Fintech license
Regulatory Authorisation as Operating Infrastructure
A fintech license is not a certificate. It is a regulatory operating framework that determines how your business is allowed to function, scale, and interact with banks, payment systems, investors, and supervisors over time.
We structure and deliver fintech licensing projects as controlled regulatory builds — not as document submissions. Our work starts by defining the exact regulatory perimeter of your business model and ends with an institution that can operate under supervision without structural remediation, banking friction, or compliance bottlenecks.
This service is designed for founders, regulated groups, and financial sponsors who require more than formal approval. It is for operators who need a licence that holds under transaction growth, cross-border expansion, supervisory inspections, and institutional due diligence.
We design licensing architectures that integrate governance authority, capital logic, safeguarding mechanisms, financial crime controls, technology oversight, and reporting discipline into a single coherent operating model. Every element is built to withstand regulatory scrutiny in live operation — not only during the application phase.
The outcome is a regulator-ready fintech institution with a defensible supervisory profile, credible banking access, and long-term operating viability. Whether the objective is payments, electronic money issuance, or a broader regulated fintech platform, the licence becomes a functional asset — not a constraint.
This is a licensing service for businesses that intend to operate as part of the financial system, not around it.
Who This Service Is For
This service is designed for operators who need licensing to unlock real market access and institutional trust, including:
payment and wallet platforms planning regulated issuance or account-based products
PSPs expanding into new services, corridors, or scheme connectivity
embedded finance programmes needing a compliant operating architecture
groups consolidating fragmented entities into a regulator-defensible structure
founders who need a licensing route that supports scaling, not just approval
What You Achieve
You do not “get a licence document.” You achieve a regulated operating position that can be defended and maintained.
Outcomes include:
a clear authorisation perimeter aligned with your product and growth trajectory
governance and control functions that remain credible under supervision
safeguarding and reconciliation that hold at scale
AML and financial crime decision-making that is auditable and resilient
reporting and data integrity that prevents supervisory escalation
an operating model banks, schemes, and partners can onboard with confidence
Deliverables
You receive a regulator-ready package that is also operationally executable.
Key deliverables typically include:
regulatory perimeter and service mapping (activities, flows, roles, outsourcing points)
target operating model (TOM) for regulated execution, including control ownership
governance architecture (board composition logic, committees, escalation, four-eyes)
financial resilience design (capital planning logic, buffer strategy, liquidity view)
safeguarding design (segregation model, daily reconciliation, discrepancy protocol)
AML and financial crime framework (CDD/EDD logic, monitoring governance, reporting)
ICT and operational resilience framework (incident response, BCP/DR, change control)
outsourcing governance pack (due diligence, audit rights, exit strategy, concentration)
reporting and data governance model (ownership, lineage, reconciliation, audit trails)
inspection readiness playbook (evidence repository structure, walkthrough scripts)
Deliverables are adapted to the chosen authorisation route and the supervisory posture you will face.
Process
We run licensing as a controlled regulatory project, not as document production.
Typical phases:
scope and perimeter definition based on actual flows, not assumptions
authorisation strategy and jurisdiction fit assessment based on supervisory reality
operating model design: governance, controls, data, and operational execution
drafting and alignment: policies, procedures, and evidence structures that match execution
management readiness: role definitions, accountability, interview preparation
submission management and supervisory Q&A handling
launch controls: post-approval reporting discipline and inspection readiness
The process is designed to prevent rework during review and reduce the risk of structural objections.
Authorisation Models and Strategic Scope
The most consequential early decision is not “where to license.”
It is what authorisation model matches your intended business.
Electronic money issuance enables issuance and redemption of stored value and typically triggers the highest expectations around safeguarding, reconciliation, and governance oversight. Payment services authorisation enables execution and related services with a different capital logic and narrower issuance capability.
Choosing the wrong model forces later restructuring.
Key decision factors include:
whether you create monetary value on your balance sheet or only transmit funds
whether you hold client funds and for how long
whether you need account-like products and scheme connectivity
whether your distribution relies on agents, partners, or embedded channels
whether your growth depends on cross-border scaling and passporting
A defensible authorisation strategy is one that remains stable when volumes increase and supervisors test operational reality.
