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Innovation Without Permission: Can You Keep Building Fast When Regulation Is Still Catching Up?

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Innovation Without Permission: Can You Keep Building Fast When Regulation Is Still Catching Up?

Published:
2026-10-18
#Product Management
#Innovation
#Startups
#Regulations
#Ecommerce Strategy
#Payments & Digital Finance
#Embedded Finance
#Payments
#Fintech
#Future of Commerce
#FinTech Insights
#Digital Commerce
#Agentic AI
#AI Commerce

Innovation Without Permission

How fast-moving companies keep building as regulation catches up

Regulation is almost always behind the market. Products and technology look ahead, while many of the rules that apply to them look backwards. For founders, scale-ups and corporate innovators, that creates a constant dilemma: how fast can you move, and how much catching up do you owe on compliance?

In this episode of the GetFutureReady Podcast, host Maulik Sailor is joined again by Lyubomira, co-founder of Relace, a regulatory technology platform. It is the third conversation in a series on compliance and regulation in fintech, agentic commerce, agentic payments and AI-native companies.

The discussion covers accountability, the checkpoints fast-moving teams often miss, how successful fintechs have taken different routes, whether breaking with industry convention can drive innovation, and what investors now expect. The views shared are opinion, not regulatory or legal advice.

The Dilemma: Moving Fast While the Rules Lag Behind

Maulik frames the problem from the founder's side. Teams want to move quickly and dominate their market before anyone else does, yet many of the rules they operate under are outdated. When the regulator eventually steps in with a new rule book, companies that moved fastest may find they have been breaching duties without realising it.

Lyubomira adds that the old split between regulated and unregulated businesses no longer holds. These days almost everybody is somewhat regulated. Even a simple landing page falls within GDPR, as does a CCTV camera in a corner shop.

Why Regulation Tends to Catch Up With Growing Companies

Looking back over the past decade, including some of the big fintechs and crypto companies, Lyubomira's observation is that regulation usually catches up with businesses that become big enough. First-mover advantage and innovation matter, but only if the company is still there three, five and ten years later.

She also pushes back on the idea that regulation simply slows companies down. There is a fixed cost to regulation, but newer, principle-based approaches such as Consumer Duty are more adapted to the scale of the business. Companies of any size can comply proportionately while continuing to innovate on their product and business model.

Show Your Work and Keep Someone Accountable

The most important thing a company can do while innovating, in Lyubomira's view, is to show its work. That means recording the decisions it made, what it considered, the trade-offs it weighed and why. It helps the company's own thinking and operations, and it helps the regulator too.

The second element is accountability. Lyubomira compares an unowned regulatory obligation to the orphan services that engineers know well: a ticking time bomb. She also stresses that individuals remain accountable for their work, including documents and code produced with AI. The aim is to be confident enough to innovate now, so that in five years, when the company is big and successful, a penalty does not come its way.

What Fast-Moving Teams Often Miss

Regulatory scope creep

In the excitement of going to market, it is easy to cross a threshold: a suggestion becomes advice, or a new technology feature crosses a line in a particular jurisdiction. Lyubomira suggests watching three things together: what the product is and does, how it is built and offered (including whether AI is involved), and where it is offered.

How data is used

Lyubomira is passionate about the way engineers handle data in regulated businesses. Personal data in logs, for example, cannot simply be used to fix bugs, because it can leak. She describes responses from some engineers at a recent event who saw this as a compliance issue and not their own, and argues that the decisions made on the ground have everything to do with the business.

Different Routes Taken by Successful Fintechs

Maulik uses Wise, formerly Transferwise, as an example of a product feature that drove a company's early growth even though, as he understands it, the underlying approach was probably not allowed in many countries at the time. The company is now regulated and compliant in many markets.

