Antitrust regulators say they’re interested in data-driven mergers. Intuit’s $7 billion deal to buy Credit Karma will show how serious they are.
New TransUnion study considers common myths around the profile of FinTech borrowers in 
Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: P2P, Lending, Digital Bonds, BNPL, Private Credit
Amazon, Walmart, the Secret Battle for FinTech Supremacy: Part II
Highradius | Anuj Saxena | Flashback to June 2018
Digital to Physical, Physical to Digital and Customer Segments
As Walmart rushes to become Amazon before Amazon can become Walmart, the impressive way Walmart has addressed the problem reminds me of a quote from Jim Collins in his bestseller “Good to Great”:
“The good-to-great companies displayed two distinctive forms of disciplined thought. The first, and the topic of this chapter, is that they infused the entire process with the brutal facts of reality. The second, which we will discuss in the next chapter, is that they developed a simple, yet deeply insightful, frame of reference for all decisions.”
While just my conjecture as an outsider looking in, it feels to me that Walmart has done both:
- It has accepted the brutal fact that it is never going to beat Amazon in the online space in the U.S., but that e-commerce’s continued growth is absolutely inevitable and it needs to be a player (hence its $16-billion bet on Indian e-commerce), and
- Management’s frame of reference for digital decisions seems to come from looking to provide solutions that combine its areas of entrenched advantage, namely its low-affluence customer base and unmatched network of stores (it has one within 10 miles of 90% of American consumers). Examples of this are its curbside collection service for online customers and upcoming drive-up grocery pickup kiosks.
These two forms of “disciplined thought” have also driven Walmart’s FinTech strategy…
See: What bankers need to know about the mobile generation
The FinTech Power Plays
Before outlining Walmart’s FinTech Power Plays, I want to let you in on a not-so-well-known “secret”: Walmart’s dabbles into the world of finance are not new. In fact, its record stretches back to 1999, when it attempted to purchase a small Oklahoma thrift, citing a desire to offer savings and checking accounts to its customers. That plan was ultimately thwarted by banking legislation which prohibited non-financial companies from owning banks regulated by the Fed. Three years later, though, it was back at it again, and yet again, it was stopped by powers in finance. Per the Institute for Local Self-Reliance’s reporting at the time:
“A coalition of consumer groups, unions, independent banks, credit unions, and realtors managed a legislative feat in California last month when they pushed through an 11th hour bill to block Walmart’s attempt to acquire a small bank.
Opponents of the move argued that it could lead to dangerous conflicts of interest. Not only might Walmart use its size and power to muscle out smaller banks and credit unions, it could also deny loans to retail competitors and their suppliers. Such distortions would undermine the soundness of the banking sector and lead to ‘a dangerous aggregation of economic power’.”
Walmart protested the “unfair targeting” based on its size, and since then has made few sustained attempts at similar approaches to enter banking. While the company is no longer going after banks (directly), it still realizes that by enmeshing itself into the lives of its low-affluence consumers via providing vital financial services, it can widen and deepen the moat they have around them. This has driven the formulation of FinTech plays which are working phenomenally for Walmart (so far)
See: Banks have lost a quarter of the payments franchise to new players
1. The Payments Play: Walmart Pay
In 2015, Walmart took a decisive step into the FinTech sphere – making headlines for eschewing external payment solutions like Apple Pay and Samsung Pay – for its own in-house solution, which was launched in 600 stores. Walmart Pay’s app enables shoppers to transact at the register via QR code. As they approach the register, a QR code pops up on the POS screen and customers scan it to activate the service. Once the code has been read, items can be scanned as normal and when checkout is complete, the payment card associated with the Walmart Pay account is charged and a receipt issued within the app.
How has it fared since launch? Well, in November last year, a Bloomberg piece updated that Walmart is “close to surpassing Apple Pay in usage for mobile payments in the U.S.” With 4,774 stores offering it and tens of thousands of new users signing up each day, its domination of the U.S. seems to be a fait accompli.
