By Alexandros Neofytou
Fintech promised to simplify banking. In many ways, it did. But it also moved the friction somewhere else, and in doing so, made the role of the lawyer more important, not less.
A transfer that once took three days to clear can now settle in real time. An account that once required a visit to a branch and a stack of forms can, at least in theory, be opened from a phone in a matter of minutes. Payment systems have become faster almost every year, and from the outside, banking looks considerably simpler than it did even a decade ago.
Yet anyone who has recently tried to open a corporate account, onboard a new client, or move a significant amount of money across a border will probably have experienced something quite different. The payment itself may take seconds but getting the necessary approvals and providing all the required information can take weeks.
There is no real contradiction here. It is simply one of the less obvious features of modern banking, and it helps explain why lawyers continue to play an important role in a system that has become increasingly automated.
To be fair to fintech, it delivered on an important part of its promise. Things became faster.
Instant payment systems have replaced transfers that once sat in overnight batch queues. Biometric verification can now do in seconds what once required copies of passports and other documents. These are meaningful improvements and the underlying technology has genuinely changed the way financial services operate.
The difficulty is that faster technology does not necessarily mean a simpler banking system. The payment itself may be almost instantaneous, while everything that must happen before the payment can take place has become more complicated.
The regulatory requirements around banking have continued to grow. Banks must deal with increasingly detailed anti-money laundering requirements, beneficial ownership information, sanctions screening and source-of-funds checks. Regulators expect banks to understand and question the information they receive rather than simply collect documents and file them away.
This is not because banks particularly enjoy paperwork. There are serious consequences when they get these things wrong. Fines are one concern, but losing a correspondent banking relationship, facing regulatory action or creating wider compliance issues can be far more serious.
Banks have therefore naturally focused their investment on the areas where technology can make the biggest difference. Payments can be automated. Identity checks can be automated. Parts of the onboarding process can also be automated.
The parts that require judgement are much harder to deal with in the same way.
The result is a banking experience that can feel very different depending on which part of the process the client is dealing with. A bank may be able to move money almost instantly, while its compliance team may still need a notarised declaration, a certified translation or additional evidence about the source of the funds.
This difference in speed can be particularly frustrating for clients because the technology often creates an expectation that the entire process will be equally fast.
An application may suggest that an account can be opened in a few minutes, only for the relationship manager to explain that the process could take four to six weeks because the bank needs further information about the ownership structure or source of funds.
Both sides are operating within the same institution, but they are often working according to very different processes.
This is where the role of the lawyer becomes particularly relevant
A client does not necessarily need someone to make the bank’s technology faster. They need someone who understands what the bank’s compliance team is actually looking for and can help provide that information in a way that addresses those requirements from the beginning.
That means understanding the client’s circumstances but also understanding how a bank is likely to assess those circumstances. A lawyer who can anticipate the questions a bank is likely to ask about the source of funds can help address them before they become a problem. Someone who understands the beneficial ownership requirements in the relevant jurisdictions can make sure that the appropriate documents are provided from the outset.
This can make a significant difference to the process. A poorly prepared submission can result in a series of questions, requests for additional documents and weeks of back-and-forth. A well-prepared submission can make the same process considerably more straightforward by giving the bank the information it needs in a form that it can actually assess.
In that sense, the lawyer is not necessarily adding another layer to the process. The lawyer can help remove some of the uncertainty that causes the process to slow down in the first place.
That has always been part of a banking lawyer’s role. What has changed is the importance of that role in a system where the technology has become much faster while the regulatory requirements have continued to grow.
There is, of course, a possibility that technology will eventually close this gap. AI and other compliance tools are already changing the way banks review information, identify risks and make decisions.
Over time, more of the compliance process may become automated. But some of the most important compliance questions still involve judgement and context. Does the ownership structure make sense? Is the explanation for the source of funds credible? Does the information provided by the client tell a consistent story?
For the time being, there remains a significant human element to the process, particularly where the facts are unusual or several jurisdictions and regulatory requirements are involved. That is why the banking lawyer has not disappeared. If anything, fintech has made the role easier to see.
The lawyer’s value is not simply in knowing the rules, but in understanding how they are applied in practice and helping the client prepare accordingly. For the client, that can mean anticipating what the bank is likely to need before the questions start. For the bank, it can mean receiving information that is clearer, better organised and easier to assess.
Fintech did not eliminate the banking lawyer. It changed the reason the lawyer is valuable. As financial services become faster and more automated, there is still a need for someone who understands the technology, the regulatory requirements and the client’s circumstances well enough to bring those things together. The money may move in seconds. The compliance process may not. For as long as those two operate at different speeds, there will be a role for the lawyer in between them.
Alexandros Neofytou is associate at Elias Neocloeus & Co LLC.