Keyword: fintech, corporate culture, organizational structure, laws and regulations

1. Introduction

1.1. Why Fintech

Itay Goldstein, Wei Jiang, G Andrew Karolyi mentioned that, as the name suggests, financial technology is the integration of finance and technology [1]. Thomas Puschmann stated that financial technology is the embodiment of digitalization in the financial services industry [2]. Fintech here mainly refers to the revolution in the financial industry caused by the development of information technology (IT). The rapid development of information technology has caused changes in the services of the financial industry. People reduce unnecessary face-to-face communication and make more asset management and investment decisions through the Internet. At present, the development of fintech is gradually penetrating into public life. The 2015 report of the World Economic Forum classified fintech related fields, which mainly consist of six parts: payments, deposits and loans, insurance, capital increase, investment management, and market supply.

1.2. The composition of the fintech ecosystem

Rose, J. W., Andrews, K.,&Kenny, K. pointed out that fintech is a multidimensional ecosystem, with important participants being decentralized cryptocurrencies without a central corresponding currency [3]. Financial technology includes various tools such as distributed ledger technology, various blockchain-based services, artificial intelligence, venture capital and mobile banking. In Lee, I., & Shin, Y. J. analysis of the financial technology ecosystem, he pointed out that the financial technology ecosystem mainly consists of five major categories: financial technology companies, traditional financial companies, governments, related customers and technology developers [4].

Among them, emerging financial technology companies are driving the continuous development and evolution of the financial technology ecosystem. Fintech companies compete with traditional financial institutions in the market to promote the continuous development of fintech technology and further deepen the depth of the fintech ecosystem. Traditional financial companies, including but not limited to traditional banks, insurance companies, bond investment banks and other financial institutions, are also engaging in further cooperation while competing with financial technology companies. On the other hand, the government is the main regulator, and its main purpose is to maintain market stability and safeguard consumer rights by issuing relevant laws, regulations and regulatory requirements. Customers are the ultimate beneficiaries of financial technology services and are also consumers in the system. Their main role is to put forward their own needs and require financial technology companies to provide corresponding solutions. Technology developers are the cornerstone of the entire fintech ecosystem. They are responsible for developing and providing relevant fintech technologies and providing them to fintech companies or traditional financial institutions, thereby broadening the coverage of the fintech market.

The main feature of the fintech ecosystem is decentralization, which eliminates intermediaries, simplifies processes, and improves the efficiency of financial services. Collaboration and partnership. In the fintech ecosystem, while there is competition between fintech companies and traditional financial institutions, there is also cooperation, using the advantages of each participating company to obtain more customers and resources. Relevant regulatory requirements and laws and regulations are crucial to the fintech ecosystem, mainly to ensure that participants do not harm consumer rights and stabilize the market.

This article mainly discusses the importance of organizational culture, governance structure, laws and regulations for financial technology companies in the financial technology ecosystem , and explores the challenges that need to be faced. Organizational culture includes its composition and positive impact on the emergence of financial technology companies. Governance structure mainly involves different management structures and corresponding functions in financial technology companies. Laws and regulations mainly refer to the laws and regulations and corresponding regulatory requirements promulgated by various governments and international organizations for financial technology. It also elaborates on the responses of financial technology companies to different laws and regulations.

2. The importance of organizational culture in fintech

2.1. The definition and related components of organizational culture

A strong organizational culture plays a crucial role in the success, development, and sustainable development of a company. The culture within FinTech organizations shapes their values, beliefs, behaviors, and norms, which in turn influence their interactions with customers, employees, regulatory agencies, and other stakeholders. Mercdal, Trudy pointed out that organizational culture refers to the formal environment and norms that characterize a specific organization, as well as the informal behaviors and social phenomena that occur between individuals within the organization [5]. Organizational culture is one of the important determinants of organizational behavior and can also be seen as a factor providing organizational performance and work efficiency. People in organizations often recruit like-minded individuals, so organizations often have a cohesive culture. Yoonjin Choi, Paul Ingram, and Sang Won Han believe that cultural consistency among organizational members can enhance the cohesion of fintech organizations, enhance task coordination, and thereby improve work efficiency, which has a positive impact on organizational performance [6]. Chatman et al. argue that the culture of each organization consists of three components: the content of norms, the level of agreement among members towards norms, and the intensity of organizational members towards specific norms [7]. A company with a high cultural consensus performs well if its normative content strongly emphasizes adaptability.

2.2. Strong Culture in the Context of Financial Technology

Promote innovation: The development of fintech companies cannot do without innovation, and only by continuously developing new technologies can they occupy a certain position in the fintech ecosystem. It creates an environment where employees feel capable of challenging traditional wisdom, exploring new ideas, and developing breakthrough solutions to address customer needs and pain points. By promoting innovation, a strong culture enables fintech companies to maintain a leading position and competitive advantage. Alzyadat, M., Baruah, B.,&Ward, A. concluded that creating an internal entrepreneurial culture, providing clear strategies, and ensuring the integration of supporting management practices serve as the main framework for promoting internal entrepreneurial capabilities among engineers [8].

