As your business grows, so does the need for compliance and risk management. One of the most crucial decisions you’ll face as a FinTech or Crypto platform is whether to build an in-house compliance team or partner with a fractional solutions provider like Fraxtional. This choice can significantly impact your operations, budget, and ability to stay compliant with changing regulations.
Let’s talk about when and why opting for Fraxtional’s solutions might be a more effective and efficient approach than hiring a full-time in-house team.
The Burden of Compliance and Risk Management for Growing FinTechs
As FinTech companies grow, they must navigate a constantly evolving regulatory environment. Compliance is no longer just about meeting local legal requirements; it’s about ensuring that you can expand into new markets, launch new products, and stay ahead of new regulations. This challenge grows exponentially as your company scales.
Fintechs, especially those in the growth or scaling stages, face the challenge of building out their compliance functions without slowing down their pace of innovation. A study by Alloy found that 93% of fintech companies struggle to meet compliance standards, with 60% of surveyed firms paying fines in the past year.
Nearly 48% of organizations recognize the need to strengthen executive leadership in managing third-party relationships. As technology continues to enhance third-party risk management (TPRM) frameworks, the priority has shifted towards integrating the right skills and talent into these programs to fully leverage the available technology, according to Deloitte’s Survey.
Here’s where Fraxtional’s on-demand, director-led compliance solutions come into play. By leveraging fractional solutions, fintechs get access to experienced professionals who can seamlessly integrate with their operations, offering deep regulatory expertise without the overhead costs of full-time hires.
- Direct Access to Senior-Level Compliance Expertise
One of the core reasons to choose Fraxtional’s services over building an in-house team is access to senior-level expertise on demand.
Expertise Without the Overhead
Building an in-house compliance team takes time and resources. You must not only hire skilled compliance professionals but also invest in their training, salaries, benefits, and office space. On top of that, these professionals may not be needed full-time, particularly during periods of rapid growth or regulatory transitions.
Here’s a closer look at the benefits:
- Senior-Level Expertise: Fraxtional offers access to highly experienced compliance leaders who bring expertise in critical areas such as KYC/AML, PSD2, GDPR, and other fintech-specific regulatory frameworks. These experts have extensive experience working with top financial institutions, regulatory bodies, and FinTech companies, making them uniquely qualified to guide your business through the most complex compliance challenges.
- Custom Solutions: Instead of hiring generalists, you get consultants who specialize in FinTech regulatory issues. Whether it’s building a comprehensive compliance program or helping your company prepare for a regulatory review, Fraxtional consultants provide tailored solutions that suit your unique needs.
- On-Demand Support: Unlike hiring full-time compliance officers, you can access Fraxtional’s leaders as needed. Interpreting new regulations, implementing necessary controls, or staying prepared for regulatory scrutiny, Fraxtional’s team will provide you with timely and relevant advice to help you stay compliant with minimal delays.
- Flexibility and Scalability for Your Business
Scaling compliance efforts as needed, without the constraints of full-time hires, is one of the biggest benefits of opting for Fraxtional solutions.
Meeting Business Needs, Not Bound by Contracts
Fintechs are constantly evolving, and the regulatory framework often changes as fast as your business. With in-house teams, you’re often tied to long-term commitments and rigid structures that don’t always align with your growth. Hiring a full-time team for compliance may be an overinvestment in slower periods and an underinvestment when you need rapid scaling.
Fraxtional offers a flexible solution. As you expand, Fraxtional consultants can seamlessly integrate into your team to provide additional compliance expertise. If you’re launching a new product, entering a new market, or facing a regulatory inquiry, you can scale up your compliance team quickly. Once the project stabilizes, you can scale back down, optimizing your budget and resources.
Rapid Response to Immediate Needs
In-house teams, even experienced ones, can face delays when urgent compliance issues arise. Whether it’s a new regulation, an audit, or a sudden need to address a compliance breach, you may experience bottlenecks in getting the right people in place fast enough.
With Fraxtional, you have access to experts who are ready to jump in at a moment’s notice. They bring not just skills but also the flexibility to ensure you meet deadlines and remain compliant without disrupting your operations. This ability to respond quickly means your FinTech can stay ahead of regulatory challenges without losing momentum.
