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- NatWest launches new savings account-Bankrate UK comments expired
- PayPal and and Mastercard expand debit card offering to more European businesses expired
- Overdraft average rates double in past year but most vulnerable benefit from usage fee ban expired
- MarketFinance awarded £10m grant expired
- UK Finance responds to the Community Access to Cash Pilot’s announcement of its plans for pilot locations across the UK expired
4th August 2020
Encompass Corporation reviews the impact of FinTech and its regulatory obligations
Max Worrall, General Markets Sales Manager, Encompass Corporation, comments:
"In recent years, financial technology(FinTech) has emerged and developed to facilitate online payments, instant banking, and trading and lending-to name just a few use cases. As FinTechs gain traction, they are facing increasing regulation to encompass the scope of their services and ensure that new technology remains ethical, safe and secure.
Every new advancement in the space, such as expanding a financial services offering to business customers, brings new risks and compliance obligations.
Despite the need to get to grips with these complex and ever-changing obligations, FinTechs have the benefit of being adaptable. Unlike some in the financial services sector, they are not tied to legacy technology, and can build compliance into their core technology.
The process of adhering to regulatory measures imposed by legislations such as the Sixth Money Laundering Directive (6MLD) can be automated in a FinTech application with comparative ease: for instance, Know Your Customer(KYC) due diligence and data security tasks can be automated, with information subsequently adjusted and updated as laws change.
Of course, in today’s landscape, FinTechs differ vastly from traditional banking institutions, and there is an ongoing debate over whether they should both be subject to the same regulations. Given the value of FinTech to the UK economy, many businesses have questioned whether regulations, which have been known to restrict capabilities, are even necessary. Thus, the government has granted support to these businesses through a variety of initiatives, including the Financial Conduct Authority(FCA) Sandbox initiatives, which allow them to test the regulatory compatibility of financial products before they are launched.
This value has really come to the fore during the COVID-19 pandemic, as FinTechs’ innovative services have facilitated secure ways for governments and providers to reach the most in need quickly and efficiently. However, they must not take anything for granted-particularly when it comes to compliance, as we know that regulations are tightening all the time, so it is important that they continue to show that they can adhere to strict regulations. This is also particularly relevant as we see an increased appetite for collaboration with banks, for whom they can’t be seen as a risk.
In the future, we can only expect FinTech to grow further and accelerate in popularity and, as it continues to expand on its use of automation, cloud technology and AI, so too will the legislation, to ensure that this technology remains in keeping with ethics and security."