For fintech startups, regulatory compliance isn’t a secondary concern; it’s a foundational requirement.
Now, 93% of fintechs find meeting compliance requirements challenging. Before launching any financial product, founders must navigate a complex web of data protection, payment security, and identity verification standards.
Frameworks like GDPR, PSD2, and KYC/AML define what’s legally permissible and structurally sound in this space.
Understanding these regulations early not only reduces risk but also accelerates go-to-market timelines and builds long-term credibility with investors, partners, and regulators.
This checklist outlines the key areas fintech startups must address before launch, offering a practical, startup-oriented guide to building secure, compliant platforms from day one.
Key Takeaways
- Compliance is a core requirement, not a post-launch task, for fintech startups.
- Understanding regulations like GDPR, PSD2, and KYC is critical to product success.
- Building compliance into your architecture early prevents delays and costly rework.
- Region-specific laws require tailored strategies for the EU, US, and MENA.
- Strong compliance builds trust with users, investors, and partners.
- VOLO helps fintech startups launch faster with secure, regulation-ready platforms.
Understanding The Compliance Landscape
Source:Alloy
Launching a fintech product means operating within one of the most highly regulated industries in the world. While innovation drives the sector forward, compliance keeps it stable, secure, and trustworthy.
For early-stage startups, that balance starts with understanding the core regulatory frameworks that shape product development.
Here are the key areas to focus on:
GDPR – General Data Protection Regulation
If your platform processes personal data from EU users, GDPR applies. It governs how data is collected, stored, and shared, requiring clear consent, user rights management, breach notifications, and documented data handling practices.
PSD2 – Payment Services Directive 2
PSD2 affects any fintech handling payments or account data in the EU. It mandates strong customer authentication (SCA), secure APIs for third-party access, and customer consent for data sharing, especially relevant for open banking products.
KYC/AML – Know Your Customer / Anti-Money Laundering
KYC and AML requirements aim to prevent fraud, money laundering, and terrorist financing. Fintechs must verify user identities, monitor transactions for suspicious activity, and maintain proper reporting protocols.
PCI DSS – Payment Card Industry Data Security Standard
If your product stores, processes, or transmits cardholder data, PCI DSS compliance is essential. It sets security standards for data encryption, access control, and breach prevention.
Local and Sector-Specific Rules
Depending on your market, additional regulations may apply, such as GLBA in the U.S., DIFC Data Protection Law in the UAE, or MiFID II for trading platforms. Ignoring these can delay licensing or trigger fines.
By building a working knowledge of these standards early, fintech startups can avoid costly pivots later in the development cycle. Compliance shapes product architecture, customer trust, and long-term scalability.
Also, read:
- PCI DSS Compliance: A Developer’s Guide to Building Secure Payment Platforms
Real-Time Payments and the API Economy: What Payment Providers Need to Scale Fast
How Banks Can Leverage AI to Improve Compliance, Risk Management, and Customer Experience
The FinTech Compliance Checklist (Pre-Launch)
Before going live, fintech startups need a foundation that meets regulatory expectations from day one. The checklist below breaks down core compliance areas every startup should address before launch.
Each step is designed to reduce risk, accelerate approvals, and prepare your platform for scale.
Define Your Regulatory Jurisdictions
A payments app serving the EU will face very different requirements than one focused on U.S. markets or operating across both. Identify your obligations early to avoid retroactive compliance fixes.
Establish GDPR Readiness
Ensure personal data collection is lawful, transparent, and secure. Set up:
- A lawful basis for processing (e.g., consent or contract)
- Records of Processing Activities (RoPA)
- Data subject rights management (access, erasure, portability)
- Breach notification protocols
VOLO supports startups in structuring these components early in the build process, so compliance isn’t an afterthought; it’s integrated from the beginning.
Implement PSD2-Compliant Payment Flows
If offering payment or account information services in the EU, implement:
- Strong Customer Authentication (SCA)
- Secure, documented APIs
- Consent-based data access policies
These aren’t optional; they’re required to connect with the EU banking infrastructure.
Build a KYC/AML Policy
Develop clear procedures for onboarding and monitoring users:
- Identity verification checks
- Transaction monitoring rules
- Suspicious activity reporting process
- Ongoing compliance audits
Whether outsourced or in-house, this framework must be defined before launch.
Assign Compliance Responsibility
Even if you’re a small team, regulators expect clear ownership. Designate a compliance officer (internal or external) and establish a point of contact for audits, reporting, and incident response.
VOLO often supports early-stage clients by integrating compliance management into the MVP development process, ensuring every team has a compliance structure in place from the start.
Conduct a Security & Risk Assessment
Perform vulnerability scans and penetration testing. Document findings and remediation plans.
Consider frameworks like ISO 27001 or SOC 2 to guide your approach, even if certification isn’t yet required.
At VOLO, these frameworks inform our security-first development practices for fintech clients across regions.