Corporate Structure, Substance, and Control
Modern supervision is not satisfied by incorporation.
It tests whether the licensed entity controls the regulated activity.
Substance is demonstrated through:
decision authority that is real, not delegated informally
traceable approvals for risk acceptance and control exceptions
independent compliance and risk functions with power to challenge
operational ownership of outsourced functions and vendor dependencies
evidence that governance bodies actively oversee execution
Where supervision detects “shadow control” from other group entities or external advisors, it will treat the model as structurally weak.
The Licensing Process as an Operating Readiness Test
Regulators assess applications as a prediction of future behaviour.
They test whether:
the operating model is coherent across documents and real workflows
staffing is realistic for projected volumes and control obligations
outsourcing does not impair supervisory access and auditability
risk ownership is clear, and escalation routes are executable
data, reporting, and reconciliation can be reconstructed historically
A licence is issued when the regulator believes the institution can remain stable under stress, incidents, and growth.
Governance, Fitness, and Accountability
Supervision focuses on people, not only structures.
Expect scrutiny of:
who holds material influence over regulated activity
whether senior management can explain operational risk in detail
whether boards function as oversight bodies with real challenge capacity
whether control functions are independent from commercial pressure
A common failure pattern is presenting an institutional governance chart while operating as a founder-led execution machine without independent controls.
Financial Resilience and Capital Discipline
Minimum capital is a floor, not a target.
Supervisors look for:
capital planning linked to operational complexity and transaction growth
buffers that remain credible during stress, not only at launch
liquidity logic that anticipates settlement peaks and partner constraints
evidence that management understands capital triggers and response actions
Where firms treat capital as a static requirement, supervisory confidence erodes quickly during growth.
Safeguarding of Client Funds
Safeguarding is a daily discipline.
Expect supervisory attention on:
segregation mechanics and account controls
daily reconciliation and discrepancy investigation procedures
clear ownership for safeguarding breaks
independent review and auditability of safeguarding effectiveness
The decisive question is not whether safeguarding exists, but whether it remains reliable at scale without manual fragility.
Financial Crime Control Framework
Financial crime controls are assessed by decision quality.
Supervisors expect:
risk-based customer acceptance and periodic risk reclassification
monitoring that adapts to new typologies and business mix changes
sanctions screening governance with controlled exceptions
documented rationale for reporting and non-reporting decisions
escalation that cannot be suppressed by commercial priorities
Controls that exist on paper but collapse under client pressure are treated as systemic weaknesses.
Technology Governance and Operational Resilience
Fintech supervision increasingly treats ICT as systemic infrastructure.
Regulators assess whether the board:
understands critical system dependencies
controls change velocity
can reconstruct incidents and system states historically
can recover operations within defined tolerances
Operational resilience is not a BCP document. It is a tested capability with clear decision authority and evidence discipline.
Outsourcing and Third-Party Risk
Outsourcing does not transfer responsibility.
Supervisory expectations include:
due diligence proportional to criticality
contractual audit access and practical information rights
concentration risk awareness and mitigation
realistic exit plans that can be executed under time pressure
A model that relies on vendors without internal oversight capacity will be treated as loss of control.
Data Governance and Reporting Integrity
Regulators treat data quality as a proxy for governance effectiveness.
They look for:
clear data ownership and lineage
reconciliations between operational, financial, and regulatory streams
controlled corrections and documented adjustments
audit trails that survive migrations and system changes
Inconsistent submissions trigger deeper inquiry because they suggest the institution cannot see itself clearly.
Cross-Border Operations and Supervisory Coordination
Cross-border servicing increases detectability of inconsistencies.
Supervisors increasingly coordinate and cross-reference:
service mapping disclosures
financial and prudential reports
AML control representations
outsourcing structures and intra-group dependencies
Fragmented structures designed for regulatory arbitrage are becoming ineffective. Consistency and traceability are the sustainable strategy.