The US market for mobile payments is worth $550 billion but is set to skyrocket to $3 trillion in just two years, and Walmart is jockeying for position as the biggest player. I can’t help but think that with the widespread use of QR code technology in their business, a move to Bitcoin (or another cryptocurrency) could be the next step for Walmart. After all, it represents a much faster and secure mobile payment option…
2. The Prepaid Card Play: Walmart MoneyCard
In 2015, Walmart signed a partnership with FDIC insured bank GreenDot – a branchless digital Challenger Bank from Southern California that issues plastic prepaid cards. GreenDot does not offer credit, so only basic ID checks are required for customers to be able to receive and pay money with ease (essentially creating a checking account). This deal yielded the re-loadable, prepaid Walmart MoneyCard, which opened the floodgates for many of Walmart’s un/underbanked consumers. With the MoneyCard, holders can:
- Use it for purchases everywhere MasterCard or Visa debit cards are accepted in the U.S.
- Deposit checks via their smartphone’s camera
- Receive their wages by direct deposit from their employers
- Write checks to pay rent and other bills requiring a paper check
- Order personalized checks using the Walmart MoneyCard Mobile App
- Pay bills for free with the online bill pay service
- Send money for free to another participating card issued by Green Dot Bank (including the Walmart MoneyCard, of course)
- There are no overdraft fees, at all and,
- Cards are registered and protected against unauthorized transactions
All of which can be tracked around the clock in the Walmart MoneyCard App.
See: Growth in Canadian FinTechs Having Impact on Canada’s Banking Landscape
3. The Money Transfer Play(s): Walmart2Walmart
In April 2014 Walmart launched its groundbreaking, in-store money transfer service for customers – a joint venture with Ria Financial – making money transfer simpler and cheaper for customers. This was launched in 4000 stores, promising to make the process of money transfer cheaper and more transparent for its consumer-base, and boy has it! Since then, customers have saved approximately $700 million on fees, enabling them to keep more of their hard-earned cash in their pockets for important things (like buying groceries… at Walmart).
Customers can walk into any of the designated “money center” stores’ service desks (or start the process with the Walmart App and finalize in-store), complete a form with the transfer details (amount, recipient name, and state) and then can use cash or debit cards for payment. W2W then transfers the money to the intended recipient who can pick the cash up at any store in the specified state in a matter of minutes. No bank accounts needed at all and the service costs just $4 to send up to $50, $8 to spend between $51 and $1,000, and $16 to spend between $1,001 and $2,500.
Continue to the full article --> here
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Big Data Promises Better Deals. But for Whom?
Wired | | Feb 28, 2020
Antitrust regulators say they’re interested in data-driven mergers. Intuit’s $7 billion deal to buy Credit Karma will show how serious they are.
The announcement earlier this week that Intuit, the financial software giant, would be buying the personal finance company Credit Karma for $7 billion was striking. The tech industry is under more antitrust scrutiny than ever; just a few weeks ago, the Federal Trade Commission announced a broad inquiry into the past decade of acquisitions by the five biggest tech giants, with a focus on mergers that kill off budding rivals. This deal certainly raises that prospect: Intuit and Credit Karma compete on various fronts, and Intuit’s most recent federal filings named Credit Karma’s free tax preparation software as a threat to its dominant offering, TurboTax. Intuit has said it will keep Credit Karma's service free, and probably needs to promise as much to regulators to get the deal approved.
See: The future of fintech: lending + services
But antitrust enforcers, whose core responsibility is to keep markets competitive and protect consumers, are not just watching for mergers that kill off rivals. They’re also starting to look more closely at how tech companies acquire and use data. And that seems to be the main event here. The companies themselves have suggested that a driving force behind the merger is Intuit wanting to get its hands on Credit Karma’s stash of user data. Which raises an important question: Do consumers benefit from deals where the key asset being sold is their own personal information?
We’re talking about a lot of data here. Credit Karma, whose business is built around a free credit monitoring app, boasts more than a hundred million users. While those people don’t pay to use Credit Karma, they do turn over their financial information, as well as the kinds of behavioral and location data that other companies, like Facebook and Google, track. The platform’s algorithms then help lenders microtarget users with offers for credit cards, loans, and other financial products. Credit Karma gets a cut when users sign up.
“There’s no business person on the planet who doesn’t want to get access to consumer financial transaction details—that is a pot of gold,”
said Kristin Johnson, a professor at Tulane Law School and an expert on financial technology.
“The information regarding your purchases and sales, all credits and debits related to your account, really tell a full narrative about you and your life and the things you value and the things you have committed financial resources toward.”
