Michelle Prohaska Chief Compliance Officer Nymbus, brings firsthand legal expertise to the thorny regulatory issues of digital banking.

Harness Insightful Data While Capturing Clients’ Trust

Customers want to know what data you have on them, and banks are already tasked with providing annual notices that describe how their data is used across everyday transactions and in direct marketing. One big change with Web 3.0 will be increased demand for transparency about how you use their information.

You can see it now, in the current state of Web 2.0. Companies such as Facebook and Amazon use information to market to customers; the effects of data transmission are much more “in your face.” You talk about your neighbor’s adorable new goldendoodle with friends in a coffee shop, and the next day, ads for pet supplies bombard your Facebook feed. These facets of Web 2.0 left customers feeling exploited, leading the call for change.

Lead with transparent, authentic data collection practices. Areas of immediately tangible opportunities for banks mostly fall around privacy and data handling. Customers are generally comfortable sharing information when they understand what’s in it for them. FIs are interested in how consumers spend, and they naturally accumulate data from millions of transactions. When brought together in the right way, FIs can leverage the data their customers are willing to share to better identify opportunities to create solutions and solve everyday problems for their consumers.

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Take A Collaborative Approach To Web 3.0 Compliance

In the world of banking, regulatory requirements are ever-changing as they look to keep up with the pace of innovation. Web 3.0’s unprecedented methods of commerce will result in new regulatory assessments and the potential for revised roles in banking oversight.

We know that some portions of older rules already in place don’t keep pace with innovation. For example, rules for identifying and assessing the risk of customers at the time of onboarding have not evolved to specifically address the differences in opening an account using ever-increasing digital channels.

For FI’s aspiring to be industry leaders in the digital banking revolution, make a strategic investment in compliance to unlock opportunities with less risk. No matter the technology, banking safely and soundly and lending to your customers in a fair and equitable way will always remain a requirement.

Banks must find a balance for how to use data and AI to support automated lending practices. Inadequate monitoring of tools and the outcomes they provide could lead to potentially dire consequences.

Compliance won’t complete you, but it doesn’t have to crush you. Rather than using compliance as a reason to run from or be afraid of innovation, lean into collaborative compliance as a path to some semblance of control. Find fair and equitable solutions to shared problems in a way that balances regulatory requirements with purpose-fueled growth.

When FIs and fintechs partner to engage in transformative compliance, they can uncover solutions that differentiate themselves in new markets without taking unnecessary risks. FIs must maintain compliant programs that meet their regulatory needs but also that are sustainable for the services they offer. To accomplish this, they need to invest in the right processes and people. Banking is no longer viewed through a skewed lens of conspiracy. Now more than ever before, people are open to sharing data. But they require transparency about what’s in it for them. This opens the door for banks to uncover solutions to customer problems.

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Crack Real-World Customer Problems — Such As Crypto

The financial institutions that are thriving are outcomes-based. By dipping their toes in Web 3.0 waters — at least conceptually — FIs can strengthen their reputation as educators and consultants.

FIs have Web 3.0 opportunities around privacy for releasing data, such as for an exclusive program or specific banking services. Stablecoins are an area of focus for regulators in 2022. Their popularity continues to grow with beginning investors looking to avoid trading fees. Banks can provide value as a conduit between crypto and regulators.

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Invest In Fearless, Future-Minded Partners And Processes

Partner is a hard word, and it’s one that is often overused in the financial industry. Everyone says they are your partner, but when you look at how they invest in their support infrastructure or actually work with you on the problems most relevant to you, it sometimes doesn’t add up.

For a partnership to truly thrive, both sides must understand each other’s motivations and capabilities. Nobody’s perfect, so the best partnerships occur when there is a shared goal of growing and learning together. Web 3.0 is a way financial institutions and fintechs can unite to look at what they are trying to accomplish for their customers and what new tools and opportunities are possible to do that.

Shed the status quo, and step into the future. Ready or not, Web 3.0 is coming. Don’t be left behind in the metaverse. What is certain is that within the next 10 years, the way we interact will be different. Innovative banks can help redefine the financial future. Let’s go!

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