Dmitrijs Stals is CEO and Founder of CARROT Capital Management LLC.
Despite all of the innovation in fintech, the industry still relies upon banking foundations that were never built for speed, agility or global scale. Fintechs are often forced to layer modern experiences atop slow, paper-bound legacy systems that haven’t meaningfully evolved in decades. Anyone who has tried partnering with a major U.S. bank knows the reality. Most large institutions remain closed to collaboration, comfortable with their market share and not especially motivated to support emerging players. Even when regulators are welcoming, the infrastructure itself creates barriers.
Meanwhile, consumer expectations (especially from Gen-Z and Gen Alpha) have accelerated far beyond what traditional systems can deliver. In Europe, Ukraine, Kazakhstan, Uzbekistan and other fast-moving markets, customers can open accounts in minutes, sign digitally with secure verification and move money instantly. By contrast, the U.S. still relies on branch visits, outdated signature standards and transfers that can take days. The gap between expectations and reality widens with every passing year.
For fintech founders, the question is how to maintain speed, compliance and customer experience while still operating on the rails the financial world depends on. Our experience building an API-first fintech across the U.K. and EU, and now into the U.S., has made the best practices clear.
1. Build API-First, Modular Systems That Cut Through Legacy Barriers
One of the best decisions a fintech can make is designing its architecture to be cloud-native, API-first and easily integrable. It’s extremely challenging to build fintech products directly on the core systems of traditional banks. Many of the largest U.S. banks simply don’t partner with startups, and even when discussions happen, access is slow and restrictive.
A modern fintech architecture needs to bypass as much of that friction as possible. API-first platforms create clean connections with core banking rails, allowing product teams to work quickly without waiting months for legacy integration approvals. A modular design also gives fintechs the flexibility to switch partners, expand into new markets and scale functionality without rewriting entire systems.
Ultimately, an API-first approach preserves the two things fintechs can’t afford to lose: customer experience and speed.
2. Embed Automated Compliance And Real-Time Onboarding From Day One
Europe has demonstrated what is possible when digital onboarding becomes the norm. Across the EU, most fintechs can onboard customers within three to five minutes using enhanced digital signatures and automated verification.
Compare that to the U.S., where opening an account often requires visiting a physical branch, e-signing with tools that do not confirm identity or trusting verification processes reliant on easily stolen personal data.
Manual onboarding and paper-driven compliance workflows are not options for fintechs, particularly digital-first challengers. AI-driven KYC and AML tools, real-time transaction monitoring and event-sourced ledgers should be part of the foundation. These technologies make instant onboarding possible while satisfying regulators’ expectations around auditability and risk management.
Equally important is selecting banking-as-a-service (BaaS) partners who support this philosophy. Many traditional banks still have conservative compliance practices and require paper documents where digital workflows are available.
Fintechs cannot move at fintech speed if their partners are stuck in the past.
3. Pursue Direct Licenses Or Multi-Market BaaS Partnerships To Unlock Global Scale
Few companies in the global fintech landscape operate seamlessly across borders. In Europe, players like Revolut have made progress, and in the U.S., firms like Mercury or Brex have modernized business banking. But almost no one has created a multi-market, consumer-friendly solution that works effortlessly across regions like the U.S., U.K. and EU. Even on the BaaS side, no infrastructure player offers cohesive coverage across all three.
This multi-market gap presents a barrier and an opportunity. Fintechs that pursue their own licenses, or work with partners licensed across several jurisdictions, gain direct access to core payment rails, faster onboarding and the ability to create unified white-label solutions. This increases credibility and dramatically accelerates go-to-market timelines for clients expanding globally.
Multi-market capability is especially important for travelers, expatriates, digital workers and globally mobile consumers. There’s currently a clear market need for a singular application that enables users to bank locally across multiple geographies without juggling separate accounts and systems. Fintechs that solve this pain point will have an enormous competitive advantage.
