Fintechs will be beginning to consider life under the spotlight following the FCAs announcement of likely Regulation in its annual report 2016/17.
The Banking sector is feeling the pain and constrains of Governance right now and Insurance companies are not immune either. Will Fintechs be next?
The mantra of the FCA is to protect the consumer and promote the confidence of the financial system. And integral to the financial system are the Fintechs: the networks and software products that enable faster, more efficient and visible activity. A useful example is the booming Mobile Payments Industry that acts as the key enablers between the Banks, retailers and consumer.
Technology plays a fundamental role in delivering innovative products and services; however, one does need to strike a balance between supporting innovation that benefits consumers versus ensuring they are adequately protected.
As the new technologies allow us to adopt our lifestyles, we are placing greater expectations and reliance on these. Technology, however, is susceptible to all sorts of new risks and this is what the FCA is particularly interested in when it comes to Fintechs. They have now set out their stool, announcing their desire to regulate these firms.
The FCA will be particularly concerned with risks such as operational resilience, cybercrime, protection of information and insolvency. Regulated firms will need to focus on infrastructure and culture to ensure that new technologies benefit both consumers and markets.
With reference to risk management and resilience, Darren Watkins, Managing Director, VIRTUS Data Centres commented: "Transparency is at the heart of financial regulation; MiFID was developed to prove best execution through the retention and visibility of trading data as one example. Such transparency needs to exist at every level of the IT stack as it is through this insight that risk can be reduced. VIRTUS are the only data centre operator to give, free of charge, a fully integrated DCIM portal that displays every aspect of collocation infrastructure usage, which sits at the very bedrock of the IT stack."
Phil Bower has 25 years experience in the risk and insurance industry specialising with Technology and Telecommunications companies.
Categories: Commercial Insurance