According to Intuit CEO Sasan Goodarzi, the merger will benefit not just the companies, but also consumers. “What you’re now able to bring together with the two companies is the customers’ complete financial identity so they can get the best loan and insurance products for them,” he said in a conference call announcing the merger Monday, as reported by American Banker. By combining the two companies’ data sets, in other words, Intuit will be able to build more richly detailed dossiers of the financial backgrounds for millions of people. That, in turn, will allow lenders—and Intuit itself—to target offers even more efficiently. (When reached for comment, a spokesperson for Intuit pointed me to smartmoneydecisions.com, a website the companies created about their deal.)
See: Banks, fintech startups clash over ‘the new oil’ — your data
Does this sound familiar? It should. It’s the entire value proposition behind the ad-supported internet. Facebook and Google, two of the most profitable companies in the world, make their billions by monitoring as much of our online (and, increasingly, offline) behavior as possible and selling ads against that data. They, and other websites and apps like them, justify the surveillance by arguing that consumers appreciate having ads that are more relevant to them. Read a privacy policy, and it will probably mention something about “sharing your data with advertising partners” in order to “present offers that might interest you.” It’s not about extracting more money out of us, the story goes; it’s about helping us find what we really want.
It’s true that companies can use data to microtarget users with better deals. If you’ve got great credit, for example, your financial history might indeed lead to you getting better offers: cards with more points, loans with lower interest rates, and so on. But financial data has also been used to benefit corporate bottom lines at the expense of the consumer. This week, the tech publication The Markup published an investigation showing that the insurance giant Allstate has been trying to get Maryland regulators to approve a pricing algorithm for auto insurance that, according to the article, would squeeze more money out of the biggest spenders, rather than pricing strictly according to risk. (Maryland ultimately rejected its proposal.) Intuit itself has been documented steering customers to paid products when they qualified for free ones.
Continue to the full article --> here
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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FCA Report (Feb 2020): Sector Views – Key Areas of Harm Identified
UK FCA | Feb 21, 2020
This analysis also contributes to the decisions we make affecting consumers, market integrity and competition.
Drivers of change
The first chapter describes the common themes across sectors with a focus on those themes that are having the greatest impact on the sectors we regulate. And in the light of EU withdrawal and its impact on financial services markets, we give an overview of our position in the current international context.
The 7 sectors
The remaining chapters cover all the markets we regulate:
- retail banking and payments
- retail lending
- general insurance and protection
- pensions savings and retirement income
- retail investments
- investment management
- wholesale financial markets
Continue to the full article --> here
Download the 86 page PDF Report - Sector Views (Key Areas of Harm Identified)
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Growth in Canadian FinTechs Having Impact on Canada’s Banking Landscape
TransUnion Canada | Release | Feb 24, 2020
New TransUnion study considers common myths around the profile of FinTech borrowers in Canada
- FinTechs are not just attracting younger Canadians: 46% of FinTech borrowers are over the age of 40
- Short-term loans are not the primary focus for FinTechs: 88% of FinTech loan terms are between 13-60 months
- FinTechs are not just catering to 'underbanked': 51% of FinTech consumers have 3 or more existing credit products
TORONTO, Feb. 24, 2020 /CNW/ - A new study from TransUnion explores the evolving trends around the FinTech lender landscape in Canada. The research study analyzed over 21 million non-mortgage credit products originated in Canada from Q1 2017 to Q2 2018. The study's findings reveal key insights that appear to debunk commonly held beliefs around the profile of FinTech borrowers in Canada, as well as the ways that FinTech lenders are employing and embracing different credit strategies compared to some of the more traditional lenders.
See: Robocop vs. Terminator in Fintech; Comparing DeFi originations to Digital Lenders in the early years
The study defined FinTech lenders as those who rely on advanced computer algorithms or other technology as their primary platform to enable, support or improve banking and financial services, and do not have an established physical network of branches or stores. Typically, these are start-ups or emerging lenders that have an emphasis on an agile and sophisticated use of technology to deliver a fast and unique lending experience, or use analytics to penetrate typically underserved markets.
"The explosive growth of the FinTech industry has already had a significant disruptive impact on the traditional consumer lending landscape, and has fueled a race for digital capability amongst banks and FinTechs," observed Matt Fabian, director of financial services research and consulting for TransUnion Canada of Canada, Inc. "It is apparent that FinTechs attract Canadian consumers across different ages and levels of credit experience by providing a differentiated, seamless consumer experience. Looking to the future, this creates both competitive challenges and opportunities for increased partnerships between traditional banks and FinTech firms."
