Career & Law

Fintech Banking Requirements: The Regulator vs Bank Dilemma

Fintechs and startups face a classic dilemma: regulators expect banking arrangements before approving MSO licences, but banks won’t open accounts without licences. Here’s how to navigate it.

browngeek

04 Nov 2025 — 5 min read

How to Get a Bank Account in Hong Kong as a Fintech Startup Seeking an MSO Licence

In my 20+ years as a private practice lawyer, I advised many banks and established corporates. They understood each other. Banks wanted to lend to these corporates, and the corporates had good relationships with the banks. The pattern was predictable: audited financials, known ownership structures, proven management teams, and a track record the bank could assess.

I’m now talking to more startup founders — particularly fintechs and companies seeking Money Services Operator (MSO) licences. What I’m hearing from them is consistent: it’s genuinely hard to get a bank account. I have written about this before, but this time I want to delve deeper.

And it’s not just a paperwork problem. It’s a structural deadlock.

While you don’t always need a bank account to get an MSO licence, in practical terms, regulators expect credible banking arrangements as part of approval and ongoing operation. Meanwhile, banks often refuse to open accounts without licences or demonstrated compliance.

Classic catch-22.

This post unpacks what banks actually fear, why the usual compliance approach sometimes fails, and how an independent adviser can help break the stalemate.

What Banks Actually Fear

Banks are businesses; they exist to make money. So why do they say “no” to startups that look compliant on paper?

It’s not just about incomplete forms — though many startups do get the compliance pack wrong, which kills applications early.

Banks say “no” because they fear regulatory scrutiny and reputational damage. A startup that fails spectacularly doesn’t just cost the bank money; it strains their relationship with regulators and impacts their standing in the market. The relationship manager who approved the account becomes the person who has to explain why the bank faces regulator inquiries. That fear weighs more heavily than the quality of your pitch or business model.

Your job as a founder (or adviser) isn’t simply to prove compliance. Your job is to prove you won’t become the bank’s problem.

Why Startups Break the Pattern

Banks rely on pattern recognition. They understand established corporates because they’ve seen them before with predictable cash flows, clear ownership, audited financials, and proven management.

Startups break that pattern. Revenue is unproven. Founders are new. Ownership can be complex. Fintechs and MSO applicants also ask banks to bet on regulatory approvals that haven’t yet been granted.

So banks default to “no” — not necessarily because you’re non-compliant, but because you’re unfamiliar and pose operational unknowns.

This is where storytelling matters; it must go beyond ticking compliance boxes.

The Story You Need to Tell

Your narrative must answer three key questions banks ask silently:

Who are you really?

Banks need to know you’re not a regulatory landmine in disguise.

Credible founders, reputable backers, and transparent ownership structures reduce fear. Mention known investors, advisers, or regulated industry experience. Familiarity builds trust.

They’re not simply asking “are you compliant?” but “do we recognise you or familiar entities around you?”

What’s your actual risk profile?

Banks want evidence of effective controls, not just completed forms.

Explain your AML/KYC framework, compliance leadership, jurisdictional risk management and cross-border controls. They don’t need to love your product but must believe you won’t trigger a regulator inquiry landing on their desk.

Why won’t this blow up in my face?

Banks want to avoid regulator questions triggered by your account. Applications often die silently due to lack of an internal narrative that gives senior management confidence.

Offer “air cover” with evidence of regulator engagement (meetings, correspondence, in-principle signals), engagement of credible legal or compliance advisers recognised by banks, and a realistic timeline demonstrating understanding of the licensing process.

Your story is not “we’re compliant” but “we are credible, controlled, connected, and approving us won’t cost you your job.”

Where an Independent Adviser Adds Value

If you’re a startup founder or board member stuck in this deadlock, an independent adviser brings:

Translation of your business and compliance pack into the risk language banks understand. Many applications fail due to incomplete forms; advisers catch these early.
Introductions and navigation through bank relationship managers and compliance and onboarding teams. While not guaranteeing accounts, good relationships improve your odds of being heard instead of auto-rejected.
Storytelling that frames your business narrative in a way relationship managers and senior bank staff can support. It’s about understanding bank risk assessment and regulator concerns, not just product knowledge.

What Startups and Boards Should Ask

Non-executive directors and investors should ask these key questions:

Who owns our banking strategy? Is there a named responsible person or is it handled ad hoc?
Do we have someone who understands both regulator requirements and bank risk appetites—not just a compliance consultant, but someone who navigates both worlds?
Are our compliance, KYC, and AML documents fully coherent, complete, and ready for scrutiny—not just “mostly done”?

If you can’t answer these clearly, neither can the bank.

Conclusion

The catch-22 is real but solvable with the right expertise and approach.

Banks aren’t fans of startups not because they dislike innovation, but because startups break patterns banks use to assess risk. The solution isn’t just better compliance documents (though they matter); it’s building credibility, relationships, and narratives that reassure banks you won’t be a regulatory or reputational liability.

If you’ve faced or cracked this issue, I’d love to hear from you — subscribe to this blog or drop me a message.