International Expansion for Financial Services: Adapting to Local Markets

As fintechs and financial services institutions seek to expand beyond their local markets, international expansion offers as many opportunities as it does significant complexities. Adapting a financial services offering to the realities of a local market is often not straightforward. Multiple factors make global market entry an odyssey for many companies, but perhaps one of the most complex is understanding the regulatory landscape, cultural nuances, customer expectations, and local competition.

While cross-border growth is attractive, the strategic and operational hurdles involved in localizing a financial product or service are considerable. Whether entering an emerging market or refining your strategy in an established one, success depends on the ability to adapt while maintaining strategic consistency.

This article seeks to describe the main challenges financial services providers face when entering or expanding into foreign markets and offer guidance on how to overcome them.

Understanding the regulatory landscape

Regulatory complexity is probably the biggest challenge in any international expansion strategy, and it is even more so in the financial services sector. As one of the most tightly controlled sectors globally, financial services and fintech requires companies to deal with each country having its own rules, regulators, and practices they must follow.

These are just some types of regulations to consider:

AML & KYC frameworks

Anti-Money Laundering (AML) and Customer Due Diligence rules vary by jurisdiction, especially following EU’s 5th AML Directive, which broadened KYC obligations to cryptocurrency exchanges, e‑wallets, and fintechs.

In LaTam, In Brazil and Chile for example, fintechs are required to partner with licensed banks or become regulated institutions themselves, maintain KYC processes and file detailed transaction reports to authorities.

Local taxation & reporting standards

Different national financial tax regimes introduce complexities in transactional tax, withholding tax, VAT (on digital services), and cross-border withholding. Some markets require detailed remittance reporting even for small transfers.

Marketing & communication restrictions

EU regulations (through ESMA and national competent authorities) require marketing for financial instruments or investment services to be “fair, clear and non‑misleading,” with appropriate disclaimers and audience segmentation to protect less experienced investors.

If you’ve ever tried to run a Meta ad campaign, and had to declare your ads under the ‘Financial products and services’ policy, this might sound familiar.

Read Meta’s policies for Financial products and services.

EU data residency & localisation rules

While GDPR doesn’t explicitly mandate storing data within the EU, it does impose strict rules for transferring personal data outside the European Economic Area (EEA). This means that while you can store data outside the EU, you must ensure that the recipient country provides an adequate level of data protection equivalent to the GDPR’s standards.

Learn how our consulting services can simplify your international expansion strategy.

Cultural nuances

What financial trust looks like in one country might be interpreted very differently in another. Consumer confidence in institutions, and attitudes toward credit, insurance, or digital banking vary widely. The success of fintech market penetration, for example, is not necessarily linked to a country’s social or technological development, but more related to cultural norms.

Impact of cultural norms on digital payment adoption

In Germany, Europe’s largest economy, cash continues to be one of the main means of payment. This has nothing to do with convenience, but rather a lack of trust in how financial institutions may use or abuse personal data.

However, in other countries that are considered “less developed” in many aspects, digital payments are growing exponentially. For example, in Latin America, 60% of transactions are made through digital means, with countries like Brazil leading this trend.

This highlights the critical importance of understanding cultural norms and consumer behaviour when developing a financial services market entry strategy.

Source: PCMI: 2025 Latin America Payments Outlook

A common mistake made by international brands is to assume that the same communication and product strategy will work the same in all markets. Translating the message without adapting it to the local context—whether cultural, economic, or regulatory—often results in ineffective campaigns and a disconnect with audience expectations.

For a deeper dive, read out guide to building trust in new markets.

Intense local competition

Even in emerging markets, global brands often face strong local competition. These local competitors may already have cultivated brand loyalty, developed distribution networks, and aligned better with cultural or linguistic preferences.

Overcoming market skepticism and building local trust

New entrants may also face market skepticism: Why should customers trust a foreign provider with their money, insurance, or data? If local players are already seen as “safe” and “known,” the barrier to switching becomes even higher.

In highly regulated sectors like insurance, pensions, and banking, incumbents often benefit from long-standing relationships with regulators or local gatekeepers, making fintech disruption or market entry more difficult.

If you need help identifying your specific niche, our expert team provides detailed market sizing and research services, which can help you uncover new opportunities.

Technology and infrastructure challenges

Entering new markets often means adapting to local infrastructure — or the lack thereof. For instance, payment gateways, credit scoring systems, or identity verification services vary significantly across regions.

This can create friction in onboarding, compliance checks, or product delivery. In many cases, third-party integrations that work in one country may be unavailable in another. Additionally, latency, security, and data storage issues can impact user experience if the tech stack isn’t optimized for the local market.

Adapting fintech infrastructure to local market conditions

The challenges around technology and infrastructure are especially pronounced in digital-only financial services products like neobanks and crypto platforms, where infrastructure is both a product enabler and a competitive differentiator.

When expanding into new markets, success hinges on the fintech’s ability to integrate seamlessly with local technology and ecosystems. Key challenges for various sectors may include:

• Payment gateways and local processors – integrating with locally preferred payment gateways and supporting local debit cards, bank transfers or mobile payment methods is essential for a frictionless user experience.
• Credit scoring and identity verification – partnering with local providers to perform KYC and ID verification may facilitate compliance with the new market’s data sources and legal frameworks.
• Data residency – choosing a local cloud provider might be a requirement to meet the country’s data residency laws.

Conclusion: Overcoming key challenges for financial services in new markets

Adapting your financial services offering for new markets is not a one-time task, it’s an ongoing, multi-dimensional effort. From regulatory strategy to brand messaging, from local SEO and GEO to user onboarding, each element must be informed by local realities while staying aligned to your global vision.

The most successful finance brands share a few key traits when entering new markets. They proactively:

• Invest in market intelligence: They thoroughly understand the market before launching.
• Build local expertise: They build cross-functional teams with local insight.
• Localise deeply: They adapt their product, service, and customer experience to meet local needs.

And they stay agile, using data to continuously refine their approach.