Compliance Moved From Cost Center to Growth Engine in 2024

For decades, compliance has been viewed as a necessary but costly burden — a box to check to avoid penalties, maintain licenses and keep regulators at bay.

But 2024 marked a turning point for compliance in the payments and financial services sectors, in part marked by FinTech collapses and tightening oversight. Still, the flip side of the coin was that, by turning regulatory challenges into opportunities, firms can not only strengthen their market positions but also set new standards for innovation and trust.

The payments and financial services industry operates under a patchwork of global regulations that grow more intricate each year. In 2024, key drivers include heightened scrutiny from regulators, the rapid expansion of cross-border payments and the proliferation of new technologies such as artificial intelligence (AI) and even blockchain, as well as a backdrop of financial institution and FinTech partnerships and a sprawling third-party landscape. These developments have forced companies to rethink their approach to compliance, moving beyond reactive measures to proactive strategies.

By focusing resources on the areas that pose the biggest threats, payments and financial services firms are working to turn compliance into a competitive advantage in 2025.

This year showed that compliance has shifted from being a defensive shield to a strategic asset. By embedding compliance into the core of their operations, firms are not just avoiding penalties but helping to build trust, improve efficiency and enhance customer experiences.

Read more: Financial Landscape Unprepared for Increasing FinTech Influence, Oversight Group Says

Risk-Based Compliance: Prioritizing What Matters Most

At the heart of the ongoing compliance transformation is the shift to risk-based compliance frameworks. Rather than spreading resources thinly across all areas, firms are now increasingly turning to advanced analytics and data-driven insights to focus on the highest-risk activities and relationships.

Real-time data analysis helps pinpoint areas that pose the greatest regulatory and reputational risks, while automating low-risk compliance tasks frees up teams to concentrate on strategic initiatives. By prioritizing high-risk areas, firms can optimize their compliance budgets and personnel.

Another key factor driving compliance as a growth engine is the integration of compliance processes across the organization. In the past, compliance functions often operated in silos, disconnected from other departments such as finance, operations and IT. This fragmented approach led to inefficiencies, duplication of effort and missed opportunities.

Throughout 2024, firms worked to break down these silos by integrating compliance into their enterprise-wide strategies. This holistic approach helped ensure that compliance considerations were embedded into every decision, from product development to market expansion.

As PYMNTS has reported, regulators are increasingly turning their attention to the downstream risks associated with know your customer (KYC), compliance and risk management, fraud and the financial safety of FinTechs and their BaaS partners. As a result, many banks operating BaaS business models have been de-risking by offboarding higher-risk and lower-value programs.

Managing third-party relationships has become a focal point for compliance efforts, particularly as organizations expand their ecosystems to include a growing array of partners, vendors and service providers. A single weak link in the chain can expose firms to significant risks, from data breaches to regulatory violations.

In response, firms are eyeing and embracing more sophisticated tools to manage third-party risk. These solutions combine real-time data feeds, predictive analytics and customizable dashboards to provide a comprehensive view of third-party compliance. By identifying and addressing risks early, organizations can maintain the integrity of their operations while fostering stronger partnerships.

Read more: Synapse’s Downfall Provides Hard Lessons for Its B2B Partners

Compliance as a Trust Builder

As 2025 approaches, the role of compliance in the payments and financial services landscape will continue to evolve. Firms that embrace a risk-based, integrated and tech-enabled approach may find themselves to be well-positioned to navigate the challenges ahead while unlocking new opportunities.

For example, a payments company that consistently demonstrates its commitment to compliance may gain faster regulatory approvals, enabling it to launch new products ahead of competitors. Similarly, firms with strong compliance records are more likely to attract investment and secure partnerships, fueling long-term growth.

In today’s competitive landscape, trust is a critical differentiator. Customers, investors and regulators expect firms to operate with transparency and integrity. By embracing a robust and proactive compliance strategy, organizations can build and maintain this trust, opening the door to new opportunities.