The problem usually starts with good intentions. A new fintech product is sleek, fast, and beautiful until it asks for three selfies, a passport scan, and a utility bill for the last three months before letting you send five pounds to your friend.
Behind every polished app is a battlefield of trade-offs. Somewhere in the back office, someone had to weigh security versus simplicity, legal requirements versus user flow, risk tolerance versus growth. And too often, user experience loses.
This is the quiet war happening in fintech today, and I’ve fought it from both trenches.
I’m the Director and Money Laundering Reporting Officer (MLRO) at SENDS, a UK-based fintech company regulated by the Financial Conduct Authority (FCA). My job is to make sure we meet the full weight of regulatory requirements – Anti-Money Laundering (AML), Know Your Customer (KYC), fraud detection, transaction monitoring, while also making sure that people don’t abandon the app before they even get to the dashboard.
It’s not an easy dance. But if the UK’s fintech sector wants to keep its global edge, we have to stop treating regulation and UX as opposites. Because the moment compliance breaks the product, you’ve already lost your user.
Why Compliance Usually Kills UX (And Why It Shouldn’t)
Let’s be honest: most people associate compliance with friction. It’s the pop-up that interrupts your sign-up flow, the document upload that fails on mobile, the error message written like a legal memo. That friction doesn’t just frustrate users – it costs companies real money.
In 2022, Finextra reported that over 68% of fintech app users abandoned onboarding flows due to poor KYC experience. That’s two-thirds of your marketing budget burned before a user even verifies their account. For startups, it’s deadly. For regulators, it’s a missed opportunity to foster trust through thoughtful design.
Why does this happen?
Because in many companies, compliance lives in a silo. The legal team drafts bulletproof protocols. The design team builds a slick UI. And no one sits down to translate one into the other. As a result, they get Frankenstein workflows, built for auditors, not actual user-clients.
I’ve seen what happens when you treat regulation as a checkbox exercise. Before I stepped into my current role, our onboarding process took new users an average of 8 minutes to complete. We had a 39% drop-off rate on step three: document verification. And worse, users who failed once often didn’t try again.
But compliance doesn’t have to mean complexity. When it’s done well, it’s invisible. Intuitive. Trust-building.
That’s why the question isn’t whether we comply, it’s how we do it without killing the experience.
Anatomy of a Product-Led Compliance Strategy
We had to make a choice: let compliance dictate the product, or let the product shape compliance. We chose the second and it changed everything.
We call it product-led compliance. It’s not a buzzword. It’s a mindset. Instead of starting with the regulation and figuring out how to “force it in” later, we built our AML and KYC flows hand-in-hand with the product and UX teams from day one. This meant sitting around the same table, mapping user journeys against regulatory requirements, and redesigning both when they clashed.
One of our most effective moves was implementing a tiered KYC model. Inspired by the FATF’s risk-based approach, we grouped users into categories based on transaction size and geographic risk profile. Lower-risk users, someone sending £50 to a friend in the UK, got a lightweight, frictionless onboarding. Higher-risk profiles triggered deeper checks automatically.
The result?
- We reduced onboarding time by 50% on average.
- Drop-off at the document stage fell from 39% to 20%.
- The average number of support tickets related to verification dropped by 70% within three months of rollout.
This wasn’t about cutting corners. We remained fully compliant with FCA standards and underwent third-party audits successfully. But by building smart logic into the user flow, things like progressive disclosure, real-time error messaging, and backend automation, we gave users a sense of speed and transparency. And we did it without sacrificing a single line of regulatory coverage.
Key Principles for Marrying UX and Regulation
There’s no secret sauce, but there are principles. Over the past few years, I’ve distilled some hard-won lessons from building real, live systems that walk the tightrope between compliance and usability. Here’s what works:
1. Know the Regulation Better Than Your Regulator
This sounds provocative, but it’s essential. Regulations are rarely as rigid as companies think; they’re frameworks, not scripts. Most fintech teams over-comply out of fear or uncertainty, building walls where doors would do.
When we redesigned onboarding, I personally reviewed not just UK FCA rules, but FATF recommendations, EU AML directives, and even key enforcement actions. Why? Because the better we understood the intent behind the rules, the more freedom we had to innovate.
Case in point: The law didn’t require users to upload documents on day one. It required us to verify identity before certain actions. So we restructured the flow, users could explore the app and only triggered verification when they tried to transact. This change alone increased first-week retention by 25%.
2. Design With Risk, Not Red Tape
Not all users carry the same risk, and not all should be treated like they do. A tiered compliance model allows you to be both rigorous and respectful.
