Building a strong foundation: how legal best supports first line operations for business success – interview with Qliro

Building a strong foundation: how legal best supports first line operations for business success – interview with Qliro

It can be challenging for a company in the FinTech sector to adapt to new legal frameworks. In recent years, besides a few national initiatives, the EU has introduced a number of regulations and directives affecting regulated companies and actors in the FinTech sphere. Financial companies are required not only to field a substantial legal and compliance department, but also often needs to involve external expertise and consultants to ensure that the business meets all legal requirements that are imposed on it.

Efficient and streamlined business operations, including skilled employees, efficient marketing efforts etc. are all fundamental for a successful business. Yet, legal and compliance may in certain aspects be just as, or even more, critical. In this article, we delve into how the integration of legal support and proactive legal compliance can bolster the first line operations of FinTech companies to contribute to the success of business and share how FinTech company Qliro has worked to achieve their goals in this regard.

The Role of Legal in First-Line Operations

The first line operations are at heart of a financial company’s business; the day-to-day production and sales of the services or goods provided, directly interacting with customers and suppliers. Well-oiled first line operations are fundamental for a business to succeed. But without the integration of a sound legal foundation, even the greatest business operations can falter.

FinTech companies are also, just like traditional financial institutions, vulnerable to different types of legal risks and uncertainties. Failing to understand the legal risks, which may be unique to the specific business, may for example lead to unexpected, and almost always unnecessary, legal disputes with suppliers and or authorities.

For businesses operating within industries with strict regulations, such as financial markets, legal compliance is not just good practice, but the bedrock which the business itself must be built upon.

Proactive legal compliance

In the fast-paced world of FinTech, businesses must quickly adapt to the everchanging regulatory landscape, and consider new business lines and opportunities in light of applicable regulations.

We have had the opportunity to interview Carin Eriksson, Head of Legal at Qliro. Qliro, headquartered in Stockholm, was founded in 2014 and is a fast-growing FinTech and licensed credit-market company (Sw. kreditmarknadsbolag) offering safe and simple digital payment solutions for e-commerce. Carin joined Qliro as Head of Legal in 2022. Carin’s background is within banking and finance, and she has spent several years at a larger Nordic law firm. She has also been a part of the in-house legal team at one of the largest banks in the Nordic region.

The legal team of Qliro works closely with their colleagues in other departments to ensure that Qliro is not only compliant with existing regulations but also aware of how and why certain actions and steps are required of them in their daily work. Such cooperation also enables Qliro’s legal team to better understand the impact of a particular legislative change, or the introduction of a new law, on the company’s day-to-day operations.

During the interview, Setterwalls sat down with Carin and discussed the challenges and opportunities related to the introduction of new laws and regulations, and how legal can support the business to adapt to the entailing changes.

For some insights into this, below is a summary of our interview with Carin:

Q: Could you please provide a brief overview of Qliro and its position within the FinTech field?

Qliro is a Swedish FinTech listed on Nasdaq Stockholm. Qliro is authorized by the Swedish Financial Supervisory Authority (Sw. Finansinspektionen) as a credit-market company. Our business, and our products, are two-folded, as we offer payment solutions to both e-commerce companies (B2B) and consumers (B2C). Our offering to our B2B clients includes a safe and simple all-in-one checkout and the offering to our B2C clients includes Buy-Now-Pay-Later and more traditional credit solutions. We also offer various direct payment methods through our payment partners in the Qliro checkout.

We work every day to make the purchase experience as safe and simple as possible for both merchants and consumers.

Q: How has Qliro integrated its legal department into its first-line operations?

As a listed and regulated company, legal compliance is of utmost importance for the operations we conduct. There are rules impacting almost all parts of our business.

It has therefore been an important process and a priority for us, which we are continuously working on, to spread knowledge within the company and ensure that all our employees are aware of and understand the requirements we have as a listed credit market company.  Even though we are a relatively small player, the regulatory landscape is mostly the same as for bigger companies.

Recognizing the significance of legal compliance is typically a challenge for any organization. Early involvement of legal expertise in the company’s strategic projects and initiatives, on one hand, and a solid business understanding within the legal team on the other, are key to ensure alignment between internal stakeholders, as well as seamless cooperation in regulatory matters.

Q: Could you give us an example of how legal is involved in the preparation of a new product or service?

When for instance developing a new product or changing a product, the legal team’s involvement is required at several stages of the product development process. This process then requires that we have a good understanding of the legal requirements for such a product and that we (i.e., Qliro’s legal department) thus assist our product development teams in its development.

On a concrete level, taking a consumer credit product as an example case, such assistance can be to help the product managers to understand what type of fees and interest we are allowed to charge and how it should be structured, or what type of consumer protection measures must be in place, and so forth.

We also need to work closely with our IT and data engineers to design the digital product offering to ensure legal compliance. Our product offering is hence subject to continuous iteration and cooperation between several departments within the company, whereby legal is one of the key stakeholders.

Q: What are the main challenges you and your team face and how do you cooperate with external experts?

It is an ongoing process to keep up to date with new legislation, especially as we operate in several markets and countries in the Nordic region.

In certain instances we also use external law firms, for example where we may not have the right skills ourselves, or if we have a major project where we may need external support to be able to effectively bring it to completion. It is important that our partners and advisors are familiar with our activities and the business itself, in order for us to fully benefit from their support. It is key that the advisor understands what is of key importance to the project and the business, and that they fully grasp our needs, in order to make our collaboration successful.

Q: How do you and your team ensure that the first-line operations teams stay informed about regulatory updates, and describe your approach to working with them?

As mentioned earlier, our role is to be a sounding board for Qliro’s operations, informing our colleagues about news and regulatory changes, how they affect our business and how we need to adapt. But it is also important that we are able to speak up and that we are allowed to be a part of the business and product development that one might otherwise think the legal team is not usually part of.

The legal team also works to constantly compile, update, and keep records of which laws and guidelines apply to our business and our services, which of course depends on the jurisdiction we operate in, and the respective service we are providing to our customers.

It is not always the case that a new major act or law will automatically have the greatest impact on the business side of our operations. Also legal changes which at an initial stage are deemed to be of minor magnitude can, eventually, force the business to take rather extensive integration measures. There is therefore always a need to analyse all new legislations, as the same compliance requirements are often imposed on the smaller FinTech operators just as much as they apply to the larger ones.

To conclude

Navigating the ever-evolving legal landscape of FinTech, and the legal framework’s profound impact on the financial industry, presents both challenges and opportunities for its stakeholders. A sound understanding of legal compliance for the operations of FinTech companies has never been more important than it is today. The delicate balance between innovation, regulation, and legal compliance is paramount in shaping the future of FinTech.

Thank you Carin, and the Qliro legal team for your valuable perspective.