So You Want to Build a Regulated Fintech? Don't. (Until You Read This)

Building and scaling a regulated fintech is a different kind of beast.

If my years in the trenches have taught me anything, it's that you can't just bolt on a compliance team and call it a day. These businesses demand a fundamentally different strategy, structure, and mindset from day one. Get it wrong, and you're not just risking a failed product; you're risking public sanction, loss of trust, and a swift end to your ambition.

In future posts, I'll break down the specific strategies and systems you need. But for now, let’s start with the foundations. Before you start or scale, here are 7 truths you need to internalize to avoid a world of pain down the road.

1. Hire an Advisor. Yesterday. It doesn't matter if this is your first rodeo or your tenth. The regulatory landscape is a constantly shifting maze of new rules, frameworks, and technologies. An experienced advisor isn't a cost center; they are your credibility. Their presence signals to regulators and partners that you have compliance on your radar, not as an afterthought. A light-touch engagement is infinitely better than no engagement at all.

2. Know Your Red Lines (And Don’t Even Think About Crossing Them). Financial regulation is complex, but the fundamentals are not. Core principles like KYC/AML, Treating Customers Fairly (TCF), and Financial Promotions are largely universal and non-negotiable. While some rules live in the grey, the ones that bring down companies are written in black and white. Know what they are. Breaking them invites consequences that go far beyond a regulatory slap on the wrist; investigations are often public, destroying the trust of your customers and partners overnight.

3. Your Partners Are Your Gatekeepers. You might have a world-changing product and an aggressive risk appetite. That’s great. But your payment providers, banking partners, and suppliers do not. They have their own risk committees and red lines. Your brilliant idea to serve a niche market or create an innovative financing model is dead on arrival if the banks won’t give you an account. You cannot go it alone. Respect your partners' risk profiles, or you’ll find yourself with a great idea and no way to execute it.

4. If It's Not Forbidden, It's Not Automatically Allowed. This is a trap for the clever. Finding a loophole or a novel business model that isn’t explicitly forbidden doesn’t mean it's permitted. If your model requires a whiteboard and a 20-minute explanation, it’s a red flag. Regulators are not looking to be impressed by your ingenuity; they are looking for clarity and fairness. Sound out these "clever" ideas with your advisors and, if possible, the regulator early. Surprises in this game are rarely good.

5. Any Of Your Customer's Jurisdiction Is Your Jurisdiction. In a digital world, your service is geographically agnostic; your compliance is not. Being fully compliant in the UK doesn't grant you a free pass to serve customers in Germany, the US, or Japan. You must be compliant in every single jurisdiction where you operate. "Asking for forgiveness" from a regulator is a naive strategy that often ends with a cease-and-desist order and the painful process of off-boarding a huge chunk of your customer base.

6. Document Everything. Then Document It Again. I mean everything. Every policy, every procedure, every internal discussion, every customer complaint, every audit report. Assume the regulator could walk in tomorrow and ask for a complete paper trail of a decision made six months ago. Not having it, or having it "for show," can be a showstopper for the entire business. Build the discipline of having your house in order from day one. It is non-negotiable.

7. Think in Decades, Not Quarters. Regulatory audit periods are long. Fines are high. Personal consequences for executives are real. Don't think you can "scrape by now and rectify later." If there are issues, fix them immediately. If a product has compliance deficiencies, do not launch it until they are resolved. And never, ever knowingly operate a non-compliant business, even "temporarily." The short-term gain is never worth the long-term existential risk.

None of this is rocket science. But in the rush to scale, these fundamentals are the first things to fall through the cracks—and they are almost always the cause of a fatal fall. Building a regulated business isn't just about a good idea; it's about disciplined, relentless execution from day one.

These are the lessons I've learned from the trenches.

What's the one piece of advice you would give to a founder in the regulated space?