4. Avoid Legacy Integration Pitfalls By Prioritizing Modern Architecture And Testing
Integrating with traditional banks exposes fintechs to a long list of risks, including inconsistent APIs, outdated protocols, ancient core banking systems and manual processes that should have been automated years ago. These gaps introduce onboarding delays, compliance vulnerabilities and severe scalability challenges.
The best defense is proactive avoidance of these pitfalls. That means choosing partners with modern, event-driven architectures that support automated onboarding and AI-first compliance. It also means insisting on a rigorous sandbox integration before anything goes live. By mapping out the entire user and data flow early, fintechs can identify friction points and eliminate them long before customers are affected.
Scalability is only possible when the weakest links in the chain have been upgraded or removed.
5. Design Compliance And Product Architecture For Multi-Region Flexibility
While many regulations across developed markets are harmonized, country-specific rules still exist and must be respected. About 95% of compliance requirements may overlap, but the remaining 5% can create major operational complexity.
Fintechs should design their systems so that onboarding flows, transaction monitoring, reporting logic and risk scoring can all adapt by jurisdiction. A modular compliance engine makes it possible to adjust country-specific rules without rewriting core code. Still, technology alone isn’t enough; fintechs also need strong regional partners who can interpret local regulations and provide guidance.
The Future Is API-Driven Banks, True Instant Payments And Embedded Finance
Looking ahead, the collaborations between banks and fintechs will change significantly. Open banking will enable fintechs to build directly on top of traditional bank accounts. Plug-and-play solutions will make it possible to launch new products in weeks rather than years.
Instant payments will finally become instant. The idea that U.S. transfers can still take three days (and that paper checks sometimes clear faster) is unsustainable. As AI improves risk detection, there is no technical justification for long settlement windows, especially when overnight deposit profits are the main driver of the delay.
We will also see a surge in embedded finance, where core banking functions live inside everyday apps and platforms. Fintechs that invest early in modular APIs, AI-driven compliance and multi-market licensing will be best positioned to lead this shift.
Despite all of the innovation in fintech, the industry still relies upon banking foundations that were never built for speed, agility or global scale. Fintechs are often forced to layer modern experiences atop slow, paper-bound legacy systems that haven’t meaningfully evolved in decades. Anyone who has tried partnering with a major U.S. bank knows the reality. Most large institutions remain closed to collaboration, comfortable with their market share and not especially motivated to support emerging players. Even when regulators are welcoming, the infrastructure itself creates barriers.
Meanwhile, consumer expectations (especially from Gen-Z and Gen Alpha) have accelerated far beyond what traditional systems can deliver. In Europe, Ukraine, Kazakhstan, Uzbekistan and other fast-moving markets, customers can open accounts in minutes, sign digitally with secure verification and move money instantly. By contrast, the U.S. still relies on branch visits, outdated signature standards and transfers that can take days. The gap between expectations and reality widens with every passing year.
For fintech founders, the question is how to maintain speed, compliance and customer experience while still operating on the rails the financial world depends on. Our experience building an API-first fintech across the U.K. and EU, and now into the U.S., has made the best practices clear.
1. Build API-First, Modular Systems That Cut Through Legacy Barriers
One of the best decisions a fintech can make is designing its architecture to be cloud-native, API-first and easily integrable. It’s extremely challenging to build fintech products directly on the core systems of traditional banks. Many of the largest U.S. banks simply don’t partner with startups, and even when discussions happen, access is slow and restrictive.
A modern fintech architecture needs to bypass as much of that friction as possible. API-first platforms create clean connections with core banking rails, allowing product teams to work quickly without waiting months for legacy integration approvals. A modular design also gives fintechs the flexibility to switch partners, expand into new markets and scale functionality without rewriting entire systems.
Ultimately, an API-first approach preserves the two things fintechs can’t afford to lose: customer experience and speed.
