As the Financial Technology industry continues to soar, fintech compliance anxieties are at an all-time high. In a recent financial technology Global Report by PwC, financial companies dealing with financial technology listed regulatory uncertainty (49%) as one of their top challenges.
Furthermore, according to Thomson Reuters, a full 69% of firms are expecting regulators to propose even more rules in the coming year, with 26% expecting significantly more. Being flexible in approach, understanding the fintech regulations, and having the appropriate fintech compliance checks in place is imperative to a financial technology company’s success in the current environment.
Much regulatory and fintech compliance uncertainty in the United Kingdom is of course attached to Brexit. Brexit could result in UK and EU rules becoming less congruent if the two implement international standards with differing approaches. However, it is unlikely that drastic changes will be made in this regard as it is important for the United Kingdom to retain and implement EU legislation to ensure equivalency with the EU market.
This also highlights one of the greatest difficulties with fintech expansion, the lack of compatibility of different regulatory environments. Differences in financial technology regulations, licensing, fintech compliance and institutional oversight between countries (AKA regulatory patchwork) is a challenge for any fintech expansion. Ensuring appropriate financial technology regulation checks are place and understanding fintech compliance in that jurisdiction is imperative and increasingly difficult.
However, in spite of regulatory uncertainty, many industry leaders have noted that London is well-placed to weather the Brexit storm because its most important strengths are not inherently tied to the EU, and that talent will look favourably to the UK due to its critical mass of tech expertise and access to capital. As a global trading hub and a renowned financial services infrastructure, London’s strengths will stand in good stead for whatever lies ahead.
As major international banks will have to devote resources and fintech compliance capabilities in order address the Brexit seriously, there opens up an opportunity window for London financial technology startups to gain relative pace and strive ahead.
With the UK currently attracting the second highest amount of venture capital per capita after the US, according to Comply Advantage, and Christopher Woolard (Director of Strategy and Competition at the FCA) being reported to say that the regulator would double down on its commitment to supporting the success of the financial technology industry, there looks like no better time for London financial technology startups and fintech expansion to the UK.
Furthermore, Banks are opening up to the idea that there’s much more benefit in working with fintech startups and that collaboration with financial technology companies will be a win-win for all. This willingness to work together is echoed by fintech startups. Fintech startups are increasingly keen to look to work with Banks for the core, less sexy infrastructure, and also of course, the customers.
A report from Accenture goes one step further in relation to collaboration between Banks and fintech startups. Traditionally, those offering financial services have looked to partner with others in their own industry. However, in the future, collaboration will need to go a step further, to build ties with those in different industries and with different outlooks in order to identify new ways to generate value.Read more