Prepare Audit-Ready Documentation
Create and store key compliance artifacts:
- Privacy policy and terms of service
- Data processing agreements (DPAs)
- Vendor risk assessments
- Policy documents (KYC/AML, data handling, incident response)
Investors and partners will expect this level of transparency.
Train Your Team
Founders, engineers, and customer-facing staff all impact compliance. Ensure everyone understands data handling protocols, access restrictions, and incident reporting procedures.
Need help aligning your product with GDPR, PSD2, or KYC requirements?
Book a free consultation with VOLO’s specialists to assess your launch readiness and map out next steps with confidence.
Schedule a FinTech Strategy Session
Region-Specific Watchouts
While fintech regulations share common principles globally, like protecting consumers and reducing fraud, compliance requirements vary significantly by region.
Startups planning for cross-border growth need to account for these differences early to avoid legal blockers or platform redesigns post-launch.
Here’s what to keep in mind when operating in or expanding to key markets:
European Union (EU)
- GDPR governs all personal data handling, regardless of company location.
- PSD2 applies to any business offering payment initiation or account information services within the EU.
- eIDAS affects electronic identification and trust services, especially for signing digital agreements.
- Data localization is generally not required, but transfer mechanisms (e.g., SCCs) must be in place when moving data outside the EU.
United States
- No federal equivalent to GDPR, but multiple state-level laws apply:
- California (CCPA/CPRA): data access, deletion rights, and opt-out mechanisms.
- New York DFS: cybersecurity requirements for financial services.
- GLBA (Gramm-Leach-Bliley Act): governs how financial institutions share nonpublic personal information.
- Ongoing scrutiny from the CFPB (Consumer Financial Protection Bureau) means compliance frameworks should cover both data protection and consumer fairness.
Middle East & North Africa (MENA)
- Many countries are formalizing data protection laws aligned with GDPR principles.
- UAE (especially DIFC and ADGM) enforces strict data privacy, cross-border data controls, and fintech licensing frameworks.
- KSA (Saudi Arabia) is rapidly expanding its fintech sandbox under the Saudi Central Bank (SAMA).
- Data localization is a growing expectation, especially for platforms storing financial or biometric data.
Other Regions to Watch
- Singapore & Hong Kong: Strong regulatory oversight with established fintech sandboxes and mandatory KYC/AML regimes.
- India: Increasing scrutiny under RBI, especially around digital lending, eKYC, and real-money transactions.
- Brazil (LGPD) and Canada (PIPEDA): Similar to GDPR, with local nuances around consent and enforcement.
Building with regulatory awareness from the start helps avoid costly refactoring later, and opens the door to partnerships with banks, PSPs, and cross-border investors.
Beyond The Checklist: Compliance As A Growth Enabler
Compliance is often viewed as a barrier to innovation, but for fintech startups, it can be a powerful growth driver.
When treated strategically, it creates momentum across funding, partnerships, product architecture, and user trust.
1. Strengthens Investor Confidence
Investors are more likely to back companies that demonstrate operational maturity and risk awareness. A well-prepared compliance foundation, complete with documented policies, consent flows, KYC/AML procedures, and audit trails, signals that the business is ready for due diligence and built to scale responsibly.
2. Unlocks Banking and Payment Partnerships
Integration with banks, payment processors, or card networks depends on proof of regulatory readiness. These partnerships can accelerate market entry and expand your reach, but only if your platform meets security, identity, and licensing standards from day one.
3. Reduces Technical Debt
Designing products with privacy and compliance in mind avoids costly rework after launch. Instead of retrofitting risk controls or rewriting APIs for PSD2 or PCI DSS, startups can scale on stable, future-ready infrastructure.
4. Builds Customer Trust
Fintech customers are highly attuned to privacy and security signals. Transparent policies, clear data practices, and visible fraud protection measures can differentiate your product and increase user retention.
How VOLO Helps Fintech Startups Get It Right
We work closely with founders and product teams to integrate GDPR, PSD2, KYC/AML, and PCI DSS requirements directly into platform architecture, so startups don’t have to choose between speed and structure.
For 20+ years now, our team supports early regulatory scoping, documentation, and risk assessments to help you meet investor expectations, pass partner reviews, and go to market with confidence.
Here’s how we support fintech startups at every stage:
- Early-stage guidance on selecting the right jurisdiction, understanding licensing needs, and building a scalable compliance roadmap.
- MVP development with security-first architecture and embedded regulatory features like SCA, consent management, and KYC workflows.
- Documentation and audit readiness, including privacy policies, data flow mapping, and risk registers tailored for investor due diligence and regulatory review.
- Technical delivery that meets global standards, from ISO 27001-aligned infrastructure to region-specific data handling practices.
- Post-launch support for scaling securely, maintaining compliance across updates, and expanding into new markets.
For startups building MVPs, we offer rapid iteration cycles that don’t compromise compliance. For scaling teams, we help strengthen security, governance, and reporting as requirements grow more complex.
Book a free strategy session with our fintech specialists to assess your compliance readiness and launch with confidence.