2. Embed Automated Compliance And Real-Time Onboarding From Day One
Europe has demonstrated what is possible when digital onboarding becomes the norm. Across the EU, most fintechs can onboard customers within three to five minutes using enhanced digital signatures and automated verification.
Compare that to the U.S., where opening an account often requires visiting a physical branch, e-signing with tools that do not confirm identity or trusting verification processes reliant on easily stolen personal data.
Manual onboarding and paper-driven compliance workflows are not options for fintechs, particularly digital-first challengers. AI-driven KYC and AML tools, real-time transaction monitoring and event-sourced ledgers should be part of the foundation. These technologies make instant onboarding possible while satisfying regulators’ expectations around auditability and risk management.
Equally important is selecting banking-as-a-service (BaaS) partners who support this philosophy. Many traditional banks still have conservative compliance practices and require paper documents where digital workflows are available.
Fintechs cannot move at fintech speed if their partners are stuck in the past.
3. Pursue Direct Licenses Or Multi-Market BaaS Partnerships To Unlock Global Scale
Few companies in the global fintech landscape operate seamlessly across borders. In Europe, players like Revolut have made progress, and in the U.S., firms like Mercury or Brex have modernized business banking. But almost no one has created a multi-market, consumer-friendly solution that works effortlessly across regions like the U.S., U.K. and EU. Even on the BaaS side, no infrastructure player offers cohesive coverage across all three.
This multi-market gap presents a barrier and an opportunity. Fintechs that pursue their own licenses, or work with partners licensed across several jurisdictions, gain direct access to core payment rails, faster onboarding and the ability to create unified white-label solutions. This increases credibility and dramatically accelerates go-to-market timelines for clients expanding globally.
Multi-market capability is especially important for travelers, expatriates, digital workers and globally mobile consumers. There’s currently a clear market need for a singular application that enables users to bank locally across multiple geographies without juggling separate accounts and systems. Fintechs that solve this pain point will have an enormous competitive advantage.
4. Avoid Legacy Integration Pitfalls By Prioritizing Modern Architecture And Testing
Integrating with traditional banks exposes fintechs to a long list of risks, including inconsistent APIs, outdated protocols, ancient core banking systems and manual processes that should have been automated years ago. These gaps introduce onboarding delays, compliance vulnerabilities and severe scalability challenges.
The best defense is proactive avoidance of these pitfalls. That means choosing partners with modern, event-driven architectures that support automated onboarding and AI-first compliance. It also means insisting on a rigorous sandbox integration before anything goes live. By mapping out the entire user and data flow early, fintechs can identify friction points and eliminate them long before customers are affected.
Scalability is only possible when the weakest links in the chain have been upgraded or removed.
5. Design Compliance And Product Architecture For Multi-Region Flexibility
While many regulations across developed markets are harmonized, country-specific rules still exist and must be respected. About 95% of compliance requirements may overlap, but the remaining 5% can create major operational complexity.
Fintechs should design their systems so that onboarding flows, transaction monitoring, reporting logic and risk scoring can all adapt by jurisdiction. A modular compliance engine makes it possible to adjust country-specific rules without rewriting core code. Still, technology alone isn’t enough; fintechs also need strong regional partners who can interpret local regulations and provide guidance.
The Future Is API-Driven Banks, True Instant Payments And Embedded Finance
Looking ahead, the collaborations between banks and fintechs will change significantly. Open banking will enable fintechs to build directly on top of traditional bank accounts. Plug-and-play solutions will make it possible to launch new products in weeks rather than years.
Instant payments will finally become instant. The idea that U.S. transfers can still take three days (and that paper checks sometimes clear faster) is unsustainable. As AI improves risk detection, there is no technical justification for long settlement windows, especially when overnight deposit profits are the main driver of the delay.
We will also see a surge in embedded finance, where core banking functions live inside everyday apps and platforms. Fintechs that invest early in modular APIs, AI-driven compliance and multi-market licensing will be best positioned to lead this shift.
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