Lyubomira says she cannot speak to the legality of what any company did. Her point is that it becomes a question of scale: whether controls and operational maturity kept pace with growth. If they do not, sooner or later that slows a company down. She notes that successful fintechs have taken very different approaches, from running first and thinking later to engaging early and growing through an active dialogue with regulators. Zilch is one she mentions as being in active conversation with its regulators and, as she understands it, having come through one of the sandboxes. There is no one-size-fits-all, but accountability and showing your work apply whichever route a company takes.

Can Breaking With Convention Drive Innovation?

Maulik argues that in heavily regulated, sleepy industries, innovation often comes from people who start thinking against the existing rules. If a founder finds that incumbents are not doing something because regulation does not allow it, an outsider may decide to do it anyway. If it takes off, existing players start to adopt it and regulators tend to catch up or change. There is a risk, but it can be a worthwhile one if the industry can change.

Lyubomira responds with the airline example. A senior airline executive might want compensation rules scrapped, yet the same person as a passenger on a disrupted flight is glad of the protection. Regulation, she says, changes constantly, tightening and loosening with events, and as a regulatory technology provider she is not advocating for more of it, only for dealing with change. Her advice to founders exploring a completely new model is to go for it, and to engage with the regulatory environment when doing so.

Investors Now Ask About Your Regulatory Posture

Lyubomira says more and more investors, from early-stage startups to large funds, expect companies to be able to prove what their regulatory posture is and what they are doing about it. Without that, they will struggle to fundraise. Managing regulatory requirements in a spreadsheet is, in her view, no longer acceptable. Companies should have clear answers on where they stand and what their growth trajectory means for compliance.

The UK Approach to Innovation and Regulation

Maulik notes that politicians in the US, the UK and India have all talked about cutting red tape to win the innovation race, which suggests regulation and innovation sit at opposite ends of a spectrum. The conversation asks instead how to be innovative within the regulatory wrapper.

For the UK, Lyubomira points to the FCA's innovation programmes and her own company's participation in the sandbox. She sees a real attempt to balance supporting innovation with preventing bad outcomes, and likes the approach for being engaged and on the ground.

Quick-Fire Tips for Founders

To close, Maulik asks Lyubomira for short answers on how founders should handle regulation:

  • Engage proactively with regulators as soon as you have found product market fit and know what you want to do
  • Build the foundations before the growth phase: show your work, adopt technology to help you do it, and keep someone accountable
  • When talking to a regulator, show your work, explain the benefit and the outcomes for customers, and ask what it means for your regulatory posture
  • To stay future-proof, keep the business nimble and watch how you use data, the technology you use, and regulatory scope creep, embedding technology whether you buy it or build it
  • If regulators seem to be ignoring your space, remember that plenty of existing rules still apply, so engage with them and keep following the same best practices

FAQ

Why does regulation tend to catch up with fast-growing companies?

According to Lyubomira, regulation usually catches up with businesses that become big enough. First-mover advantage matters only if the company is still there years later, so what a company does while innovating, such as documenting its decisions, determines whether penalties follow.

What does it mean to show your work?

It means recording the decisions you made, what you considered, the trade-offs you weighed and why. That evidence helps a company's own thinking and operations, and it helps regulators and investors understand its posture.

Why does accountability matter for startups?

Someone in the company needs to own regulatory obligations, in the same way engineers expect every service to have an owner. Individuals also remain accountable for their work, including work produced with AI tools.

What is regulatory scope creep?

It is the way a product can drift across a regulatory threshold as it evolves, for example when a suggestion becomes advice. Lyubomira suggests monitoring what the product is and does, how it is built and offered, and where it is offered.

Do investors care about regulatory posture?

Yes. Lyubomira says investors increasingly expect companies to prove their regulatory posture and what they are doing about it, and that tracking requirements in a spreadsheet is no longer acceptable when fundraising.

When should founders engage with regulators?

Lyubomira's answer in the quick-fire round is proactively, as soon as you have found product market fit. She stresses that this is opinion and not regulatory or legal advice.

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