Why Small and Medium-Sized Businesses Need Regulatory Technology (RegTech) Infrastructure Before Expanding Their Compliance Teams – Kanayo Frank Kemuwa

For many small and medium-sized businesses, regulatory technology and compliance becomes a serious concern only after the business has started to grow.

The pattern is familiar.
The business acquires more customers. Transaction volumes increase. New products are launched. New markets become attractive. More employees are recruited. Third-party providers and suppliers are brought into the operating model.

Then the compliance workload begins to grow.
The usual response is to hire more workforce.
After many years of working across compliance, risk management, financial services and customer onboarding, I have seen this pattern repeatedly. In many cases, the size of the compliance team is not the underlying problem.

The more important question is this:
Does the business have the right compliance infrastructure to support its growth?

Growth Exposes Weaknesses in Compliance
A growing fintech might begin with a relatively simple operating model.
Customer onboarding is manageable. KYC checks are reviewed manually. Risk assessments sit in spreadsheets. Policies are stored in shared folders. Regulatory updates are circulated by email.

At an early stage, these arrangements often appear to work and ultimately suit the business.
Growth changes the situation.
Customer numbers increase. Products become more complex. The business enters another jurisdiction. More payment providers and other third-party providers become part of the operating model. Senior management wants better information about the company’s risk position.

The compliance team is now working across spreadsheets, emails, shared folders, customer records, policy documents and several technology systems.

This is where the compliance cracks start to appear.
A company might have the right policies on paper, yet still struggle to demonstrate how those policies operate in practice.

There is an important distinction between having a compliance framework and having the infrastructure required to manage that framework effectively.
I have encountered this distinction throughout my career.

The Compliance Team Cannot Solve an Infrastructure Problem Alone
Large financial institutions generally have access to specialist compliance functions, dedicated technology budgets and teams covering areas such as AML, sanctions, financial crime, regulatory reporting, risk and governance.
Many SMEs operate differently.

A small financial services business might have one or two people responsible for AML, KYC, risk assessments, regulatory reporting, policy reviews, staff training, monitoring and regulatory change.

Those individuals might be highly capable.
The problem is the volume and fragmentation of the work.
When information is spread across different systems, compliance professionals spend significant time looking for information, updating records, sending reminders and preparing reports.

This reduces the time available for the areas where professional judgement matters most, creating a situation where major issues receive less attention while minor administrative tasks consume disproportionate time.
This is why I do not think the answer to every compliance problem is another hire.
People remain essential to effective compliance. But they need systems that support them to work efficiently, proactively and with better visibility.

Regulatory Technology Should Support Compliance Professionals
There is a common perception that RegTech is primarily about automation and reducing the number of people required in compliance.
I see it differently. Good regulatory technology should remove unnecessary administrative effort and give compliance professionals better visibility over the organisation’s regulatory position.

A compliance function should be able to answer basic questions without spending hours searching through different files and systems.
What regulations apply to the business?
Where are the compliance gaps?
Who is responsible for addressing them?
Which remediation actions are overdue?
Which regulatory changes affect the business?

What risks require management attention?
What has changed since the last review?
These are operational questions, but they are also governance questions.
If the answers require searching through spreadsheets, emails and separate policy documents, the business is carrying unnecessary operational risk.

A structured compliance platform should bring the relevant information, responsibilities, actions and reporting into one environment.

The technology does not make the compliance decision. It gives the compliance professional better information on which to make the decision.
Compliance Should Be an Ongoing Management Activity
Another issue I have observed is the tendency to treat compliance as an exercise carried out before an audit or regulatory review. That approach does not reflect how businesses should operate.
Businesses change. Customers change. Products change. Ownership structures change. Suppliers change. Markets change. Regulatory requirements change.
A business entering the UK market, for example, needs to understand its regulatory obligations before it begins operating. Meeting those requirements at launch is only the starting point.

The business then needs to keep asking whether its controls remain appropriate as its activities change.
This is where RegTech has an important role.
The objective should move beyond simply recording whether a requirement has been addressed.
Businesses need visibility into their current compliance position. They need to know where they stand, what requires attention and who is responsible for taking action.

SMEs need compliance infrastructure designed for their specific reality. There is a significant opportunity to build regulatory technology around the practical needs of SMEs.
The technology does not need to replicate the complexity of systems used by large financial institutions. It only needs to address the problems SMEs encounter every day.

A useful SME compliance infrastructure should support areas such as but not limited to:
Regulatory mapping
Compliance gap analysis
Risk assessment
Customer KYC and onboarding
Regulatory change and insights
Policy management
Remediation tracking
Third-party and vendor compliance
Governance oversight
Vendor management
Management reporting
The purpose is not to remove human judgement.

Compliance decisions often require experience, context and an understanding of the business.
Technology should provide the information, workflow and visibility required to make those decisions properly.

My Experience Has Shaped How I See the RegTech Opportunity
My view on this has developed through my years of working in compliance, risk roles across financial services and technical knowledge.

I have worked with customer onboarding, KYC and AML processes, transaction monitoring, regulatory reporting, risk management and compliance operations.

I have also seen the operational difficulties created when compliance processes depend too heavily on manual intervention and disconnected systems.
Those experiences have influenced my work in regulatory technology.
They were among the reasons I founded Voima CaaS, a regulatory infrastructure platform focused on helping businesses assess, manage and monitor their compliance requirements, particularly as they enter new markets.
The purpose of building such technology is not to replace compliance professionals.
It is to give them better infrastructure.

The Next Stage of SME Compliance

As more SMEs operate across borders, compliance needs to become part of the business infrastructure rather than something added after growth has already occurred.
A registration certificate and a collection of policies do not, by themselves, create an effective compliance function.
A business needs processes.
It needs accountability.
It needs appropriate technology.

And it needs people who understand how regulation applies to the business.
I do not expect technology to remove the need for compliance professionals.
If anything, the increasing complexity of regulation will continue to create demand for people who understand regulation, risk and business operations.
The difference is how those professionals work.
A small compliance team supported by good systems should have greater visibility and control than a larger team working with fragmented information and manual processes.
For SMEs preparing to grow, therefore, the question should not only be whether the compliance team is large enough.

The more fundamental question is whether the compliance infrastructure is ready for the business the organisation is becoming.
In my view, the future of SME compliance will depend on three things working together: people, process and technology.

Getting the balance right will become increasingly important as businesses grow, enter new markets and operate under increasingly complex regulatory requirements.

Kanayo Kemuwa
RegTech Expert | Compliance & Technology Infrastructure | Digital Banking Systems