Fintech is one of the dominant sectors that covers the innovation landscape globally and is evolving the economy to be more digital; yet, some processes in FinTech haven’t caught up with the momentum of transformation, such as audit readiness.
Despite the fact that fintech is a leading example of digital transformation for many sectors and practices, companies still manage audit processes and procedures manually, often with messy email threads, shared file storage, and multiple versions of documents, resulting in hundreds of files. As a result of messy and outdated workarounds, audits have become one of the most stressful processes fintechs often endure.
With the help of technology, today, encryption, data collection, and digital footprint management have become easier. Most importantly, it is more available than ever before. As fintechs have become one of the most important actors globally in terms of innovation and digitalisation, both principles should be implemented within the sector to increase efficiency and improve the sector overall. Hence, efforts to gather evidence and documentation for modern audit processes do not have to be “scary,” “stressful,” or time-consuming for fintech players due to the current complexity and manual nature of these processes.
By its nature, an audit is a process by which an entity gathers relevant information, documents, and evidence regarding a specific or general subject for examination by third parties or internally. This means there is a flow of information from one source to another, which is then presented. Since an “audit” may contain critical and sensitive information or processes, it would make more sense to avoid the current method of conducting the “audit” with various and multiple means and tools of communication and information storage, over which both the entity and the auditor have no control.
One of the core principles of a strong audit trail is integrity. Each piece of information carries its original metadata, including timestamps, user ID, and source system. Based on this principle, an audit should be carried out in an integrated, singular environment that avoids risks associated with messy documentation or inserting critical or sensitive information into different environments that do not provide encryption, interfere with the roles of shareholders in the process, or require authentication to access files or information. Additionally, manually reviewing hundreds of files for one critical log or policy that could create negative consequences is not only painful for the auditor and the entity being audited, but it is also unsustainable.
Considering all this scattered practice within the fintech sector, there is no need to strive in every audit period to prolong the agony manually. Modern fintech companies and start-ups rely on multiple tools, including Jira, Slack, Google Drive, ERP systems, internal storage systems, and APIs – the list is endless. As fintech companies digitalise, automate, and even revolutionise how the economy operates, it would not be assertive to assume there is enough collective knowledge about the problems fintechs are facing and what solutions could be developed and implemented within the sector. It is also important to note that compliance does not end when the audit is over, as the audit is not a one-time event that remains valid for eternity. Many different types of audits require the retention of evidence and information for specific periods. Therefore, solving the “audit drill” is a critical step for fintechs to flourish.
