Nery Alaev writes about fintech and regulations.
As the EU’s weakened financial markets feel the growing pressure of regulation, there may be an opportunity for fintech organisations to take advantage of the situation by using the very frameworks that are currently causing strife among the union’s banks.
I’ve decided to look at this news and summarise.
It may be that fintech companies actually benefit from the regulatory environment, thanks to their basis in transparent data, as investment expert Marta Sjögren points out:
“Fintech start-ups will need a very clear regulatory and compliance strategy as well as their product and marketing strategies.
The new regulatory environment is beneficial for those fintech companies that are building data-driven businesses with transparency and data-integrity as the backbone.”
Regulation can prove to be quite the barrier for start-ups, as they must comply and follow the rules if they’re to trade in respective ‘jurisdictions’, according to the article on the subject in TechCrunch.
The regulation process remains important to fintech companies though, as it allows them to gain the intangible asset of trust within consumers if they prove they are following the rules and complying with requirements.
This is important for fintech companies more than older institutions such as banks, as they rarely have historical reputations to rely on with customers.
Perhaps unsurprisingly, the need for higher regulation has surged in the eight years after the Great Recession – this is bad for existing institutions but, as aforementioned, a potential boon for fintech newcomers. Marta Sjögren explains:
“The financial crisis has meant regulatory entities have been proactive both in Europe and the U.S., creating opportunities for new incumbents, but compliance is absolutely crucial.”
What are my thoughts? My thoughts are that it’s a good time to be in the fintech arena, but it’s important that the right moves are made or a large opportunity could be lost for the sector’s companies to capitalise on the regulatory changes in Europe.
Nery Alaev is the current Director of ESN Investments GmbH, which engages in acquisition and development of commercial and residential property in Germany and Austria