Enabling Technologies

Daily Review: Why Regulation Is Crucial to FinTech’s Future

Being home to the largest unicorns in the world, China has been continuously leapfrogging the world in fostering rapid technological innovation adoption. Dozens of reasons for China to become the most innovative hub have been enriched with another one – its own experience that led China’s finance and tech professionals to learn the key to sustainable innovation. Regulations are not seen as crippling to the opportunities presented by the tech community, but rather reasonable safeguards developed from a colorful experience and the need to put innovation on the rails of massive adoption. Sophisticated frameworks around the FinTech industry will add to the factors that will drive the dramatic rise of China’s FinTech.

Pick #1. ‘Freedom at a Price’: Why Regulation Is Crucial to FinTech’s Future

China’s FinTech industry has seen Ponzi schemes and weak business models, and that about 100 online wealth management platforms in China went out of business in 2015-2016. Through a series of moves beginning January 2016, China’s government has tightened regulatory oversight of the FinTech space. It also went after FinTech firms that offered excessive and unsustainable returns.

“Many of the new financial systems don’t have the safeguards,” said Edward Hartman, Co-founder of LegalZoom, who is also the entrepreneur-in-residence at Simon-Kucher & Partners, a global consulting firm, listing another area of concern. “And they’re enormously powerful.” He added that while FinTechs bring financial inclusion, regulation and oversight are essential to protect investors. “It’s freedom that comes at a price.”

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Pick #2. Explaining PSD2 Without TLAs Is Tough! (By Starling Bank)

What are the pros and cons for all the players in PSD2?

Pros and Cons for Consumers

+ Ability to consolidate all accounts in one place with continued protection under their product terms and conditions\ + The choice of the most convenient internet or app interface to check their bank account details\ + Direct integration of their bank account with merchant acquiring sites is convenient and practical\ – Lack of clarity of responsibility between PISPs (merchants) and the ASPSPs (banks) in the event of loss

Pros and Cons for Merchants

+ Reduced costs compared to card interchange\ + Immediate settlement into merchants account\ + Even greater direct relationship with the customer

Pros and Cons for Banks

+ Ability to position themselves as an AISP\ – Significant costs to change systems\ – Loss of screen time in front of consumer

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Pick #3. Introducing Our Powerful New Geolocation Travel Insurance (By Revolut)

How does it work?

Pay-per-day Travel Insurance makes use of Revolut’s geolocation technology to pinpoint exactly where you are in the world and automatically turn on coverage for you when traveling.

Using your Revolut app, you can easily tailor your insurance policy to suit your needs, even if you’re already on the move. For example, you can extend your policy to include friends or family, or add cover for winter sports such as skiing or snowboarding, all at the tap of a button.”

How much does it cost?

“In true Revolut style, our Pay-per-Day Travel Insurance starts at less than £1 per day. On average, a Revolut user spends 13 days abroad per year, which means that Pay-per-Day Travel Insurance only costs £11.76!”

Who provides the cover?

“Revolut works with leading underwriters, White Horse Insurance Ireland, part of the Thomas Cook Group, who are authorized and regulated by the Central Bank of Ireland.”

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Elena Mesropyan

Global Head of Content, MEDICI

Elena is a research professional with a background in social sciences and extensive experience in consumer behavior studies and marketing analytics. She is passionate about technologies enabling financial inclusion for underprivileged and vulnerable groups of the population around the world.