New IBA report outlines fintech regulatory framework – My Startup World
A new report by the International Bar Association Banking Law Committee (IBA BLC), provides an overview of financial technology (fintech) regulatory frameworks for 39 jurisdictions across Africa, Asia-Pacific, Europe, North America and South America. The report, with the title Fintech: how is the world shaping the financial innovation industry?addresses how various regulators around the world are dealing with the application of technology and innovation to banking and financial services, as well as society’s current concerns.
Carlos Maria Melhem, IBA BLC Membership Officer and a partner at Allende & Brea, stated “Technology and innovation applied to the banking and finance industry has shown a significant positive impact around the world, not only in terms of financial inclusion, but also in many other aspects crucial to the development of countries. This particular project is a great source of consultation to find out how more than 35 countries approach and regulate fintech.’
The Fintech revolution has brought about important changes on a worldwide scale. Technology has become one of the most important tools in modern life and has profoundly affected the way business transactions are conducted, especially in the banking and financial sector. Fintech provides opportunities to reduce the gap between traditional financial users and people who may not have access to banking and payment services in general, thus helping to achieve financial inclusion.
Lukasz Szegda, IBA BLC Academic Liaison Officer and a partner at Wardynski & Partners, commented ‘The Fintech industry is multi-jurisdictional in nature. Our worldwide comparative fintech regulatory guide is designed to be a valuable resource for industry players seeking international expansion, as well as for their corporate advisors and other international practitioners. It provides a comprehensive legal background in a given jurisdiction of interest across a wide range of fintech landscapes. The guide is based on the contributions of leading fintech lawyers in their respective countries, and we are very grateful for their excellent efforts.’
The report contains outlines of laws and regulations that regulate five different aspects of fintech: financial innovation; crypto assets; payment service providers and digital wallets; open banking services and special programs that support the fintech ecosystem. It also outlines the key elements to be taken into account when ensuring adequate regulation of fintechs in different jurisdictions, including:
- Establishing a fintech regulatory framework: as fintech becomes a relevant solution for financial business transactions, adequate and balanced legal frameworks are essential to ensure the growth of fintech activities and innovation. At the same time, and considering that the use of fintech products is often not limited by geographical barriers, adapting a common regulatory framework in specific areas can be useful to encourage fintech companies to offer services in multiple jurisdictions. Each country should develop adequate and specific fintech regulations, because it will not be sufficient to regulate fintech through diffuse and isolated norms.
- Provide special support for fintechs: due to their presence and utility in most areas of modern life, every jurisdiction should promote fintechs to achieve optimal use and take advantage of the benefits they offer users. The role that governments undertake in encouraging the development of fintech and promoting their use will be fundamental to achieving this.
- Develop open banking tools and digital wallets: Increasingly, financial transactions and personal banking are carried out via digital means such as smartphones and computers. It is important that jurisdictions regulate the current means used to control personal finances. Providing the opportunity to have better options and benefits when conducting financial activities online is essential.
Matías Langevin, IBA BLC Young Lawyers’ Liaison Officer and a partner at Honorato Delaveau, noted “The fintech industry has a huge impact on the financial world as we know it. Most jurisdictions are planning, or already have in place, relevant regulations that will be crucial to allow further development in this field along with the necessary protections to ensure fintech companies play an important role in the new financial environment. This report reveals the essential and relevant legal requirements and limits adopted by each country in the fintech sector.’
Rafael Aguilera, IBA BLC Financial Innovations Subcommittee Chair and partner at Gomez-Acebo & Pombo, commented ‘The report shows how most jurisdictions are adapting their regulation to the new fintech tools. The need to combine an inclusive and flexible way of entering into financial transactions, together with investor protection, is a challenge not only for authorities, but also for lawyers specializing in the financial sector. A common fintech framework is key to increasing competitiveness across jurisdictions.’
