The Future of Finance: 5 Insights From Sindeo GC Jobe Danganan
When you hear “fintech,” you don’t usually think of a company that cares deeply about people, especially its consumers. You also likely don’t think of a general counsel intricately aligned with a fintech company’s consumer-focused mission. But Jobe Danganan, General Counsel and Chief Compliance Officer at Sindeo, thinks differently.
Sindeo is a modern mortgage marketplace, which works with over 40 lenders and uses technology as a platform to connect consumers with loans that fit their unique needs. At Sindeo, according to Danganan, the consumer is the end all and be all. From the product design, to the technology framework, to mortgage advisors who are compensated based on customer satisfaction, Sindeo is focused on their consumers. So what did it take for Danganan to succeed in today’s hottest space at such a mission-driven company?
- Pursue your passion. Few things fuel success as much as holistically aligning your personal drive with your professional ambition. Prior to joining Sindeo, Danganan served as an enforcement attorney at the Consumer Financial Protection Bureau (CFPB) – a federal agency created in response to the 2008 financial crisis. He says, “I joined the CFPB because of its mission to help consumers in financial transactions. As years passed, I realized that fintech companies were also striving to provide transparency and empowerment to consumers through technology.” Fintech companies are essentially disaggregating products offered by banks without depository clients they can take for granted. Instead, fintech companies have to compete based on technology and transparency. This is an exciting challenge, especially for Danganan.
- Align with the company’s mission as a whole. Given his passion for and experience in consumer empowerment, Danganan’s transition to Sindeo was natural. He explains, “When a new fintech startup – Sindeo – approached me about the General Counsel role, I was immediately sold on their mission to provide technology and services to consumers in navigating one of the most complex and costly financial products for consumers: mortgages.” Though his role isn’t as customer-facing, he plays a vital role in enabling Sindeo’s mission by being responsible for all legal, compliance, and regulatory issues affecting the company. As any startup lawyer, he has “quickly learned to be the jack of all trades – from startup financing, employment, IP, corporate governance, licensing, product advice, contract negotiation, immigration, federal and state regulations, and of course, being a trusted partner to the CEO and the Board of Directors.” He adds, “And since we’re in the mortgage space – one of the most regulated industries – I ensure that the company strictly complies with all regulations affecting the company.”
- Compliance, compliance, compliance. “You need a robust compliance program. Complex regulations apply equally to a big bank with 100+ attorney, and to a small fintech player with one lawyer. And a legal violation, given the capital constraints of a startup and costly penalties, can literally put your company out of business,” Danganana explains. This is no exaggeration – according to Danganan, the CFPB can fine up to a $1 million/day. He continues, “At minimum, you need living policies and procedures approved by your Board; regular training for all your employees; and a swift and efficient complaint resolution process.”
- Stay proactive and involved in new regulations. Danganan explains that “You really need to get ahead and be proactive given that you’re dealing with highly regulated products.” Danganan also suggests being deeply involved in the process. “For example, if the government is proposing a new rule affecting your industry, make sure to comment and weigh in. And if you’re a small player and don’t have the resources, band with other players in your field so you can pool resources and comment together. There’s strength in numbers.” Danganan himself is an active player in this field. “Several Fintech GCs, for example, banded together to weigh in on a proposed charter by the OCC,” he explains. “We’ve also set up an informal Fintech GC forum, and we often get together informally to chat about common issues and challenges.”
- Education leads to understanding. Given the heightened regulatory interest in fintech, there are diverging trains of thoughts on to whether it’s better to “beg for forgiveness later than to ask for permission” from regulators now. Danganan strongly recommends the latter route. “My personal view, especially after having worked at the Bureau, is that you should meet your regulator now when you’re on friendly terms, as opposed to an adversarial position later when you’re being formally investigated. Show them why your product is great for consumers and that your company takes compliance very seriously.” According to Danganan, “You need to understand that regulators are very interested in the fintech space.” “For example, the CFPB, created Project Catalyst, whose stated purpose is to ‘engage with the innovator community’ and ‘monitor emerging trends.’ You can even “Pitch a Pilot” to the CFPB if you’re working on a ‘new, consumer-friendly financial product,’” Danganan explains. Danganan adds that the OCC and the FTC have also set up similar programs for fintech outreach. Meanwhile, individual states have requested documents from and set up meetings with fintech companies to better understand their products. Becoming a thought leader can be key for a fintech startup, and these are just some of the opportunities available to fintech GC’s.
Fintech is a disruptive, exciting field – but, as Danganan’s insights reveal, it depends heavily on a strong, proactive approach to compliance. By maintaining robust compliance programs and cooperative regulator relationships, fintech lawyers can successfully usher in the future of finance.
This article was originally published by Above the Law.