FinTech to Revolutionise Financial Services – The future is now

The recent acceleration in FinTech startups in Australia is presenting interesting regulatory challenges, according to The Fold Legal (The Fold) managing director, Claire Wivell Plater, who says FinTech solutions have the capacity to radically revolutionise traditional financial and credit services.

“We are providing regulatory advice to a number of exciting and creative FinTech providers on how they can work within the existing regulatory obligations,” she says. “Where these providers can’t meet existing obligations, we will be encouraging them to approach the Australian Investments and Securities Commission for relief.”

Ms Wivell Plater says ASIC is very interested in electronic solutions that facilitate the delivery of financial services in particular, to make them more accessible to consumers. “ASIC is aware of the need for regulation to keep pace with innovation and early indications are that it will facilitate relief from regulation to FinTech businesses where necessary in order to help make that happen.”

However, that doesn’t mean that FinTech businesses will have an advantage. “They will still need to comply with the law,” Ms Wivell Plater says, “But many of the regulatory obligations were modelled on manual operating methods and need to be modified for a virtual environment.”

The Fold is currently working with a number of innovative FinTech solutions such as online or ‘robo’ advice, peer to peer lending, crowd funding and bitcoin. Robo advice, which automates investment selection and client advice, has the capacity to greatly improve financial advice business efficiencies.

“FinTech businesses in Australia are developing really innovative solutions right now,” Ms Wivell Plater says. “Other developments in the space include companies setting up virtual MDAs. These can provide very cost effective solutions for consumers if they’re happy to deal direct,” she says. “Other technologies gaining traction here include mobile payments and collaborative communities such as AirBNB.”

If they are providing a service for which a licence is required, Ms Wivell Plater says depending on the type of business, FinTech providers will need to bring themselves within the existing financial services and credit regime.

“They need to understand what services require a licence and understand the regulatory obligations that flow from that, whether it be disclosure or other mandated conduct requirements,” she says. “Then it is a matter of mapping the process and the end client’s experience; analyzing and understanding where the existing law fits, meeting it as much as possible and if it’s not possible, consider approaching ASIC for relief.”

Ms Wivell Plater says it all adds up to very exciting times. “What we are seeing at the moment is just the tip of the iceberg,” she says. “The future of FinTech really is now and given the cost-effective efficiencies these initiatives will offer financial services businesses, the industry should welcome the developments with open arms. FinTech solutions do not represent threats, but outstanding opportunities.”