Growth, Change, and Supervisory Perception
Rapid growth is treated as a stressor.
Supervisors assess:
whether compliance capacity scales with alert volumes
whether reconciliation remains reliable under higher transaction counts
whether capital and liquidity buffers keep pace
whether change control remains disciplined as release frequency increases
Unmanaged expansion often leads to enhanced supervision, remediation plans, and practical constraints on future optionality.
Exit Planning and Wind-Down Readiness
Exit readiness is viewed as maturity.
Supervisors expect:
a credible plan to return client funds
settlement and operational closure procedures
continuity of critical systems during wind-down
communication protocols and role ownership
Wind-down planning protects clients and preserves supervisory trust during stress periods.
Culture, Conduct, and Supervisory Trust
Supervisory trust is built on behaviour over time.
Signals that strengthen trust include:
transparent escalation and early disclosure of issues
consistent documentation discipline
internal challenge capacity and dissent management
structured remediation with measurable milestones
Firms that treat supervision as a relationship, not a transaction, maintain strategic flexibility when conditions change.
Jurisdictions Covered
Country-specific licensing pathways (detailed pages below)
Request Fintech License Assessment
Supervisory Reality After Authorisation
How Regulators Evaluate Fintechs Once the Licence Is Issued
Licensing marks the beginning of supervision, not its conclusion. From the regulator’s perspective, authorisation is a forward-looking judgment about how an institution will behave under real operating conditions. Once a fintech becomes live, supervisory focus shifts decisively from documentation to execution.
Regulators evaluate whether the operating model behaves as described, whether governance functions assert real authority, and whether controls remain effective as transaction volumes, client profiles, and third-party dependencies evolve. Firms that treat the licence as an endpoint often encounter supervisory friction within the first inspection cycle.
Supervision is continuous, cumulative, and comparative. Each reporting cycle, interaction, and incident contributes to the regulator’s internal risk assessment of the institution.
Supervision as a Behavioral Assessment
Modern fintech supervision is not limited to rule compliance. It is an assessment of institutional behavior over time.
Supervisors observe:
how quickly issues are detected
how transparently they are escalated
how decisively management responds
how consistently remediation is implemented
Patterns matter more than isolated events. A single incident handled well often strengthens supervisory confidence. Repeated minor issues handled defensively tend to weaken it.
Supervisory conclusions are shaped by longitudinal observation rather than snapshot compliance.
Reporting as a Control Signal
Regulatory reporting is not treated as an administrative obligation. It is a signal of governance quality.
Supervisors analyze:
consistency across reporting streams
stability of metrics over time
correlation between operational events and reported data
responsiveness to clarification requests
Discrepancies between prudential reports, AML filings, and operational data are interpreted as potential loss of internal control rather than clerical error.
High-quality reporting reflects effective internal coordination and ownership discipline.
Evidence Over Assertions
Supervisory trust is built on evidence, not assurances.
Regulators expect institutions to demonstrate:
how decisions were made
who approved them
what alternatives were considered
why specific controls were selected
Assertions without supporting artifacts lose credibility quickly during inspections. Evidence that can be reconstructed months or years later carries significantly more weight than polished narratives.
Inspection readiness is therefore an operational state, not a preparatory exercise.
Internal Audits as Supervisory Mirrors
Internal audit functions increasingly act as proxies for supervisory scrutiny.
Supervisors assess whether internal audits:
test real execution rather than policy alignment
challenge management assumptions
identify control weaknesses early
result in concrete remediation
Audit reports that consistently find no issues are treated with skepticism. A credible audit function identifies weaknesses and tracks their resolution.
The quality of internal audit often determines the intensity of external supervision.
Escalation Discipline and Decision Authority
Supervisors pay close attention to escalation behavior.
They evaluate:
whether staff escalate issues promptly
whether escalation paths are clear and respected
whether decisions are taken at the appropriate level
whether control functions can override commercial pressure
Failures in escalation discipline are interpreted as governance failures, not operational mistakes.
Clear decision authority under stress is a hallmark of a mature regulated institution.
