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Financial regulators as fintech catalysts

Fintech companies are struggling with the friction of compliance, while at the same time they try to deal with risk-averse regulatory bodies in every part of the world. Practically all* fintech series A decks include a fund allocation strategy on establishing an internal compliance department in order to acquire a license in one or more parts of the world.

There are various initiatives which constitute a positive development to several other regulatory authority startup acceleration programs, such as :

  • FCA's small Electronic Money Institute (EMI) fast licensing in UK
  • Dubai Financial Services Authority's (DFSA) Innovation Testing Licence (ITL)
  • Abu Dhabi Global Market's (ADGM) ITL
  • Monetary Authority of Singapore (MAS) and the FinTech Regulatory Sandbox (FRS) initiative

This lean approach, a vital element to startup success, is now being adopted by the regulator. I am really confident that initiatives that are guided by transparency and collaboration, will result in early-stage companies avoiding precious capital investments on compliance and focusing all execution capacity on product market fit. 

In addition, given the imminent Brexit and FCA being vocal about the need for a contingency plan that will assure e-money passporting capabilities, central banks of various European countries have already established a relocation ecosystem with marginal costs. Luxemburg (CSSF) is one of the strongest contenders.   

In other words, we definitely need to see more regulatory agency hackathons, more national regulating bodies establishing accelerator programs and less marketing stunts by financial organizations that just recently got an innovation officer.

*in parallel, another fintech segment is after the $500Bn market of banking infrastructure software, therefore they do not need to be regulated to oper

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