6 March 2021
The FinTech Landscape and
Regulatory Issues
ISOM5220 FinTech Regulation and Compliance
Course Plan
Class Schedule
6 March 2021 The FinTech Landscape and Regulatory Issues
13 March 2021 FinTech Regulatory and Policy Responses
20 March 2021 Regulatory Challenges and RegTech
27 March 2021 FinTech and RegTech Future Opportunities and Challenges
Course Plan
Assessment
• 2 Assignments (40%)
• Class Participations (10%)
Evolution of Financial
Technologies
Application of Technology to Financial Services
Evolution of Financial Technologies
1800s Telegraphic Transfer
1950s Credit Cards
1960s Automated Teller Machine
1970s Electronic Trading
The Global Financial Crisis
Evolution of Financial Technologies
• 15 September 2008: Bankruptcy of Lehman Brothers
• Trust in the financial system was fundamentally broken
• Slew of innovative entrepreneurs
• Technology space: the third platform
Evolution of Financial Technologies
The Third Platform
What is FinTech?
• Financial Technologies?
• Innovative application of
technologies in the delivery of
financial services
• An emerging industry
• Financial inclusion
Evolution of Financial
Technologies
Evolution of Financial Technologies
Innovations
Innovations
Evolution of Financial Technologies
The FinTech Landscape
FinTech Tree
Taxonomy of FinTech
Landscape
The FinTech Landscape
Deposit and Lending
• Digital banking: deliver banking services primarily through electronic channels
instead of physical branches
• FinTech balance sheet lending: provision of credit facilities by Internet-based
platforms that use their own sources of funds
• Crowdfunding: matching entities raising funds with those seeking to invest
without traditional financial intermediaries
• Equity vs. Loan
• How do they compare to their traditional counterparts?
The FinTech Landscape
Asset Management
• Robo-advice: financial advice on investment products that is generated
through algorithm-based tools with limited or no human intervention
• How do they compare to their traditional counterparts?
The FinTech Landscape
Payment, Clearing, Settlement
• Digital payment services: facilitate payment transactions by transferring
money, clearing or settling balances digitally without the use of physical
money
• E-money services: issuance of debt-like instruments for the purpose of
facilitating payment transactions
• How do they compare with their traditional counterparts?
The FinTech Landscape
Insurance
• InsurTech: use of digital technologies to transform the insurance business,
drive new products, and innovative distribution and underwriting models.
• E.g. comparison portals
• How do they compare with their traditional counterparts?
The FinTech Landscape
Cryptoassets
• Crytoassets: private asset that depends primarily on cryptography and
distributed ledger as part of their perceived value
• Financial activities include creating, distributing, storing, or exchanging crypto
assets, using them for investment or payment purposes
• How do they compare with their traditional counterparts?
The FinTech Landscape
Discussion Questions
• Identify a FinTech activity that you have encountered in real life
• What are the underlying enabling technologies?
• What are the underlying policy enablers?
• Would you consider this FinTech activity “innovative”?
FinTech Regulations
FinTech Regulations
What is Regulation?
• Regulation: action that command and control the decisions of firms, in an
effort to prevent private decision-making that would take inadequate account
of the public interest
• Government: law, administrative rules, taxation
• Self-regulation: industry associations, code of conduct
• Cost
FinTech Regulations
Why Regulate?
• Correct for market failures
• Inadequate existing regulatory framework to curb risks
• Risks to investors
• Risks to financial services firms
• Risks to financial stability
• Regulation vs. Innovation
• Regulation imposes control of risks; innovation thrives on risk taking behaviours
FinTech Regulations
Risks to Investors
• Novel products - mis-selling
• Financial exclusion vs. inclusion
• Data privacy and security
FinTech Regulations
Risks to Firms
• Competitive pressure
• Technology and operational risks
• Legal and regulatory risks
FinTech Regulations
Risks to Financial Stability
• Displacement of financial intermediation
• Concentration
• Contagion and herd-like behaviours
FinTech Regulations
What to Regulate?
• FinTech activities
• Enabling technologies
• Policy enablers
FinTech Regulations
RegTech
• Regulations impose regulatory cost on consumers and financial services
providers
• RegTech: use of technology to enhance the regulatory process
• Firms to manage regulatory compliance
• Regulators to monitor and supervise
Thank you







































































































































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