long-term success with a winning formula for scale.
If you’re considering solutions and facing challenges with budget approval or if you aren’t sure where to start, our team of experts would be happy to help you in the exploration process. Reach out to our experts and we’ll help walk you through step-by-step considerations on how to get started.