Financial Crime Controls Under Live Conditions
AML and financial crime frameworks are tested continuously once operations begin.
Supervisors focus on:
alert handling quality under volume pressure
consistency of risk classification
rationale for alert closures
quality and timeliness of suspicious activity reporting
Backlogs, inconsistent thresholds, or undocumented overrides indicate that controls may not scale with the business.
AML effectiveness is assessed by decision quality, not by the number of alerts generated.
Safeguarding Under Operational Stress
Safeguarding failures rarely arise from design flaws alone. They emerge under stress.
Supervisors assess safeguarding resilience during:
peak transaction periods
partner outages
reconciliation breaks
system migrations
They expect clear ownership of safeguarding processes, rapid investigation of discrepancies, and documented resolution paths.
Safeguarding is treated as a continuous fiduciary obligation rather than a static structural requirement.
Technology as a Supervisory Concern
ICT governance has become central to fintech supervision.
Regulators evaluate whether:
system architecture supports auditability
access controls are enforced consistently
logs are complete and tamper-resistant
changes are controlled and documented
Technology failures that affect customer funds, data integrity, or service availability attract immediate supervisory attention.
Operational resilience is assessed through demonstrated capability, not theoretical preparedness.
Change Management and Release Velocity
High-growth fintechs deploy changes frequently. Supervisors monitor how change velocity interacts with control stability.
They examine:
pre-deployment risk assessment
segregation of duties in development and release
rollback capabilities
post-deployment monitoring
Frequent changes without robust governance are treated as structural risk, even if incidents do not materialize immediately.
Controlled change is a supervisory expectation, not a technical preference.
Outsourcing as an Extension of the Institution
Third-party providers are treated as extensions of the licensed entity.
Supervisors assess:
depth of due diligence
ongoing performance monitoring
incident coordination
exit feasibility
Loss of visibility into outsourced operations is interpreted as loss of control.
Outsourcing arrangements that cannot be audited in practice are treated as unacceptable, regardless of contractual language.
Banking and Scheme Relationships as Supervisory Feedback
Banks and payment schemes function as secondary control layers.
Supervisors are aware of:
enhanced due diligence outcomes
transaction monitoring feedback
account restrictions
scheme compliance findings
Breakdowns in banking relationships often precede regulatory intervention.
Stable institutional relationships signal supervisory confidence in the operating model.
Capital and Liquidity Under Growth
Capital adequacy is monitored dynamically.
Supervisors expect:
forward-looking capital planning
stress scenarios linked to growth assumptions
timely capital reinforcement
clear triggers for management action
Reactive capital measures undermine confidence. Anticipatory planning reinforces it.
Liquidity stress, even if short-lived, is treated as a consumer protection concern.
Cross-Border Activity and Supervisory Coordination
Cross-border operations increase supervisory visibility.
Regulators coordinate on:
passporting disclosures
incident notifications
AML risk assessments
enforcement actions
Inconsistent representations across jurisdictions are easily detected and interpreted as governance weaknesses.
Transparent service mapping and consistent control frameworks are essential for cross-border credibility.
Incident Handling as a Trust Test
Incidents are inevitable. Handling them is optional.
Supervisors evaluate:
detection speed
escalation clarity
decision authority
communication discipline
remediation effectiveness
Delayed or selective disclosure damages trust more than the incident itself.
Institutions that treat incidents as learning events rather than reputational threats tend to strengthen supervisory relationships.
Informal Supervision and Early Signals
Not all supervisory action is formal.
Early signals include:
requests for additional data
targeted questionnaires
thematic reviews
informal feedback during meetings
Ignoring these signals often leads to formal intervention.
Experienced institutions treat informal supervision as a critical feedback loop.
Culture as a Regulatory Variable
Supervisors assess culture indirectly.
Indicators include:
documentation discipline
staff understanding of controls
willingness to challenge decisions
transparency in communications
Culture manifests through behavior rather than statements.
A strong control culture increases supervisory tolerance during periods of change.
Growth Trajectory and Supervisory Risk Rating
Supervisors classify institutions based on trajectory, not static position.
