"There are varied reasons why FinTech flourishes in some countries and stalls in others. In this piece, I explore a common thread found in jurisdictions where FinTech has gained traction: the level of support governments extend toward the budding industry. Where government regulators are accommodating, forward-looking, collaborative and proactive, the industry grows, user adoption expands and investment increases."


To read the full article, follow this link.

SEQVOIA’s viewpoint:

The macro environment in which FinTech operates has become critical to continuing innovation in the sector. Put bluntly, governments can help or hinder FinTech.

In the main, governments – through their national and regional regulators – have encouraged innovation. Sandboxes, for example, are well established as a facilitator for technology and there is even competition between the national sandboxes to attract companies.

Luxembourg has long been a cheerleader for FinTech, adopting a proactive approach to blockchain, for instance, in recognition that blockchain/DLT technologies potentially reduce costs and create more robust securities processes.

Yet, despite the proven benefits of FinTech, regulators worldwide are starting to show concern over the perceived risks, deploying a range of transparency and disclosure rules and writing detailed conduct of business rules to respond to each new wave of FinTech innovation.

Artificial Intelligence (AI) has attracted a focus all of its own. The EU Commission has established a High-Level Expert Group on AI, with the aim of developing new policy on ethical, legal and societal issues related to AI. Similarly, the UK has created a Centre for Data Ethics and Innovation to identify potential gaps in governance and regulation that could impede the ethical and innovative use of data and AI.

In Luxembourg, a champion of innovation in the funds sector, the CSSF in December 2018 published a white paper on artificial intelligence, highlighting potential risks and advocating “an adequate control framework”. Luxembourg is also tackling robo-advice head on, arguing that many robo-advisers have “limited capabilities”.

The stance governments take towards Fintech is critical to future growth. Caution is a fundamental facet of the regulator, of course. But governments and regulators worldwide must not relinquish their cheerleading role for FinTech, and should continue to recognise that they have a beneficial role to play in lowering costs and levelling the playing field for ordinary investors.

Innovation is at the heart of our industry. Let's allow it to flourish!



This article is part of our newsletter's "Views on the news" section. To start receiving our mailings, please complete this form.

You may be interested in

21 Oct. 2019

Data Management strategies are evolving — so must entreprises

21 Oct. 2019

More Financial Services Firms to Invest in Data Management to Improve Investment Decisions

01 Oct. 2019

The future of PRIIPs ⁠— sifting through the clues