In our work providing banking-as-a-service (BaaS) to fintech companies, we’ve seen frustrations mount about rigorous regulatory requirements.

Fintechs are focused on creating a frictionless experience for their users, minimizing roadblocks to a streamlined user experience. They bring conceptual, interface, and app engineering expertise to the product development process. In turn, fintechs need to depend upon a BaaS provider’s familiarity with regulatory framework along with a compliant operations and technology infrastructure.

Bank account openings, for example, are subject to a litany of rules and regulations. Simply opening an account requires attention to Know Your Customer (KYC) and Anti-Money-Laundering (AML) requirements, among others. You might hear your BaaS partner use the phrase “regulatory playbook” to communicate its readiness to help your fintech navigate the onboarding and continuing services. Not surprisingly, “regulatory playbook” can mean very different things.

We suggest fintechs evaluate the following questions as they seek to design streamlined client experiences, build their reputations, and stay out of the headlines for regulatory missteps. These questions will help you understand the type of support and collaboration you can expect from a BaaS provider.

1. Does the provider’s regulatory playbook include bringing experts to the table?

In our experience, everybody wins—and is protected—when legal and compliance experts are part of product meetings from the start. A consultative approach is the best way to ensure fintech product needs are met within regulatory requirements. In some cases, there are multiple ways to fulfill those requirements. Fintechs and banks can work together to define processes best aligned with fintechs’ objectives and their customers’ needs.

2. Is the bank applying the same standards for all new customers?

While there’s room for some discretion within account rules and practices, that doesn’t mean banks can treat BaaS accountholders differently than other accountholders in any fundamental way. Make sure the bank’s regulatory playbook is based on its broader practices.

Find out how—and how well—the bank executes new account opening and onboarding in contexts other than BaaS. Ask how that translates to the BaaS experience.

3. How seriously does the bank take protecting its own reputation?

In a BaaS relationship, both the bank and the fintech have obligations to fulfill with respect to meeting regulatory standards.

At UMB, we have a well-established reputation to uphold. That reputation extends far beyond BaaS—where we are one of the larger providers—to include all our lines of business, so we are fully vested in proceeding with diligent attention to regulatory requirements.

4. Does the bank handle regulatory compliance internally?

Be sure to ask your potential providers about resources and how they approach compliance questions. These processes will impact the timelines and development processes you’re considering. Typically, having an in-house team is a more efficient and collaborative way to confront regulatory requirements.

At UMB, a focus on risk and compliance is part of our DNA as an organization. Therefore, we have in-house specialists available for consultation as part of the product development process and include them in discussions early and often.

5. Does the bank’s approach accommodate flexibility wherever possible?

Fintechs want to gather necessary information from customers in the most efficient way possible while also satisfying KYC requirements. We’ve worked with fintechs to establish an essential question set that’s proven to be clear and effective. A consultative approach provides an opportunity to evaluate specific wording, question order and other adjustments to support an optimized user experience.

6. Does the regulatory playbook apply beyond product design and account onboarding?

Customer communication (including disclosures), advertising, transaction monitoring, suspicious activity reporting and economic sanctions compliance are among the ongoing factors that require close attention by one or both parties.

Ultimately, these questions for your BaaS provider boil down to expertise and partnership. Fintechs need to protect their brands, products and customers—as do banks. In our experience, any regulatory playbook should emphasize gathering specialists at the table—right at the outset of BaaS product development.

Learn how UMB can support your financial institution or fintech with integrated banking solutions, insured deposit accounts and Banking-as-a-service. Contact us to schedule a consultation.