The internal auditor: a valuable pillar of governance in fintech

The role of the internal auditor in fintech extends well beyond routine compliance. In a sector defined by rapid innovation, digital infrastructure and regulatory scrutiny, internal audit is an investment in resilience, transparency and trust.

Within the fast-evolving fintech ecosystem, the internal audit function is indispensable, yet it remains frequently underestimated. For regulated fintech firms operating under the supervision of the Malta Financial Services Authority (MFSA), a robust internal audit function provides valuable guidance in identifying and mitigating operational, technological and regulatory risks.

Too often, internal audit is treated as a procedural necessity or as a checklist exercise to satisfy regulatory requirements. In reality, it is a dynamic function that protects stakeholders and strengthens the organisation. Recognising its broader value is not merely a matter of sound governance, it is a strategic imperative.

Internal auditors provide independent assurance on the effectiveness of risk management, internal controls, cybersecurity safeguards and governance processes. In technology-driven businesses, where risks can emerge quickly and scale rapidly, this independent perspective is particularly critical. Internal audit is uniquely positioned to assess the organisation holistically, connecting product development, IT operations, regulatory compliance and board oversight.

When properly empowered, internal auditors become trusted advisors to management and the board. They can identify emerging vulnerabilities in systems and processes before they escalate, highlight control gaps and offer insight that goes beyond minimum regulatory expectations. For this to happen, fintech firms must embed internal audit firmly within their governance structures and equip the function with the technical expertise and authority required to fulfil its mandate.

Regulatory expectations in Malta and internationally have steadily increased, especially in areas such as data protection, anti-money laundering and operational resilience. The MFSA’s rulebooks and corporate governance expectations emphasise strong internal controls, effective risk management and accountability at board level. A robust internal audit function is central to meeting these standards, particularly in a sector where regulatory breaches can lead not only to penalties but also to reputational damage and loss of customer trust.

However, compliance frameworks alone do not ensure effectiveness. The tone set by founders, senior management and the board is decisive. A governance culture that values constructive challenge and transparency allows internal audit to contribute meaningfully. Without that support, the function risks being confined to a narrow compliance role, with limited influence over strategic or technological decisions.

These dynamics can be even more nuanced in founder-led fintech companies. Entrepreneurial drive, speed to market and strong leadership vision are often the engines of growth. Yet concentrated decision-making and informal processes can create governance blind spots. In such environments, maintaining the independence and objectivity of internal audit may be challenging, particularly when commercial urgency competes with control discipline.

There may also be reluctance to surface weaknesses in systems that underpin core platforms or customer-facing applications. The pressure to maintain growth trajectories can discourage escalation of issues or delay remediation efforts. Nevertheless, it is precisely in these high-growth contexts that internal audit adds the greatest value.

By promoting structured processes, safeguarding investor interests and reinforcing accountability, internal auditors support the maturation of governance frameworks as fintech firms scale. They help create an environment where innovation and control are not opposing forces but complementary pillars of sustainable growth.

As Malta continues to position itself as a hub for fintech and financial innovation, governance standards will remain under scrutiny from regulators, investors and customers alike. A well-resourced and independent internal audit function is a clear signal of institutional strength. It demonstrates a willingness to self-assess, to address weaknesses proactively and to prioritise long-term stability over short-term gains.

Fintech firms should therefore resist viewing internal audit as a regulatory overhead. Instead, it should be seen as a strategic investment, one that enhances resilience, reinforces transparency and builds trust in an industry where credibility is paramount. Ultimately, governance is not judged by policies on paper, but by how decisively risks are uncovered, confronted and resolved before they threaten the business.