Bogged down in a maze or take unnecessary risks: the current climate of FinTech in the United States they often leave players with only two tough choices, according to Bruce Parker, founder and CEO of Modo, who describes himself as a "cloud-based utility" that enables payment systems to interoperate.
In the wake of this week's release of a US Treasury Department report on how to encourage more FinTech, payment executives were mulling over the relationship, wondering if it would lead to concrete improvements and giving their ideas to PYMNTS about how to better improve innovation and entrepreneurship of payments.
The report, published in support of President Trump's request to regulate the US financial system around a series of fundamental principles, offered indications and recommendations. They bounced for a long time in the FinTech space. and that no doubt they already have the support of many managers. In general, the department has proposed to feed more FinTech activities in the United States by loosening federal regulations, implementing national safeguards against data breaches and drafting state model laws to reduce overlapping bureaucracy.
In addition, the report requires the US Office of the Currency Controller (OCC) to allow FinTech companies to operate in all states, according to the same standards as banks – a move that would require all. office to issue special papers for the younger payment companies and financial technology.
The treatment of the artificial intelligence (AI) report offers a typical prescription for a future of FinTech's future. Federal summits and inter-institutional efforts focused on artificial intelligence would help promote technology, which is increasingly used for payments and trade. Furthermore, the avoidance of "unnecessary burdens [s] or obstacles" for companies that develop artificial intelligence and machine learning technology, especially as regards testing, would serve to accelerate the progress of the industry. ; IA.
Review of the compromises
FinTech executives are eager for such moves.
"It is time to re-examine the compromises between innovation, competition and regulation in FinTech," said Parker. By defining the state-by-state FinTech regulatory model "absurd", he said that, for FinTech companies, "the journey towards a regulatory and compliant business model passes through an exasperating number of twists and turns of conflicting legal opinions – confusing agency interactions – and colossal bureaucracy. "
These are, of course, old and familiar complaints, but the world in which FinTech must compete and prosper is changing. The PSD2 in Europe is offering opportunities for start-ups of financial technology to more efficiently access data that is vital to their visions and operations. In addition, regulators around the world are warming up to the idea of "sandbox" FinTech – a concept that the Treasury Department has warmly treated in its report and which enables relatively rapid testing of new FinTech products based on regulations loose.
At FinTech The paper could do a lot to put American companies on a better level with their peers and competitors in Europe and Asia, Parker said.
FinTech Helping Itself
Other executives agreed, at least on the general point of introducing more common standards for the broader FinTech sector in the United States. Furthermore, the theme of the Treasury Department in the report on balancing security and convenience – as demonstrated in the pages concerning data security and the access of consumers to better services – appeals to people in the sector.
"The weak point for FinTech companies is to find the link between security and convenience – creates faster, simpler and more personalized transactions for consumers, making the whole ecosystem safer", said Mike Orlando, CEO of FitPay, a technology boot platform that adds contactless payment capabilities to wearable devices and the Internet of Things (IoT). "A regulatory environment that supports and encourages innovation towards achieving these goals is positive for consumers and for industry."
Orlando claimed that the industry must also do its own lifting and, in his words, "embrace change". everything that challenges innovation efforts can be attributed to governments and regulators. "Legacy systems and business rules within the ecosystem that are slow to evolve," he said. "Ultimately, a regulatory environment and an industrial mentality that support the opening of new terrain are positive for everyone."
It is unclear what happens now with the Treasury Department report. Will it serve as a basis for real policy change or will it simply provide fodder to speak in the parlor? Regardless of the impact it has had, the report has brought the stakes home with FinTech: between 2010 and the end of 2017, more than 3,330 new companies based on technology at the service of financial services were founded, and the FinTech financing reached $ 22 billion globally in 2017.
Judging from these trends, it is hard to imagine that the pressure to reform FinTech's policy will soon decline.