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You’re working at the next great investment platform and the time has come to consider fintech onboarding. Maybe you’re the CEO, founder or head of a product organization tasked with identifying the third-party providers that will help launch your new platform, or take an existing company to the next level.

Yes, Dwolla is a fintech company and we work with other fintechs to deliver comprehensive account-to-account payment experiences for our clients, partners and their end users.

Our team of payments experts has acquired a wealth of knowledge on fintech onboarding and what steps investment platforms can take to help ensure they have a smooth onboarding experience with fintechs.

We’ve identified four key questions investment platforms should be prepared to answer (and document) when onboarding with a fintech.

  1. Is your product an investment fund, or are you a technology company enabling investments on behalf of your end users?
  2. What SEC regulations will your platform need to comply with?
  3. Who are your investors?
  4. What are your internal risk and compliance processes?

Identify the Type of Investment Platform

Does your company identify as an investment fund or a technology company? The difference may seem subtle and interconnected, but in the investments space there are important differences that determine your regulatory obligations.

Charityvest, for example, is a donor-advised fund. Through the Charityvest platform, end users deposit money in their Charityvest accounts and are then able to make grants to any IRS-recognized nonprofits. Their customers can also invest their Charityvest balance tax-free in ETF (exchange-traded fund) portfolios.

Masterworks is an example of a technology company that enables investing on its platform. Masterworks facilitates fractional investing in art. Once a Masterworks end user attaches a funding source to the platform, funds can move from the end user’s bank account to an escrow account set up for each individual piece of art.

See the difference? Knowing where your company falls on the spectrum of investment platforms is a significant step in fintech onboarding.
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Be Aware of SEC Regulations

During an onboarding call with a fintech company, this question is certain to come up: Are you aware of the SEC (U.S. Securities and Exchange Commission) regulations you are responsible for complying with?

There are two correct answers to this question:

  1. “Yes, let me send you a copy of our documentation.”
  2. “That’s a great question for our compliance officer.”

This article isn’t meant to be a deep dive on SEC regulations pertinent to investment platforms, so we won’t go in-depth on that here. However, any reputable organization will ask these questions, so it’s best to be prepared. Take a look at these resources on Regulation A, Regulation D and Regulation Crowdfunding for more information.
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Identify Your Investors

Knowing your customers is a relevant question for any business and particularly for investment platforms because it will influence the type of regulations your business must adhere to.
You should be prepared to answer questions like these:

  • Is the type of investment you’re working with publicly available?
  • Is it available to accredited investors only?
  • What about institutional investors? Businesses?

Answering these questions will impact end user onboarding requirements, like whether a customer can hold a balance on your platform, transact with other end users, send or receive funds, etc.
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Risk and Compliance Processes

All fintech companies will want to know what internal processes you have in place to manage risk and mitigate fraud.

We recommend three blogs and a webinar to help educate you on the importance of compliance processes and customer verification.

While each fintech company your investment platform works with will have a different flavor to its onboarding process, the questions outlined above provide a blueprint for you to come more prepared to your next fintech onboarding meeting. Addressing these questions beforehand will help move you through the onboarding process more smoothly.

If your business is looking for a modern payments platform to enable money movement and connect to payment rails such as ACH, Real-Time Payments and push-to-card with Visa Direct, reach out to the Dwolla team to explore a partnership opportunity or configure a payment solution.

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