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How FinTech Became an International Unifying Phenomenon

Customer-centricity, simplicity and scalability, cost efficiency, the absence of the need to protect existing business, and lack of regulatory burden along with legacy IT systems/branch networks – these are just some of the reasons FinTech is not a niche anymore, but a powerful force in transforming the financial services industry. Combining venture and M&A investment, FinTech deal value in Q1 2017 hit $3.2 billion, not a steep drop from the $4.15 billion registered in Q4 2016.

The potential of this industry, however, cannot be fully understood and leveraged while contained in national borders. In 2017, FinTech became impactful enough to turn heads among world’s’ watchdogs, whether it’s for never-seen-before speeds of funds accumulation through new instruments or increasing financial threats associated with those instruments for a significant number of individuals around the world.

In any case, it became evident that 8,000+ FinTech startups around the world can no longer operate effectively and productively in uncertain regulatory environments – regulatory uncertainty disproportionately affects first-movers and discourages innovators. To scale the opportunities presented by imaginative entrepreneurs in local markets, international authorities accelerated their efforts to attract and allow easy integration of international teams in foreign markets (Estonia, probably, is one of the most forward-thinking ones in that sense).

One of the first concepts that came into existence to facilitate innovation adoption beyond national borders was the concept of a regulatory sandbox, which increases time-to-market by about a third at a cost of ~8% of product lifetime revenue. More interestingly, estimations from other industries suggest that valuations may be reduced by ~15% due to regulatory uncertainty. By November 2016, nine financial authorities have launched regulatory sandboxes (ADGM, OSC, HKMA, MAS, FCA, and more) to enhance access to capital, curate quality of products reaching national markets, and offer a regulatory relief and assurance of the best solution for the end-user.

Regulatory sandboxes, most importantly, were some of the earliest government-level instruments used by forward-thinking authorities to attract and attain international talent building innovative solutions. Never before there has been such a massive precedent of financial watchdogs considering any regulatory relief for entrance into the most stringently regulated industries globally – the financial services industry.

The impact of FinTech on international policies did not stop on expanding the minds of regulators to the level of running a sandbox – starting 2016, governments started to actively cooperate on international FinTech initiatives. Increasingly, countries are recognizing that international cooperation is crucial to help develop their domestic FinTech market. Asia-Pacific, in particular, has been one of the most active regions where progressive authorities pay close attention and take actions on the deeper exploration of opportunities that FinTech opens in national markets.

Data source: The FinTech Market in Asia Pacific – An Overview, 2017

By the look of existing partnerships, there is no doubt we will see more collaborative work that will inevitably benefit the governmental structures, the end-user in every corner of the world, and the international massive force of talented entrepreneurs. While Hong Kong, Singapore, and Australia are all in with partnerships, the rest of the world is catching up with a certain future, where collaboration will drive innovation.

Not only does FinTech bring together governments, its unifying force actually first started to show in domestic markets among financial institutions and startups. Immense mutual benefits have been a strong incentive for startups and commercial banks to start transforming traditionally rigid industries together – financial services and insurance. Indeed, …the best way to foster progress is by working as a global and collaborative ecosystem, emphasized Laura Gaviria Halaby, Global Head of FinTech Acceleration at Citi, in an exclusive interview with the LTP Team.


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