Key findings include:
FinTechs appeal to both older and younger generations.
- Contrary to popular belief, FinTech borrowers are not exclusively younger, while many FinTech borrowers are more digitally savvy Millennials and Gen Z consumers, FinTech consumers have a diverse age demographic.
- Specifically, nearly half (46%) of Canada's FinTech consumers are over the age of 40, compared to 53% for consumers with personal loans from traditional banks.
- This suggests that Gen X and older consumers are almost equally attracted to what FinTechs offer, challenging the notion that older age groups are more likely to only engage in traditional lender relationships.
See: The 5 Debates That Will Shape Fintech In The 2020s
FinTechs cater to all types of Canadian consumers – versus focused on the 'unbanked' or 'underbanked'.
- While FinTech lenders are sometimes perceived to cater largely to the unbanked or underbanked, the study reveals that many FinTech consumers have multiple existing sources of credit elsewhere.
- More than half (51%) of FinTech consumers have three or more existing credit products with traditional lenders at the time they originate a FinTech personal loan.
- This mix of other products held includes credit cards, lines of credit, installment loans and home loans.
FinTech lending extends across the full spectrum of loan terms.
- FinTechs are comfortable (and actively) lending across the full spectrum of personal loan terms; contrary to the common perception that they are primarily focused on offering short-term loans less than 12 months in duration.
- Around 88% of FinTech-issued personal loans have a term longer than 12 months, versus 68% for personal loans issued by banks. In fact, banks issue a far higher percentage of personal loans with terms of 12 months or less (32%) compared to FinTechs (12%).
FinTechs are willing to embrace increased risk compared to traditional lenders – with associated higher delinquency rates
- The study findings show that FinTech portfolios are generally comprised of riskier consumers than other installment loan lenders (those consumers with lower credit scores), with a significantly higher consumer base within the subprime space. This appears to be an intentional strategy, as these lenders seek to satisfy market demand among consumers who may not have access to traditional lending sources.
- Over the course of the study period, 65% of FinTech installment loans were originated to consumers in the subprime segment (TransUnion CreditVision risk scores below 640). In contrast, traditional banks and lenders issue more than half of their personal loans to borrowers with prime and better risk scores (TransUnion CreditVision risk scores 720 and above).
- FinTechs also have higher delinquency rates across all risk tiers, which they compensate for by charging generally higher interest rates for personal loans. In the subprime segment, FinTechs have delinquency rates that are on average between 100-500 basis points higher than traditional banks and traditional lenders, but price for that risk with interest rates ranging from 20% to 30% within this segment.
See: Fintech’s next decade will look radically different
"The ability to be agile, potentially with lower overhead compared to more traditional lenders, may enable FinTechs to operate in higher-risk segments and carry higher delinquencies. But it is still critical to have a strong credit risk framework, and a detailed understanding of portfolio risk," said Fabian.
"FinTech consumer profiles span diverse demographics and loan terms. As the industry continues to evolve, there are some key factors that will contribute to FinTech growth, including technology advancement, access to capital – especially at a lower cost – potential shifts in regulations, and an increasing percentage of Generation Z and Millennials in the population. But there is no doubt that we will likely continue to see growth and evolving competitive dynamics in the FinTech space in Canada."
While the industry is still relatively new, with 61% of FinTech start-ups founded between 2012-2017, FinTechs now represents over 25% of the PayTech market.
View the original release --> here
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Why LendingClub’s Acquisition Of Radius Bank Is A Smart Deal
Forbes | Ron Shevlin | Feb 21, 2020
LendingClub, one of the nation’s first peer-to-peer lenders (oops! I mean, “marketplace” lenders—real ”peer to peer” lending lasted all of about a month), announced it plans to acquire Radius Bank, a relatively small Boston-based bank, unknown to most people outside of the industry (and within, for that matter).
The press release announcing the pending deal contained the usual platitudes from the acquiring CEO:
“This is a transformational transaction that allows us to reimagine banking in a way that is free from legacy practices and systems. We will create a category-defining experience for our members that will dramatically enhance the resilience and earnings trajectory of our business.”