Attracting and retaining talent: A strong organizational culture has become a key factor in attracting and retaining top talent. Financial technology companies usually look for talents who are passionate about technology and entrepreneurship and are willing to have a meaningful impact. A culture that emphasizes teamwork, collaboration, and a sense of mission can greatly attract talented professionals to share the company's values and mission.

Confidence building: Trust is a very important factor in financial services. Financial technology companies need to handle sensitive customer data when providing services, so establishing a strong organizational culture with transparency, integrity, and ethical behavior can build trust with customers, regulatory agencies, and partners. This reflects the commitment of fintech companies to customer information, compliance with regulatory requirements, and ensuring fair and responsible practices.

Customer-centric: Fintech is essentially a service industry, so it is necessary to focus on customers and provide them with convenient and personalized financial services. It is indispensable to establish a strong organizational culture with customers at the center of decision-making. By encouraging employees to think deeply about customers' needs, promote empathy, and constantly improve products according to customers' requirements and their own judgments.

Adapting to regulatory changes: Legal regulation is another important aspect of the fintech industry. Financial technology companies operate in complex regulatory environments and must comply with laws and regulations to ensure consumer rights, data privacy, and financial integrity. A strong organizational culture that values compliance, ethical behavior, and actively responds to regulatory changes can help fintech companies effectively respond to the regulatory environment. This organizational culture can ensure that employees understand and comply with compliance requirements, actively participate in risk management processes, and thereby reduce the risk of organizational non-compliance.

2.3. Conclusion

A strong organizational culture is crucial for fintech companies to thrive in a dynamic and fiercely competitive industry environment. Its ability to drive innovation, attract top talent, establish trust, and cultivate a customer-centric mindset has a positive impact on the organization's position in the financial technology ecosystem.

3. The role of a robust governance structure in the financial technology ecosystem

3.1. The composition of the governance structure

A robust governance structure is an important component of the fintech ecosystem, providing a framework for effective decision-making, risk management, and regulatory compliance for fintech companies.

In fintech companies, the governance structure generally consists of the following points:

Risk management: Currently, fintech companies face various risks in the environment, including not only network security threats, operational interruptions, and financial challenges. Establishing a robust governance structure can effectively identify, evaluate, and come up with appropriate solutions for these risks. In response to these risks, fintech companies can proactively manage risks and ensure business continuity by establishing clear accountability, defining risk management processes, and implementing appropriate controls, ensuring that the company is not affected by these risks.

Compliance with regulatory requirements: In the current financial technology ecosystem, there are various related requirements, such as data privacy, consumer protection, anti money laundering (AML), and Know Your Customer (KYC). A robust governance structure provides a necessary framework for financial technology companies to monitor and comply with these regulations. Fintech companies establish internal policies and procedures, implement controls, and ensure compliance with legal and regulatory obligations.

Accountability and transparency: Financial technology companies can further promote effective communication and information sharing by establishing clear reporting relationships, defining roles and responsibilities. This transparency enhances internal control mechanisms, promotes ethical behavior, and reduces the likelihood of fraud or misconduct.

Effective decision-making: In the current rapidly changing competitive environment, timely and accurate decision-making is crucial for fintech companies. A robust governance structure promotes effective decision-making processes by providing a clear governance framework, establishing decision-making bodies, and ensuring accurate and reliable information is obtained. This governance structure can enable fintech companies to quickly respond to market opportunities and adjust their strategies, while constantly changing their business models to adapt to changing customer needs and industry trends.

Maintaining financial stability: Compliance with regulations can be helpful for financial stability within the fintech ecosystem. Regulations on capital requirements, risk management, and operational flexibility help ensure that fintech companies have sufficient capacity to withstand potential economic shocks and disruptions. This way, in the face of sudden fund breakage or investment failure, fintech organizations have a certain buffer, which can stably weather various unexpected events and also reduce the risk of turbulence in the fintech ecosystem.

Investor confidence and partnership: Financial technology companies typically require external investors to invest, including venture capitalists, private equity firms, and strategic partners. A robust governance structure can attract and maintain investor confidence. Investors seek companies with strong governance practices because a robust governance structure can demonstrate a commitment to ethical behavior, risk management, and long-term sustainability.

Scalability: A robust governance structure can help fintech companies expand. In response to the increasing regulatory requirements and the gradual expansion of the company, a good governance structure can stabilize the internal structure of the company while controlling risks, laying a solid foundation for further expansion. A good governance structure can not only enable organizations to rapidly expand in new markets, but also avoid conflicts with the regulation of new markets.

3.2. Conclusion

A robust governance structure is an indispensable part of the success of fintech companies. They can achieve effective risk management, compliance with regulatory requirements, accountability, transparency, and informed decision-making. By establishing and maintaining strong governance practices, fintech companies can improve operational efficiency, establish trust with stakeholders, and confidently navigate a dynamic and regulated fintech ecosystem.

