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Should there be specific regulations for fintechs?


We analyse different visions on fintech regulations. Should financial start-ups work under different rules to that of traditional banks even if they offer similar or identical services?

16 september 2016

With the rising market of fintechs, start-ups, banks, economists and politicians do not seem to agree on the regulation models to be applied and followed. Those who believe in creating a framework which favours the development of fintech companies and their duties are nowadays facing those who believe that they should be adjusted to the bank’s traditional regulations.


The argument in favour

Several people, particularly fintechs themselves, stand for a limp regulatory framework separated from traditional banks at least regarding the services they offer.

For example, the Spanish Association of Fintech and Insurtech is currently working on a white regulatory book for the sector. The book highlights the changes needed in the sectors for Spanish companies to adapt and compete with the world’s biggest markets (such as Great Britain or the USA).

In this sense, the vice-president, Rodrigo García de la Cruz, intercedes to minimize the regulatory risk “in terms of access to the activity and in terms of supervision”.

An example on the type of actions which should be prioritised according to him is the“sandbox”, “which allows a pre-authorisation for a trial tests with the objective of testing a product of service in the market before its launching”. Thanks to this model, business innovation is promoted when the process of creating companies and products is accelerated and, hence, “not being held to so many requisites”.

Though Fintechs understand the need of a regulation and the banks’ and other actors’ resistance, they reiterate the sector’s need “to have enough space to breathe, develop and try innovative solutions without the fear for actions and fines“.


The bank, in between entering and limiting the market

The traditional financial sector still has doubts on its role in fintech growth. While most institutions are developing their own services adapted to new financial technologies, there are also many who believe that fintechs should be as strictly regulated as traditional entities are.

“If fintechs are to sell the same products, they should hold the same requirements and there should be no specific regulations for fintechs“.  This was the opinion of Ana Rubio, BBVA Research’s head economist, who also insisted on the fact that legal requirements should be the same.

Similar was the opinion of Ignacio Redondo, head of CaixaBank’s legal consulting. Arguing that the regulation shall fall back into services and “not companies”. He said so through a football comparison as “fintechs play nicely, [but], do not deserve official protection”.


In any case, it seems necessary to establish a solid framework for the establishment of the fintech sector in Spain. With Great Britain, European leader in the sector, about to leave the European single market (and with the Digital Single Market about to arrive), the unique opportunity of establishing the country as a European and Global powerful country has arrived.  And so, it shall clarify its situation.