Despite the buzzword-laden proclamation, this acquisition makes a lot of sense for both parties for reasons that go beyond what many observers have reported on.
The Short-Term Benefits Aren’t About Radius Bank
Much of the discussion about the deal has focused on the obvious and shorter-term benefits of the acquisition, including a more stable source of funding and a $40 million reduction in bank fees and funding costs, both of which will help boost the spread Lending Club earns on the loans it keeps on its balance sheet.
If that was the only impetus for the acquisition, however, LendingClub could have acquired WebBank, the current issuer of loans through LendingClub’s platform.
Or it could have acquired any number of banks with a bank charter, no?
Radius Bank is a Strategic Acquisition
Lending Club went after Radius for a higher purpose: Its APIs and banking-as-a-service business.
See:
-
The future of fintech: lending + services
-
Banks, fintech startups clash over ‘the new oil’ — your data
Lending Club’s long-term vision is to become what it calls a “marketplace” bank. In my terminology, that means pursuing a platform strategy: attracting both buyers and sellers (borrowers/savers and lenders/investors) and providing transaction integration and processing capabilities.
Amazon is a great example of a successful platform strategy: It makes money by serving both buyers and sellers, and in fact, there doesn’t seem to be any limit to how much Amazon can make by increasing the services (e.g., AWS) it provides to the merchant side of the coin.
It’s the same with LendingClub.
Yes, LendingClub wants (needs) to expand beyond being just a monoline lending provider. It could have achieved that goal by acquiring any bank willing to sell itself to the company.
With Radius Bank’s APIs—and fintech relationships—LendingClub takes a big step forward towards becoming a multi-line platform, and not just a multi-line bank.
Many banks are falling over themselves trying to partner with fintech companies. In its latest survey, Cornerstone Advisors found that 70% of financial institutions consider fintech partnerships to be an important aspect of their 2020 strategies.
For better or worse, many are focusing their partnership efforts on digital account opening instead of product and service expansion.
LendingClub’s acquisition of Radius leap frogs a lot of those institutions.
See: Citibank to Save $600 Million in 2020 Through Digital Investments
Through its banking-as-a-service offering, Radius brings relationships and integration with firms like Brex, MaxMyInterest, Aspiration, NerdWallet, Stackin’, FutureFuel, and NorthOne.
Any bank can provide a charter. Not any bank can provide those relationships. And not any bank can bring to the table the APIs that Radius has already developed. With the exception of the largest banks, most banks are playing catch up on the API front.
Continue to the full article --> here
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Bitcoin Lender BlockFi Raises $30M in Series B Led by Peter Thiel’s Valar Ventures
Coindesk | Nathan DiCamillo | Feb 13, 2020
Fresh on the heels of an $18.3 million Series A funding round in August, crypto lending startup BlockFi has secured a $30 million Series B.
Announced Thursday, the new funding will help the firm expand both its product offering and geographic footprint.
“We decided to opportunistically raise the Series B to expand the balance sheet and give ourselves the ability to invest in the things we’re doing this year,” BlockFi CEO Zac Prince said in an interview.
BlockFi is a crypto lending startup that was founded in 2017 and raised $1.55 million in 2018 in funding. They've enriched and expanded their services and collaborations with companies like SoFi, Kinetic Capital, ConsenSys Ventures, and more. Now they announce new fundings that will expand their offers, accessibility on the trade markets, and crypto investments. With over twenty BlockFi promotions, customers will be able to get bonuses, invest in their first assets and set up repeat trades while having a good deal and many perks available.
The Series B was led by Peter Thiel’s Valar Ventures with participation from repeat investors Morgan Creek Digital, PJC, Akuna Capital, CMT Digital, Winklevoss Capital and Avon Ventures. New investors included Castle Island Ventures, Purple Arch Ventures, Kenetic Capital, Arrington XRP Capital and HashKey Capital.
Having Hong Kong-based HashKey as an investor will help BlockFi expand into Singapore later this year, Prince said. While the company has been serving customers in the region, this would be its first physical presence there.
See: Why DeFi’s Billion-Dollar Milestone Matters
In the Asia-Pacific region, BlockFi expects to attract a lot of institutional customers, Prince said, given the number of mining companies, asset managers, exchanges and market makers that exist there. BlockFi also plans to begin attracting more retail customers in the region as it translates its site and products into local Asian languages.
