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Turning the page to 2023


Klaros has grown quickly over these past three years. It seems like a good time to reflect on the company we’ve become.

Fintechs are the heart of our business, and all of our work with them revolves around a single question of existential importance to every fintech: how can you provide banking services, prudently, in full compliance with law and regulation, when you are not a bank?

Over our first three years, we’ve worked with dozens of fintechs whose challenges center on finding or maintaining bank partnerships, handfuls of fintechs seeking to obtain banking licenses by acquisition or de novo application, and a smattering of fintechs that have actually succeeded in obtaining banking licenses. We’ve also worked with fintechs focused on business and consumer lending, payments processing, fraud prevention and compliance, investment management, digital banking, core banking, expense management, mobile wallets, BNPL, and cryptocurrency.

2022 also saw significant growth in our banking clientele. Some of that growth flowed directly from the work we do with fintechs. For example, we’ve worked with fintechs that have obtained banking licenses to build strong regulatory relationships and comply with supervisory and enforcement directives. And we’ve worked with leading partner banks to the fintech sector, and a number of community and mid-size banks working to explore or launch banking-as-a-service (BaaS) businesses. We’ve also worked with several very large banks, helping them to launch innovative new products responsibly and see around the corners of coming regulatory changes.

The challenge of innovating responsibly runs through all of our work, but the risks and opportunities look different to our fintech clients than to our bank clients. For fintechs, the challenge centrally revolves around preserving a culture of nimbleness and innovation while building the risk management and governance disciplines essential to satisfying regulatory requirements and expectations. Banks approach the same problem from the other direction: they worry about the potential for overly muscular risk management to inhibit necessary innovation, putting their long-term competitiveness at risk.

This challenge won’t go away. Venture funding may be on ice, and crypto in flames, but the future of financial services depends on innovation, and the fintech sector is where it comes from. As fintech matures, and its ties to mainstream finance deepen, its standards of risk management and prudential governance must inevitably rise. The tens of millions of Americans who turn to fintechs for financial products and services every day deserve to have confidence that those fintechs are prudently managed and will treat them fairly. Conversely, banks that want to remain relevant in the future of financial services need to figure out how to raise their standards of innovation - without sacrificing strong risk management discipline.

We love this challenge. We think getting it right is hard - and that it matters. As 2022 draws to a close, we are grateful to each and every one of our clients for putting their trust in us and giving us the chance to do the work that we love.

I also want to thank all the members of the Klaros team. In the first half of the year, we welcomed several additions to our full-time staff. More recently, we welcomed our new general counsel, Doug Gleason, and several tremendous additions to our senior advisor ranks, including Mary Dent, Bob Hartheimer, Ken Miller, and Kevin Stein. Now more than 30 strong, every member of our team is laser-focused on the future of financial services and determined to be the best at what they do.

Helping clients to scale their businesses through innovation, and manage the risks effectively - whether through a new strategic direction, a sound business plan, a well-crafted policy, or simply a good business decision - is the day-to-day work of Klaros. We’re excited about the challenges ahead in 2023. In the interim, the very best to you and yours this holiday season.


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