They assess:
speed of expansion
complexity growth
control scaling
management depth
Rapid growth without proportional reinforcement of controls typically results in enhanced supervision.
Measured growth aligned with governance capacity preserves strategic flexibility.
Mergers, Acquisitions, and Structural Change
Structural changes trigger reassessment.
Supervisors evaluate:
change of control implications
continuity of governance
funding sources
post-transaction operating model
Transactions designed primarily to acquire a licence without integration are viewed skeptically.
Regulatory approval timelines often dictate transaction sequencing.
Exit Readiness as Institutional Maturity
Orderly wind-down capability is increasingly scrutinized.
Supervisors expect:
clear exit governance
client fund return mechanisms
operational continuity during closure
communication plans
Exit readiness demonstrates responsibility toward clients and the financial system.
It is treated as a sign of maturity, not pessimism.
Longitudinal Supervision and Institutional Memory
Supervision is cumulative.
Past behavior informs future expectations.
Regulators remember:
how issues were handled
whether commitments were met
whether improvements were sustained
Consistency over time matters more than episodic excellence.
Trust, once lost, is difficult to rebuild.
Fintech as Financial Infrastructure
As fintechs scale, they transition from innovators to infrastructure participants.
Supervisors increasingly apply a public-interest lens, emphasizing:
stability
continuity
consumer protection
systemic resilience
Licensing becomes a social contract rather than a permission slip.
Institutions that internalize this role align more easily with supervisory expectations and maintain long-term operating freedom.
Strategic Implication
A fintech licence retains value only when the institution behaves in a manner consistent with supervisory expectations over time.
That outcome depends on:
disciplined governance
evidence-based execution
scalable controls
transparent regulatory dialogue
culture that prioritizes accountability
This is how a licensed fintech evolves
from authorisation
to trusted financial infrastructure.
Long-Term Regulatory Viability and Business Sustainability
How Fintech Licences Hold Under Scale, Pressure, and Market Cycles
A fintech licence is not validated at the moment of issuance. Its real value is proven over time, through market cycles, supervisory pressure, and internal change. Regulators, banking partners, and institutional clients assess not whether a firm once met licensing criteria, but whether it continues to behave as a regulated institution when conditions are no longer ideal.
Long-term regulatory viability depends on whether governance, controls, and operating discipline remain effective as complexity increases. Many fintechs fail not because their initial model was unsound, but because scaling introduces structural stress that was never anticipated in the licensing phase.
Sustainability therefore becomes a function of design maturity rather than regulatory formality.
Scale as a Regulatory Stress Multiplier
Growth amplifies every weakness.
As transaction volumes increase, client diversity expands, and product lines multiply, previously manageable control gaps become systemic risks. Supervisors are acutely aware of this dynamic and evaluate scalability as a core licensing assumption.
Key pressure points include:
transaction monitoring capacity under volume growth
reconciliation accuracy at scale
responsiveness of customer support and complaints handling
workload sustainability for compliance and risk teams
Growth that outpaces control reinforcement often results in supervisory intervention, including capital add-ons, reporting intensification, or restrictions on new activity.
Sustainable fintechs design for scale from inception rather than retrofitting controls after problems emerge.
Governance Fatigue and Decision Dilution
Over time, governance structures tend to degrade unless actively maintained.
Common failure patterns include:
board meetings becoming informational rather than deliberative
control functions losing influence to commercial leadership
escalation thresholds rising informally
documentation quality declining as speed increases
Supervisors detect governance fatigue through subtle indicators: delayed responses, inconsistent narratives, and reduced quality of internal challenge.
Maintaining governance effectiveness requires continuous reinforcement of roles, responsibilities, and decision discipline.
Capital Planning Beyond Minimum Requirements
Regulatory capital is not a static metric.
Supervisors expect capital planning to reflect:
operational complexity
reliance on third-party providers
geographic expansion
product risk profile
Minimum capital thresholds represent entry points, not comfort zones. Institutions that treat regulatory minima as targets rather than baselines often encounter supervisory skepticism.