We use a combination of behavioral analytics and geographic risk scores to decide which users need which level of scrutiny. Low-risk flows are near-frictionless. High-risk ones are robust but intuitive.
Result? We maintained full AML compliance and reduced false positive alerts by 40%, allowing compliance officers to focus on real threats.
3. Make Your Errors Human
Too many fintechs still throw up alerts like “IDV_FAIL_404” or demand a re-upload with zero guidance. That’s not compliant, that’s lazy.
We rewrote every error message in our flow using human language. Instead of “document not accepted,” we used: “We couldn’t read your ID. Try again with better lighting or a clearer photo.” Our re-verification success rate went from 44% to 72%.
4. Bring Legal, Product, and UX Into the Same Room—Early
This is non-negotiable. If legal writes the requirements in isolation and the product gets them two sprints later, you’re already too late.
Compliance must sit in product kickoff meetings. Our wireframes go through risk assessment before they hit Figma. It’s slower up front, but faster in the long run.
And most importantly? It builds mutual trust. Product understands regulation isn’t just paranoia. Legal sees that good UX can reduce risk, not increase it.
Building fintech products today isn’t about choosing between regulation and growth. It’s about learning how the best companies use regulation as a backbone for trust, and design as a bridge to scale.
The ROI of a Seamless Compliance Experience
Good UX isn’t a nice-to-have in compliance, it’s a strategic asset. Once we moved away from one-size-fits-all onboarding and redesigned our compliance flows with the user in mind, the impact was immediate and measurable.
Here’s what we saw in the first 6 months after rolling out our product-led compliance framework:
- User onboarding time decreased by 43%. From 30 minutes to corporate clients to under 15, without removing a single compliance step.
- Drop-off rate during identity verification fell from 39% to 20%. Clearer instructions, smarter automation, and mobile-first design made the difference.
- False positive AML alerts dropped by 40%. Thanks to risk-based segmentation and better training data.
- Support tickets related to KYC declined by 70%. We gave users the tools to self-resolve most issues without escalation.
This also changed how we hired and structured the compliance team. Instead of purely legal profiles, we brought in data analysts, UX-minded operations specialists, and even a former customer support lead. Compliance became cross-functional by design, not accident.
We also started feeding product decisions back into our risk engine. When a user abandons onboarding at the document upload stage, we don’t just log it; we ask why. And sometimes, we change the flow entirely.
Because in fintech, user behavior is a risk signal. But it’s also an opportunity for empathy.
Why the Industry Needs More Product-Minded Compliance Leaders
Fintech innovation is booming globally, across London, Berlin, Amsterdam, New York, Vilnius, and beyond. In 2023 alone, Europe saw over €15 billion in fintech funding, while U.S. startups pulled in more than $24 billion. From neobanks to embedded finance platforms, the space is vibrant, fast-moving, and increasingly complex.
But with innovation comes regulation. And one of the biggest pain points across markets isn’t the rules themselves. It’s the compliance bloat that follows when legal obligations are bolted onto products after launch, not built into them from day one.
We’re seeing this everywhere:
- In the UK, the Financial Services and Markets Act 2023 introduced sweeping changes around consumer duty, forcing firms to revisit onboarding, disclosure, and affordability logic.
- In the U.S., pressure from the SEC and CFPB is pushing fintechs to revisit risk models, especially around credit and crypto.
- Across the EU, the Digital Operational Resilience Act (DORA) and evolving AML directives are testing how fast companies can adapt without breaking the user journey.
The result? A lot of friction. Slower onboarding. Broken flows. Compliance teams scrambling to retro-fit legal processes into sleek front ends. And in the worst cases, user mistrust and churn.
What’s missing isn’t another checklist or a stricter law. It’s product fluency within compliance teams. It’s legal teams that understand Figma, and product teams that can read a regulation without panicking. It’s leaders who can bridge the two.
That’s where I’ve built my edge.
In my experience, the most effective compliance strategies are born where regulation meets UX, not in a policy document, but in the way a user moves through a product. Over the years, I’ve worked closely with both legal and product teams, translating rules into flows, policies into interactions. It’s taught me something simple but often overlooked: the regulator and the user aren’t working against each other. They both want systems that are clear, consistent, and fair.
The fintech ecosystems that will thrive, whether in London, New York, or Warsaw, will be the ones that treat compliance not as a last-minute fix, but as a product design principle. And the leaders they’ll need aren’t just lawyers or coders, but hybrid thinkers who can build trust into every screen.
