Fintech Explosion Demands Joint Effort on Oversight, Report SaysBy and
Davos group's study points to `urgent need' for collaboration
Steps urged to spur competitions while preserving stability
An influential group including executives from some of the world’s biggest banks is calling for public-private partnerships to lead the way in developing regulations for the burgeoning financial-technology industry.
Governments and businesses should create bodies that enable them to work together on rules to govern technologies that are transforming everything from the capital markets business to consumer payments, the World Economic Forum said in a report released Tuesday. The efforts could help ensure companies don’t escape oversight by slipping though “supervisory cracks,” according to the report.
“There is an urgent need both for the private sector and financial supervisors to collaborate,” the group said in the report, whose contributors include investment bank executives, international economists and entrepreneurs from Asia, the U.K. and the U.S. The forum’s aim is “to foster competition between traditional financial players and new entrants while also preserving system stability,” it said.
Fintech was a central theme this year at the group’s annual meeting in Davos, Switzerland, and the report draws on discussions that took place there. It incorporates views of members including executives from UBS Group AG, Deutsche Bank AG and JPMorgan Chase & Co.; tech firms such as IEX Group Inc. and On Deck Capital Inc.; and regulators including the U.S. Securities and Exchange Commission and the Bank of England.
The report comes as regulators around the world scrutinize the explosive growth of new technologies from online ledgers for tracking digital currencies to peer-to-peer lending and mobile payments systems. In the U.S., agencies including the Treasury Department and Consumer Financial Protection Bureau have been studying ways to bring new systems under existing regulatory frameworks. In the U.K., the Financial Conduct Authority is developing a system aimed at spurring innovation, including a model that allows companies to test new products with guidance from regulators.
While many fintech firms set out to bypass banks and steal their customers, financial firms are increasingly teaming with these upstarts in addition to developing their own technology-driven services. For financial companies, new technologies pose both competitive threats as well as an opportunity to cut costs and bolster profitability.
“A few years ago there was a lot of skepticism about what fintech could do,” said Richard Eldridge, chief executive officer of the credit score technology company Lenddo, who also contributed to the report. “But today you’re seeing a rapid rise in innovation coming from the incumbents as well. Whether they are working on their own innovations or working with or acquiring fintech companies.”
To continue reading this article you must be a Bloomberg Professional Service Subscriber.
If you believe that you may have received this message in error please let us know.
- Avicii, DJ-Producer Who Performed Around the World, Dies
- Deutsche Bank's Bad News Gets Worse With $35 Billion Flub
- Southwest Airlines Gives $5,000 to Passengers on Fatal Flight
- Wells Fargo's $1 Billion Pact Gives U.S. Power to Fire Managers
- Oil Shrugs Off Trump Tweet to Rise for a Second Straight Week