Robust capital frameworks include:
forward-looking capital buffers
stress scenarios tied to operational risks
explicit management triggers for capital reinforcement
Capital adequacy is interpreted as a signal of institutional seriousness rather than mere compliance.
Safeguarding Resilience Over Time
Safeguarding frameworks must withstand operational evolution.
As product features change and payment flows diversify, safeguarding complexity increases. Supervisors focus on whether reconciliation logic adapts accordingly.
Key long-term safeguarding challenges include:
multi-currency flows
intermediary payment chains
delayed settlement mechanisms
refunds and chargeback handling
Institutions that fail to continuously adapt safeguarding controls often discover issues only during inspections or incidents.
Effective safeguarding is dynamic, not static.
Financial Crime Risk Evolution
AML risk profiles are not fixed.
As fintechs grow, they attract different client segments, transaction patterns, and geographic exposure. Supervisors assess whether AML frameworks evolve in response.
Warning signals include:
unchanged risk assessments despite business evolution
static transaction monitoring scenarios
alert fatigue without recalibration
declining quality of SAR narratives
Financial crime controls that do not evolve are treated as ineffective, regardless of initial sophistication.
Technology Debt and Control Degradation
Rapid development creates technology debt.
Supervisors increasingly view unmanaged technical debt as a regulatory risk, particularly where it affects auditability, data integrity, or incident response.
Areas of concern include:
legacy systems supporting new products
undocumented interfaces
manual data transformations
brittle integrations with third parties
Technology governance must address not only innovation but maintainability and transparency.
Resilience is compromised when systems are no longer fully understood by the institution itself.
Operational Resilience Across Market Cycles
Operational resilience is tested during stress, not stability.
Supervisors evaluate resilience through:
incident response effectiveness
recovery speed
communication clarity
learning and remediation
Institutions that only test resilience under ideal assumptions struggle during real disruptions.
Regular scenario-based exercises that include governance and communication layers are increasingly expected.
Human Capital Sustainability
People risk is often underestimated.
As fintechs scale, reliance on key individuals increases. Supervisors assess whether knowledge is institutionalized or concentrated.
Red flags include:
undocumented processes
single points of expertise
informal decision channels
lack of succession planning
Staff turnover without control continuity undermines regulatory confidence.
Sustainable institutions invest in training, documentation, and role redundancy.
Compliance as a Strategic Function
Compliance functions evolve from gatekeepers to strategic partners.
Supervisors expect compliance to:
influence product design
shape market entry decisions
assess regulatory feasibility of growth initiatives
Compliance teams that merely react to regulatory change are seen as underpowered.
Strategic compliance integrates regulatory foresight into business planning.
Regulatory Change Management
Regulatory frameworks evolve continuously.
Fintechs must adapt to:
new directives and guidelines
supervisory expectations
thematic reviews
Supervisors assess whether institutions monitor regulatory developments proactively or reactively.
Effective change management includes:
regulatory horizon scanning
structured impact assessments
timely policy updates
staff training
Delayed adaptation often results in supervisory criticism.
Supervisory Trust as an Accumulated Asset
Trust accumulates slowly and dissipates quickly.
Supervisors build institutional memory based on:
consistency of disclosures
reliability of reporting
transparency during issues
follow-through on commitments
Institutions that deliver on remediation plans gain supervisory latitude. Those that overpromise lose credibility.
Trust is built through behavior, not positioning.
Banking Relationships as Long-Term Validators
Banking partners continuously reassess fintech risk.
Their expectations often exceed regulatory minimums and reflect operational reality.
Key determinants include:
incident history
AML effectiveness
governance quality
financial resilience
Loss of banking support frequently precedes regulatory escalation.
Strong regulatory standing supports stable banking access.
Cross-Border Complexity Accumulation
Cross-border activity multiplies regulatory expectations.
Supervisors evaluate whether:
control frameworks scale across jurisdictions
reporting remains consistent
governance oversight remains centralized
Fragmented structures increase supervisory concern.
Transparent cross-border mapping preserves regulatory confidence.
