The halls of bureaucracy are finally on the move as technological advancements promise a “big bang” transformation of finance and other areas.
The British regulators, undoubtedly running while others seem to have just began walking, announced a raft of new measures to shake up banking based on recommendations by the Competition and Markets Authority. The most relevant for Fintech is an emphasis on Open Banking, giving access to traditional bank provided APIs and customer data so that they can provide direct services.
The CMA, however, fell short of what some had asked – the breaking up of giant banks as only a handful of them dominate the market, making banking an oligopoly or, even, a cartel which, at times, operates capriciously with little, if any, recourse as the closure of CoinJournal’s banking facilities illustrates.
The reason may be because the British seem to have taken the view that keeping the old while promoting the new is a better and less destructive approach. They are to hold a Fintech conference this spring to push for Fintech’s Big Bang moment, similar to the push in the 80s that propelled London to a global financial powerhouse.
The race has now been joined by the Swiss which announced a new proposal for light-touch fintech regulations. They are to create a “sandbox” for companies to experiment in a customized regulatory environment together with a fintech license, allowing new entrants to hold up to just above $100 million, making it easier to compete with traditional banks.
They have already attracted some talent at Crypto Valley and have shown interest in keeping it and promoting it with the local municipality being the first in the world to accept bitcoin for public service payments.
The race, however, is not limited to just the west. Abu Dhabi is also making its run with an announcement that they are to launch a Regulatory Laboratory through a new fintech legislative framework. Similar to a sandbox, it makes it easier to launch new innovative products and experiment with market reactions.
The United States is also on the move with the banking regulator appointing a senior lawyer to run a new “Office of Innovation” for Fintech. The primary task of the new center will be the designing of a fintech licensing framework to streamline regulation across the 52 states. Such discussions have now been ongoing for months, with the speed of movement probably decided by the outcome of the election.
The overall picture, therefore, seems to be one of a global understanding that finance is rapidly changing due to new technologies such as blockchains, smart contracts, APIs, and the internet. As such, global financial centers are repositioning to take advantage of the new opportunities, foster a welcoming environment for the fast-growing new industry and keep attracting new talent.
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