Compliance, once relegated to the quiet corridors of the back office and the specialized domain of legal departments, is being transformed into a growth driver for forward-thinking financial institutions and FinTechs.
This evolution means that compliance is no longer a post-launch consideration or an afterthought. It must be embedded from the very beginning of product ideation and design, Raul Leyva, vice president of issuing solutions at Visa DPS, told PYMNTS in an interview.
“Compliance and regulations were usually primarily driven by laws and rules,” he said. Now, “regulators use the law and official rules [as well as] consent orders, examiner guides, official interpretations and other less formal processes, which makes it more difficult to keep abreast of changes.”
The firms that run afoul of those changes are at risk of incurring fines that can and sometimes do stretch into the millions and even billions of dollars. Non-compliance threatens an institution’s brand reputation, stifles partnership opportunities and impedes future innovation. Specific consequences, such as consent orders or adverse audit findings, can lead to delays in new product launches, placing anticipated revenues at risk.
The Challenges
While large financial institutions may possess extensive resources, small banks, credit unions and community banks face equally rigorous scrutiny, often with fewer resources to dedicate to robust compliance teams. Furthermore, institutions that cater to third parties experience additional, often intense, scrutiny, compounding their compliance burden.
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The Proactive Approach
The proactive approach pays dividends in ways that ensure “all stakeholders are aligned, and the risk is minimized,” Leyva said.
The PYMNTS Intelligence report “The Best-in-Class Modern Card Issuer: Driving Customer Lifetime Value Through Innovation,” a collaboration with Visa DPS, found that integrated, proactive strategies separate best-in-class issuers, particularly those with high customer lifetime value (CLTV), from their lower-scoring counterparts. Proactivity allows institutions not only to stay compliant but to move faster and smarter, turning a perceived constraint into a tangible competitive advantage.
However, there are challenges in the mix, Leyva said, as roughly 42% of issuers surveyed said they had experienced at least some pain points with regulatory and compliance efforts despite investing in those efforts.
For the issuers, it’s important to “build compliance into your culture from day one, leverage generative AI and automated monitoring and reporting tools, and build relationships” with processors and partners who are aware of issuers’ regulatory challenges, he said.
The joint research indicated that 43% of high CLTV issuers and regional issuers prioritize regulatory compliance capabilities when selecting an issuer processor, emphasizing the importance of such partnerships. The data also showed that issuers facing compliance challenges are 38% more likely to value the support of an issuer processor that invests in compliance.
Visa DPS has endeavored to help its issuer clients get ahead of those struggles.
“Visa DPS has stayed ahead of this rapidly evolving regulation by investing in AI-driven, real-time regulatory monitoring tools that scan thousands of regulatory sources in over 200 countries and thousands of jurisdictions — federal, provincial, municipal and others,” Leyva said.
The advanced technologies give rise to real-time regulatory updates, distilled into concise summaries that allow compliance staff and subject matter experts to review and communicate information across organizations, ensuring complete alignment from product owners to legal teams.
Beyond technology, Visa DPS has also built an embedded team of compliance experts who work directly with product and legal teams, as well as other stakeholders, to ensure that regulations are integrated into product development.
The Embedded Mandate
The regulatory monitoring tools and compliance experts help shape an embedded approach to compliance, starting at the earliest stages of development, Leyva said.
“Compliance must be embedded from the very beginning of ideation and design,” he said. “It’s not just a box to check at the end of an afterthought,” as issuers and FinTechs come to market with new products and services.
An organization that treats compliance as an integrated element of product development, rather than a final hurdle, can reduce the internal misalignment that often creates operational inefficiencies and slows down responses to regulatory shifts.
“Compliance is no longer simply about avoiding fines,” Leyva said, adding, “it’s a foundational driver of trust and customer retention.”
