The role of regulation in stifling innovation.


Certain jurisdictions get it!  For the Fintech industry to thrive and bring secure efficient and value added financial products to market the unholy regulatory regimes must be parked.  Anti money laundering and proceeds of crime legislation is certainly required and could even be improved to be more effective but what is NOT needed is to allow vested interests to create fear on the part of regulators to stifle competition from startups. Payments and money transfer are the very lifeblood of the global banking industry earning the major multinational banks 40% of their revenue.  The banks are by and large extremely profitable and very institutional so don’t expect them to embrace change and  offer simpler less costly methods of paying and moving money unless they and their current business models are threatened. Far easier to cry wolf and put regulators into a  frenzy then to dismantle systems which have proved enduring and profitable for many years.

The UK with their Financial Conduct Authority FCA   and Singapore whose Monetary Authority of Singapore (MAS) have also embraced the same type of policies to encourage young companies to innovate by “cutting FinTech start up some slack” in regulatory requirements. A huge impediment to young Fintech’s bringing new and disruptive models of Financial Services is regulatory risk. Study after study has shown the negative impact of highly regulated regimes when trying to introduce new financial service models. Take mobile payments as an example in those countries where regulations have been eased to allow Mobile Network Operators (MNO) to introduce mobile money product independent of banks they have generally flourished, whereas when regulators force the inclusion of a Bank partner to legitimize such mobile schemes they have largely failed. It is rewarding to see the loosening of regulatory frameworks in the UK and Singapore beginning to blossom and bear fruit. As examples look to Transferwise   in the UK, brought to you by some of the same people who disrupted the telecom industry with Skype or Fast-And-Secure-Transfer commonly known as FAST in Singapore which was developed and is operated by  Banking Computer Services Private Limited (BCS) and is now supported by all major banks in Singapore. It is also wonderful to see a bank such as DBS cleaning up on the rewards; recently being rated as the best DIGITAL BANK in the world by Euromoney magazine while at the same time also being rated the safest bank in Asia six years running.  Security and fast  innovation (sorry for the pun) actually go hand in hand and are not oxymorons.

It seems strange with all the AML/CFT regulations that the criminal side of money transfers continues unabated, perhaps it is because criminals are very resourceful and don’t abide by legal regulations anyhow.  In closing I’d like to share the following additional concern I have on over regulation of the FinTech sector which is the inevitable breach in our privacy.



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