Financial institutions and FinTechs are increasingly recognizing compliance as a critical driver of growth. According to Raul Leyva, vice president of issuing solutions at Visa DPS, compliance must be integrated from the outset of product development rather than treated as an afterthought. This shift reflects changing regulatory environments where institutions face heightened scrutiny and potential fines that can reach into millions or even billions of dollars.
Leyva explained in a recent interview with PYMNTS that compliance regulations have evolved. They are no longer solely defined by formal laws and rules. Instead, regulators are now leveraging a variety of tools, including consent orders and examiner guides, which complicates compliance efforts for many organizations. Institutions that fail to adapt to these changes risk not only financial penalties but also damage to their brand reputation and missed opportunities for innovation.
The Challenges of Compliance
While large financial institutions may have the resources to manage compliance effectively, smaller banks, credit unions, and community banks face similar scrutiny with fewer resources. These smaller entities, alongside those that work with third parties, often bear an additional compliance burden. As Leyva noted, the challenge is compounded by the need for these institutions to maintain rigorous compliance standards even while managing limited resources.
The proactive approach to compliance can yield significant benefits. Leyva emphasized that aligning all stakeholders minimizes risk and enhances operational efficiency. A report by PYMNTS titled “The Best-in-Class Modern Card Issuer: Driving Customer Lifetime Value Through Innovation” indicates that proactive compliance strategies distinguish high-value issuers from their lower-scoring counterparts. Institutions that take a forward-thinking approach to compliance can not only ensure adherence to regulations but also accelerate their processes, transforming compliance into a competitive advantage.
Despite the advantages, approximately 42% of issuers reported experiencing challenges with regulatory compliance, according to the same report. Leyva advised that organizations need to embed compliance into their culture from the very beginning. By leveraging technologies such as generative AI and automated reporting tools, and by fostering relationships with processors who understand regulatory challenges, institutions can better navigate the compliance landscape.
Visa DPS’s Commitment to Compliance
The research indicated that 43% of high customer lifetime value issuers prioritize regulatory compliance when selecting an issuer processor. Furthermore, issuers facing compliance challenges are 38% more likely to value support from processor partners who invest in compliance measures.
To assist its clients, Visa DPS has developed AI-driven, real-time regulatory monitoring tools that track regulations across 200 countries. These tools provide timely updates and concise summaries, enabling compliance teams to stay informed and aligned with evolving regulations. Leyva highlighted that this proactive approach involves not just technology but also a dedicated team of compliance experts who collaborate with product and legal teams to integrate regulations seamlessly into product development.
Embedding Compliance from the Start
An embedded compliance strategy begins at the earliest stages of product ideation and design. Leyva stressed that treating compliance as an integral part of product development rather than a final checkpoint can significantly reduce inefficiencies and improve responsiveness to regulatory changes.
“Compliance is no longer simply about avoiding fines,” Leyva remarked, underscoring its role as a fundamental driver of trust and customer retention. Organizations that embrace this integrated approach are better positioned to navigate the complexities of compliance, ensuring they remain competitive in an evolving financial landscape.
As financial institutions continue to adapt to the changing regulatory environment, those that successfully embed compliance into their core operations will likely see enhanced customer lifetime value and sustained growth.
