After selling her fintech startup Creative Juice in 2023, Sima Gandhi is trying to create a new compliance manual for fintechs.
Over the past few years, fintechs and the banks they partner with have increasingly run afoul of compliance regulations, and Sima Gandhi has seen the issues play out first-hand. In late 2021, she launched Creative Juice, a San Francisco fintech startup that provided creators like YouTube Influencers with digital banking services and funding of up to $500,000. Since Creative Juice lacked a bank charter, it partnered with Charlottesville, Virginia-based Blue Ridge Bank to hold customer deposits.
But the next year, the 130-year-old bank was accused by a federal regulator of “unsafe or unsound practices” in areas including risk management and anti-money-laundering practices. Blue Ridge entered into a consent order that required regulatory review for any new fintech partners it wanted to take on or new products its fintech partners intended to launch. Gandhi soon found it hard to get Blue Ridge’s timely approval for new Creative Juice product releases and marketing campaigns. “The strain our partner bank was under made it difficult for us to move at the speed we wanted to,” she says.
By 2023, she realized she needed to change bank partners, which would probably cost her six months to a year of work and severely restrict growth, a daunting prospect for an early-stage startup in the middle of a struggling fintech market. That fall, she decided to sell Creative Juice’s assets in a small acquisition to Rho, a six-year-old New York company that provides digital banking services to businesses. Rho absorbed some of Creative Juice’s larger customers, and Gandhi shepherded some of her sole-proprietor clients to Relay, a Toronto-based digital bank. “As a former founder, I never thought I'd find myself saying that compliance can be a key to innovation, but that’s exactly what I’m saying now,” Gandhi says.
The ordeal inspired her to start a membership organization called the Coalition for Financial Ecosystem Standards (CFES), where she’s........