Paxos occupies a unique position in the financial services industry as a regulated financial institution that is also technology focused. As a regulated Trust company that is tech-native, Paxos can connect the traditional financial services and blockchain technology worlds in ways where most other companies are unauthorized to do so. But with this status come challenges – especially as it relates to product management.
A product manager’s job is to set a direction for the business while also connecting customer needs with technology capabilities. However, product management at a regulated company adds a third factor to this calculus – the regulatory status of the product. Here are a few of the tactics I’ve employed to operate in this multi-layered environment that can help PMs facing similar business challenges when working in financial services or other regulated industries.
Ask for permission, not forgiveness
Financial Services is one of the most highly regulated industries globally. Unlike Airbnb and Uber that “ask for forgiveness” after blitz-scaling in lightly-regulated markets, Paxos “asks for permission” before entering new markets and introducing new products. Many of our customers are regulated and we believe we can better serve their needs if we operate within their regulatory frameworks.
As a product manager, this approach has implications for designing and developing new products and features. At the outset of design, product managers must have a keen understanding of the regulatory frameworks that apply to their product and must maintain a clear focus on compliance as the product strategy takes shape. It’s not enough to work with a compliance department and lean on them completely for guidance as this often leads to unintended tension in the relationship and push back on the product. Rather, product managers must embrace and respect the consumer-focused purpose of regulation and work hand-in-hand with compliance to deeply understand the white space available for exploration. This leads to stronger, more creative and innovative outcomes.
For new products that require regulatory approval prior to launch, it’s important to have a clear idea of the major features and functionality needed to be successful very early in the product development process. The primary reason is that, contrary to the minimum viable product approach popularized in The Lean Startup, a product’s regulatory status places a limitation on the improvements a team can make. As a result, it’s important that any submitted product applications address the capabilities and use cases needed for a successful product.
For existing products that do not require additional regulatory approval, it’s important to ensure that any major new features fit within the existing regulatory framework. One efficient way to ensure all teams are thinking with a compliance mindset is to build a flow diagram as part of the design for a major new feature and review this diagram with compliance, business and engineering stakeholders. This ensures PMs are validating the value this feature provides the customer, the tech build required, and the feature’s fit within the existing regulatory framework with the same assumptions and information.
Consider the regulatory pipeline in product strategy planning
It can be helpful to think of new regulations and how they impact product management as a pipeline. Similar to a large commercial relationship with a major new partner, getting a new regulatory approval can take time.
When starting the quarterly goal setting process, it’s important to identify the current and target status of any regulatory applications that have been or will be submitted in the near future. This point of view should inform the extent to which the team prioritizes launching a new product vs. improving existing products vs. building the platform or validating new product hypotheses to facilitate product launches in a subsequent quarter.
Take action when the opportunity arises
Again, like a large commercial partnership, it’s hard to predict exactly if or when a regulatory application will be approved. However, when this does happen, it’s important to move quickly as a regulatory approval can create a window of opportunity for a company to distribute a unique product to its target market.
In practice, this means that product managers must be willing to de-prioritize existing quarterly goals in order to get a recently approved product to market as quickly and effectively as possible. A few tactics product managers can use to manage this ambiguity are completing some product development work during the regulatory application process and “keeping some slack” in the roadmap if there’s a high probability that an application could be approved by the regulator in the near future.
In closing, these tactics have helped ensure the Paxos product team strikes the right balance of doing what’s best for the company today, setting the stage for the products we want to build tomorrow and ensuring we maintain our trusted brand in a fast-changing market and regulatory environment.