Assumptions bite back really fast

Some assumptions are harmless in normal life. In fintech, they’re landmines waiting to explode.

And there’s one silent assumption fintech founders make that causes more damage, panic, and regulatory trouble than anything else:

“If the vendor is global, their compliance must be global too.”

It sounds logical because global brands feel trustworthy. It feels safe because large vendors display long lists of certifications.

And on paper, it even looks correct - until the very moment a regulator asks a simple question:

Where does your data actually live? That’s when the illusion breaks.

In Indian fintech, compliance does not follow the reputation of the vendor. It only follows the geography of your data.

A global vendor is not universally compliant. They are only compliant in the region you select, and most founders realize this far too late.

What Founders Assume vs. What Regulators Actually Check

Founders often rely on brand comfort:

“They work with Fortune 500 companies.”

“They have ISO certifications.”

“They must already comply with everything.”

But this is not how regulators think, and it’s definitely not how RBI evaluates risk. Regulators ask direct, factual questions:

Where is customer data stored? Which server region? Where do your backups go every night? During failover, does anything cross borders? Is there any chance that logs or metadata leave India?

They don’t call your vendor. They don’t care about your vendor’s brochures. They only hold you accountable because you are the entity serving Indian customers.

This is the core disconnect - founders assume compliance is inherited from the vendor, but regulators expect compliance to be architected and controlled by you.

Where Most Fintech Contracts Quietly Collapse

After reviewing dozens of vendor agreements, I’ve noticed the same pattern appear again and again.

Contracts often contain vague phrases like:

“Industry-standard security controls.”

“World-class global availability.”

“State-of-the-art disaster recovery.”

None of these means anything in a regulatory context. What’s missing every single time?

• No region-specific data residency commitments

• No clarity on where backups or DR systems sit

• No limitation on cross-border data flows

• No requirement to notify you before region changes

• No control over where logs or metadata are stored

This isn’t how fintech companies usually get in trouble because something “goes wrong.”

They get in trouble because they believed nothing would go wrong and assumed the vendor had already handled it.

The Fix Is Simple - But Rarely Implemented

You don’t need a 60-page legal document to solve this. You need precision in a handful of critical places. This is where most of the risk disappears.

1. Lock Down Data Residency

Your contract must clearly specify:

– Primary region

– Backup region

– Disaster Recovery (DR) region

– Whether any form of data can ever leave India

Default vendor settings are almost never compliant. You cannot leave this to chance.

2. Restrict Cross-Border Movement

State explicitly that no data - including logs, caches, metadata, or backups - may be transferred or mirrored outside approved regions unless you provide written consent.

This closes the biggest loophole.

3. Demand Transparency in Failover Architecture

Most violations happen during failover.

Your vendor must disclose:

– The exact DR region

– What triggers the failover

– How long the switch lasts

– Whether data or logs travel during the transition

Failover is where “compliant setups” suddenly become non-compliant without anyone realizing it.

4. Document Audit and Compliance Responsibilities

If you are accountable under RBI, then your vendor must support that accountability.

Make it crystal clear that:

– They must maintain audit logs

– They must cooperate with compliance checks

– They must notify you before architectural changes

Without this, you end up absorbing the entire regulatory burden alone.

Why Precision Isn’t Overkill in Fintech

It’s survival.

People often believe fintech fails because of fraud or broken systems. But the truth is much simpler - most failures happen because someone made a small assumption that seemed harmless in the moment.

A backup silently crossing a border. A DR system sitting in another country. A vendor shifting regions without an email. A feature storing logs in an unexpected location.

And before you even know something has changed, you are the one facing the regulator.

Conclusion

Fintech doesn’t get destroyed by technical issues - it gets destroyed by assumptions. A global vendor isn’t automatically compliant for Indian regulations.

In this industry, only one thing matters: where the data actually lives. Define regions, restrict cross-border movement, clarify failover, and document responsibilities. Precision isn’t bureaucracy - it’s survival.

Also, Fintech is one of the few industries where a single line in a configuration file or a single overlooked clause in a vendor contract can change your regulatory status overnight.

That’s why assumptions are so dangerous here - they create silent vulnerabilities you only discover during an audit or, worse, during enforcement.

When the rules are clear and the boundaries are written down, your systems become predictable, your compliance becomes stable, and your growth becomes safer. In a regulated environment, clarity is not optional. It’s the only real protection you have.