In the first quarter of this year, the startup plans to develop a mobile app and the ability to send fiat wire transfers. In Q2 2020, BlockFi plans to offer Automated Clearing House (ACH) payments.
It also expects to double the size of its 75-person team by the end of 2020, Prince said.
Continue to the full article --> here
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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10 ways regulators need to change in 2020
World Economic forum | Lisa Witter and Jaee Samant | Jan 31, 2020
Summary
- We need a more agile approach to regulation that supports and adapts to the change of the Fourth Industrial Revolution.
- Agile regulators can “lean into the latest technology trends and proactively shape them.”
- The UK, South Korea, Canada and other countries show how regulation can be used to foster innovation and improve technology governance.
It can take weeks to introduce a new idea or business model but years to pass a change in the law. Our rules can block innovations that can power productivity and solve our most pressing social and environmental challenges, and fail to protect our citizens as they struggle to adapt to a new era.
A more agile approach to regulation is needed to maximize the potential of the Fourth Industrial Revolution. Through the Global Future Council for Agile Governance, we have gathered the latest evidence from across the world on how our rule-making system needs to adapt to this new environment.
Here’s our 10-point pitch for how regulators need to adapt:
1. Embrace the future
Recent history is littered with examples of regulators being caught short by disruptive innovation and reacting suboptimally. Agile regulators lean into the latest technology trends and proactively shape them, using foresight methods to identify possible futures and make preparations to adapt.
See: Canadian Securities Regulators Publish Additional Guidance for Facilitating Crypto Asset Trading
Singapore has embraced foresight thinking and set up a Centre for Strategic Futures in the Prime Minister’s Office to create a “strategically agile” public service. Other governments are now following suit.
2. Focus on outcomes
Too many rules focus on process, not outcome, stifling businesses that find new ways of doing things.
Agile regulators are designing “tech-neutral”, outcome-focused regulatory regimes. Not only do these generally perform better in adapting to technological change, they can actually stimulate businesses to innovate to meet outcomes.
Japan is implementing a new governance model in areas such as health and safety. Instead of setting requirements around the design of factory facilities and processes, it looks at how well factory systems are able to monitor safety, reduce risks and intervene when issues are detected, giving businesses greater freedom in their operations.
3. Experiment and learn.
Agile regulators are creating space for businesses to trial and test new approaches – and learning about how their rules need to adapt along the way.
Many administrations have emulated the UK Financial Conduct Authority’s “regulatory sandbox”, in which regulators permit businesses to test novel products and processes for a trial period.
The UK is driving a new wave of regulatory innovation through its Regulators’ Pioneer Fund. Established in 2018, it has invested in 15 novel experiments – from stimulating tech entry to the legal services market to supporting testing of AI-powered medical devices.
4. Be responsive
Agile regulators are harnessing the power of technology to monitor and evaluate the performance of these outcome-focused regimes more effectively – enabling them to intervene in more targeted ways to uphold performance.
See: Fintech Regulatory Developments: 2019 Year in Review
The Dubai Financial Services Authority has developed its own “in-house regtech” to crunch through huge volumes of financial data and enable more sophisticated management of risk. As well as enabling better risk-based enforcement, regulators are increasingly using these techniques to monitor whether regulation is really working and, if not, to reform it.
5. Bring business on board
Laws cannot – and should not – be frequently revisited. Agile regulators are using mechanisms such as regulatory guidance and industry standards to help fill the governance gap, especially in areas of rapid technological innovation.
The UK’s Centre for Connected and Autonomous Vehicles has created a role model of public-private collaboration. It has created a code of practice to help steer the testing of self-driving vehicles without the need for repeated changes to legislation as the technology evolves, alongside working with the British Standards Institution on standards for self-driving vehicles.
6. Connect with your peers
In the Fourth Industrial Revolution, innovation often cuts across sectoral and regulatory boundaries.
See: Regulating financial innovation – going behind the scenes
Agile regulators are working with their peers to ensure a joint response to new products and services so that innovators don’t suffer “death by a thousand paper cuts” and that bad actors can’t exploit gaps between institutions. The Danish Business Authority, for example, has established a “one-stop shop” for new business models to help businesses find their way through the regulatory landscape and bring their ideas to market quickly.
Continue to the full article --> here
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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