The new regulatory environment in the U.S. and around the world has the potential to introduce a major climate change for the fintech industry. Here’s a quick look at what you need to know about how the rising tides of regulation can impact your bank, your business, and your bottom line.
Regulation is always changing
With the new administration in the U.S., we’ve already seen revisions in some sectors, and there is a strong possibility of disruption in others. For example, the Durbin Amendment that was passed in 2010 may soon be repealed. No matter which side you’re on, you need to prepare your bank or business for the reality of a possible repeal. And it’s not only new leaders that have the power to change regulation– in the U.K., the advent of APIs will soon mandate open banking through pending PSD2 regulations. What’s next? Perhaps we’ll see biometric authentication requirements or a mandated, standardized approach to cryptocurrencies. All you can know for sure is that things won’t stay the same.
Serve local, think global
Fintech isn’t immune from the global economy– in fact, the opposite is true. Fintech is actually driving the global economy. Because of this, even if your financial services company doesn’t operate on a global scale, international regulations will still alter your business. That’s because regulations not only play into the “animal spirits” that dictate consumer behavior but more importantly, they adjust incentives, which can fundamentally change a company’s business model.
Adapt and win
You don’t need to be a first-mover when it comes to regulation, but if you fail to adopt policies or adapt to changes, it’s possible you may face fees, penalties, or worse– loss of consumer and/or client trust. Taking the time to study pending regulations and learn about ways to overcome a challenge they may pose or take advantage of an opportunity it presents can pay off in the end.
With rampant regulatory hurdles and minefields, it’s never been easy to operate a financial services company, and 2017 is no exception. TrustedKey CEO, Prakash Sundaresan, will have more on this topic during a roundtable discussion at FinDEVr London next month. Sundaresan will lead an exploration of Fintech climate change: Top challenges & regulatory impacts facing the financial services environment.