4. Comply with laws and regulations in the field of fintech

4.1. The regulatory environment of fintech

SHALA, A.,&PERRI, R. pointed out that there are certain challenges in regulating the emerging new financial technologies, not only to keep up with the progress of financial technology, but also to understand and manage the regulatory risks involved [9]. In the current regulatory environment, this is undoubtedly a huge challenge. Moreover, the current financial regulatory system is not unified and does not exist in the same era, which further exacerbates the difficulties of financial regulation. Kirkpatrick, K., Stephens, A., Gerber, J., Nettesheim, M.,& Bellm, S. mentioned in their article that with the globalization of digital assets and the growth of cryptocurrency applications, regulatory agencies around the world have shifted their focus to anti money laundering [10]. This means that in the current environment, market participants should have an understanding of relevant laws and regulations when entering the digital currency market. At the same time, in the face of emerging financial technology technologies, the national regulatory system has proposed a new regulatory method, sandbox supervision, which was first proposed by the British government and involved the first six financial technology companies [11].

4.2. Legal Obligations of Financial Technology Companies

Licensing and regulatory compliance: Firstly, if fintech companies want to operate legally in the financial services industry, they need relevant licenses or authorizations. The specific types of licenses vary depending on the financial services provided by the company, such as payment, lending, digital currency, or investment management. This requires Fintech companies to establish a relevant regulatory framework, engage with regulators, and ensure compliance with applicable laws and regulations, such as financial regulations, anti-money laundering (AML) requirements, consumer protection laws, and data privacy regulations, such as the General Data Protection Regulations (GDPR).

Data privacy and security: Secondly, according to the current business provided by fintech companies, they usually come into contact with a large amount of private data from customers, so they must comply with data protection and privacy laws to protect customer information. Here, the obligation of financial companies is not only to protect customer information, but also to promptly inform customers of data breaches to avoid greater losses.

Anti Money Laundering (AML) and Know Your Customer (KYC): Financial technology companies typically need to fulfill AML and KYC obligations to prevent money laundering, terrorist financing, and other illegal activities. These obligations require a strong identity verification process, continuous monitoring of customer transactions, and reporting of suspicious activities to regulatory authorities. When conducting financial technology business, this will have a certain impact on some customer experiences. This requires financial technology companies to balance the relationship between the two and set up corresponding departments to handle the special requirements of certain customers. In controlling While taking risks, retain customers and enhance customer experience.

Promoting market access and partnerships: Compliance with laws and regulations is usually a prerequisite for market access and partnerships in the fintech industry. Regulatory and financial institutions require fintech companies to meet certain compliance standards before entering new markets or collaborating with established companies. Demonstrating compliance helps fintech companies establish credibility, obtain regulatory approval, and unleash opportunities for expansion and collaboration.

Liability and Legal Risk: Financial technology companies face legal risks and potential liabilities for errors, omissions, system failures, or unauthorized access to customer data. It is necessary to develop appropriate legal risk management strategies, including insurance coverage and contract protection, to mitigate potential legal risks.

Multi market operation: When fintech companies expand their business scope, they need to be familiar with the relevant laws and regulations of the target market in advance and comply with different regulatory frameworks when entering other markets.

Sandbox supervision: Sandbox supervision is a new type of supervision model. It mainly allows financial technology companies to innovate and test new products within the scope defined by the regulatory agency. It limits the scope of customer groups and testing time, thereby making risks controllable. . Regulators can also provide their own guidance, in which they can understand new technologies and improve their regulatory capabilities.

4.3. Conclusion

Compliance with laws and regulations is crucial for financial technology companies to operate legally, reduce risks, protect consumers, and maintain market integrity. However, the innovation of the financial technology ecosystem also needs to be balanced with compliance. When innovating, it is also necessary to communicate and cooperate with relevant regulatory agencies to ensure that relevant innovations comply with laws and regulations. Sandbox supervision is a good example, achieving a balance between innovation and compliance. However, there are also some problems, such as whether there is an imbalance in market competitiveness between companies participating in sandbox supervision and companies that do not participate in sandbox supervision. Whether a certain degree of transparency can be provided during the testing process, etc.

Although the current regulatory environment and related fintech laws are still complex and cannot provide a unified standard, how to legally comply remains the most important step in the development of fintech organizations.

5. Conclusion

To summarize, culture, governance framework, and legal regulation are the three pillars in the financial technology ecosystem. Among them, a strong culture is closely related to the cohesion of fintech organizations, representing the retention of talents and the promotion of innovative development, and determining the position of fintech organizations in the entire ecosystem. A sound governance framework is the foundation of the entire fintech organization. Only if a fintech organization has a sound and solid governance framework can it control its own risks, continue to expand its market, and stabilize its position. And laws and regulations, or compliance, are the bottom line of the entire fintech ecosystem. If any fintech company does not comply with laws and regulations, it will have an impact on the entire ecosystem, exacerbating the difficulties for regulatory agencies. Therefore, complying with laws and regulations is an unbreakable bottom line. However, as fintech continues to develop and gradually replace the traditional financial industry, there are still many challenges, such as international supervision. Currently, there are still differences in the supervision of the fintech industry in different countries and regions, which is a problem for some multinational companies. Fintech companies create challenges in how to comply with regulations while operating in different countries. Facing these challenges, the financial technology ecosystem needs to continuously develop new technologies while promoting multi-field and global cooperation to solve these challenges at all levels.