Before You Sign Your Next Fintech Contract

You wouldn't believe what happened recently.

A lot of you know I changed my focus niche.

Focusing a lot on the Fintech Space.

So naturally, I had a guy knocking on my doors!

(Not physically, but my DMs)

I had to let them in.

Now this owner had created a product to offer to financial companies.

But they were quite new.

But that didn't stop other companies from reaching out to this company.

Now before they can offer their product to other companies...

A Contract had to be signed.

Which was the reason why this owner wanted my help.

Now in the fintech space, whenever you are signing a Contract

You have to focus on a couple of points:

(1) The IP is the most important asset for any Fintech Company.

And they needed to protect it.

So they required an agreement that did exactly that for them.

(2) The fintech company wanted to make sure the sensitive information was kept confidential.

And not disclosed unnecessarily to third parties.

(3) The heavily regulated financial industry in India requires the fintech company to comply with various legal obligations.

However, the client wanted to avoid unnecessary obligations imposed by the counterparty, which were not required by law.

All of them were important points that needed to be taken care of.

Because the company is just starting out.

So any deal they sign is important for them.

Here's what we focused on in their Contract.

(1) Securing their IP

I will say this again - for tech companies, their IP is their net worth, and no stone should remain unturned to secure it.

We made sure that their IP is adequately covered in the agreement.

And related clauses such as ownership, limited license, derivative product, etc. are air-tight.

Most of the time parties disagree on the owner of any future work.

Some even agree to make it jointly owned.

But that’s the most absurd thing to do - generally, it should belong to one party.

(2) Confidentiality

Besides identifying the IP rights, another way to secure IP is to make it “confidential” under the agreement.

This is done so that the other party can’t unnecessarily disclose it to a third party.

We made sure to limit confidentiality obligations upon us since we were not receiving any confidential data from the other party.

Regarding the customer’s data, since we were only receiving masked data, we made sure to limit our processing obligations.

(3) Regulatory obligations

Depending on the function the fintech is performing, they are required to perform certain obligations under the law.

Usually, counterparties tend to confuse the role of fintech in their arrangement.

And they unnecessarily impose obligations that aren’t actually required under the law.

We made sure to heavily negotiate our obligations and did not budge on them.

This is to make sure we only do what is actually required under the law.

In the end, we had a comprehensive agreement.

We also negotiated the deal for them, to fit it in accordance with the law.

The agreement made sure to protect the company's IP, maintain confidentiality, and comply with regulatory requirements.

1 final lesson I have for you.

Just because something is mentioned to you doesn't mean it's right.

In most cases, fintech companies are given obligations that they should not necessarily follow.

And that only happens when the companies have no idea about the norms AND the regulations.

So if you are a Fintech company that needs help in understanding the norms and the regulations in India.

And also need help to have Contracts that speak your worth.

Then reply to this email with "FINTECH" and let's see how we can work together.

Talk to you soon!

-- Akhil Mishra