Product Expansion and Licence Elasticity
Licences have practical limits.
Supervisors assess whether new products remain within the licensed scope or stretch it implicitly.
Common pitfalls include:
functional creep without approval
hybrid products blurring regulatory categories
reliance on interpretations rather than authorization
Institutions that expand cautiously and engage regulators early preserve flexibility.
Institutional Reputation and Market Perception
Reputation influences regulatory treatment indirectly.
Supervisors are aware of:
media coverage
enforcement actions in other jurisdictions
market complaints
peer comparisons
Reputational risk compounds regulatory scrutiny.
Consistent professionalism supports long-term positioning.
Exit Readiness as a Structural Safeguard
Exit planning protects clients and markets.
Supervisors expect credible plans addressing:
client fund return
contract termination
system shutdown
staff responsibilities
Exit readiness reflects institutional maturity.
It is evaluated during licensing and revisited during supervision.
Longitudinal Supervision and Predictability
Supervision rewards predictability.
Institutions that behave consistently experience fewer surprises.
Predictability arises from:
disciplined governance
transparent communication
realistic commitments
continuous improvement
Volatility in behavior increases supervisory uncertainty.
Fintech as Part of Financial Infrastructure
At scale, fintechs become infrastructure.
Supervisors assess them through a systemic lens, emphasizing:
continuity
stability
consumer protection
market integrity
Licensing becomes a framework for shared responsibility rather than permission.
Institutions that internalize this role sustain regulatory acceptance over time.
Strategic Conclusion
A fintech licence retains value only if the institution evolves responsibly.
Long-term sustainability depends on:
scalable governance
adaptive controls
resilient technology
disciplined growth
transparent supervision
This is how fintechs transition
from licensed entities
to durable financial institutions.
FAQ
The core difference is the ability to hold client funds as e-money. An EMI (Electronic Money Institution) can issue and hold stored value in e-wallets (€350k minimum capital). A PI (Payment Institution) can only facilitate payments and must transfer funds promptly (€20k - €125k capital).
The three non-negotiable pillars are: 1) AML/CTF (Anti-Money Laundering and Counter-Terrorist Financing), 2) Safeguarding (protecting client funds), and 3) Digital Operational Resilience (DORA).
The test evaluates the integrity, competence, and time commitment of all directors, senior managers (MLRO/CCO), and qualifying shareholders (UBOs). Regulators are checking if they are capable and trustworthy stewards of public funds.
DORA shifts the focus from simple IT security to operational continuity. It mandates a comprehensive ICT Risk Management Framework, rigorous threat-led penetration testing, and strict oversight of all ICT Third-Party Service Providers (e.g., cloud platforms).
No. Firms must obtain the separate CASP (Crypto-Asset Service Provider) License under the new MiCA (Markets in Crypto-Assets) Regulation. Dual authorization (EMI + CASP) is often required for combined fiat and crypto services.
Safeguarding requires client money to be held in legally segregated bank accounts, separate from the firm's operational capital. This makes the funds "insolvency remote," meaning the client funds are protected from the firm's creditors if the FinTech goes bankrupt.
Regulatory Arbitrage is the strategic choice of a jurisdiction known for faster approval or lower capital. The main risk is failing to establish genuine Local Substance (local staff, office, management), which can lead to regulatory penalties and withdrawal of EU Passporting rights.
The Internal Capital Adequacy Assessment Process (ICAAP) is a stress-testing framework. It requires firms (especially EMIs/MiFID) to model various scenarios (e.g., liquidity crisis, system failure) to prove they hold a sufficient capital buffer above the statutory minimum.
A Regulatory Sandbox allows a firm to test innovative products in a live market with a limited customer base and reduced regulatory obligations. A successful "exit" significantly de-risks the model, speeds up full authorization, and enhances investor confidence.
The biggest challenge is that while the license is "passported" across the EEA, Local Anti-Money Laundering (AML) requirements and Consumer Protection Laws are not harmonized. This requires dedicated local compliance officers and country-specific adaptations to avoid fines.