- Cost-Effectiveness Without Sacrificing Expertise
Cost efficiency is another compelling reason why fintechs may choose Fraxtional over in-house teams.
Cutting Costs While Gaining Access to Top Talent
Hiring a senior compliance officer or a full team requires substantial financial commitment, salaries, benefits, recruitment costs, and other overheads. This model might not be sustainable for many startups or smaller FinTech companies. Even though in-house teams provide dedicated focus, they also represent a significant portion of your operational budget.
- Reduced Overhead: By utilizing Fraxtional consultants, you avoid the ongoing costs of hiring full-time senior-level compliance officers or executives. This model ensures you only pay for the expertise you need, without the financial burden of permanent hires, allowing you to allocate funds to other key areas of your business.
- Access to Top Talent: Fractional consulting gives you access to experienced professionals who bring valuable insights from leading financial institutions and regulatory bodies. Securing this level of talent full-time can be cost-prohibitive, but with fractional consulting, you gain their expertise as needed.
Budget Flexibility
Having the flexibility to scale up or scale down based on your needs ensures that you can redirect funds to other key areas of growth. Instead of being bound to the fixed costs of hiring a full-time team, Fraxtional helps you maintain the compliance coverage you need while optimizing resource allocation.
- Seamless Integration with Your Team
Choosing Fraxtional doesn’t mean sacrificing integration or alignment with your internal team.
No Silos, Just Collaboration
A common concern when bringing in external consultants is the potential disconnect between the fractional team and internal stakeholders. However, Fraxtional’s experts are embedded directly into your operations, working alongside your team as a trusted partner.
- Collaboration Across Departments: Whether it’s assisting your legal department, advising your leadership team, or aligning with your IT and operations teams for compliance automation, Fraxtional’s solutions are designed for seamless integration. These professionals don’t operate in silos but instead collaborate to drive results in real-time, ensuring a smooth and consistent compliance strategy.
- Continuous Communication: With Fraxtional, your internal teams won’t feel as though they’re working with an external vendor. Rather, they’ll have a trusted advisor who’s integrated into daily operations, aligning with your business’s overall goals and objectives.
- Comprehensive Service Offering for All Your Compliance Needs
Fraxtional not only provides on-demand senior-level expertise but also offers a full range of services that can be tailored to your specific compliance needs.
A Full Suite of Modular Compliance Solutions
Fraxtional stands out for its ability to provide a comprehensive set of compliance services, ensuring that no aspect of your regulatory needs is overlooked. Whether you’re a FinTech startup entering new markets, a Crypto platform navigating complex legal frameworks, or a private equity firm preparing for audits, Fraxtional has the expertise and flexibility to meet your unique requirements.
- Policy & Procedure Development: Fraxtional helps create and implement tailored policies and procedures to comply with regulatory standards such as GDPR, KYC/AML, and more, ensuring your internal processes are robust and audit-ready.
- Money Transmitter Licensing: Receive support in acquiring and maintaining MTLs, which is crucial for fintechs operating across multiple states.
- SOC2 Compliance: With Fraxtional’s expertise, your company can achieve and maintain SOC2 Type 1 and Type 2 readiness, positioning your business as a secure, trustworthy entity in the eyes of investors and customers.
- Independent Audits: Fraxtional conducts external compliance audits to ensure that your company is ready for regulatory reviews, due diligence, and investor scrutiny.
- Risk Assessments: Comprehensive risk evaluations that assess your internal compliance posture and offer actionable remediation plans to mitigate potential vulnerabilities.
Conclusion
Choosing between an in-house compliance team and fractional consulting isn’t always an easy decision. However, if your FinTech is looking to stay agile, scale quickly, and keep compliance at the core of your business strategy without the overhead of full-time hires, Fraxtional is the ideal solution. With direct access to senior-level expertise, scalable support, cost efficiency, and seamless integration, Fraxtional ensures your compliance needs are always met, without compromising on quality or flexibility.
If you’re ready to take your fintech’s compliance to the next level, Contact Fraxtional for customized solutions and find out how we can support your growth.
