How do new regulations affect banks vs. new fintech start-ups?

BrightTALK FinTechSummit, May 20th 2016

Panelists

Sandra Freeman

Accuity/Fircosoft

Risk and Payments Consultant

CAMS (Certified Anti-Money Laundering Specialist)

Disclaimer: Views are my own and do not reflect those of my employer or its clients.

Lory Kehoe

Deloitte, Ireland

Senior Manager in Financial Services Consulting Practice

Donald Gillies

CEO and Cofounder, Passfort

Passfort is Compliance As A Service (CAAS) web application designed to help business with the onboarding process

Setting the Stage

US and UK Regulators Respond to FinTech

“Innovation is laudable but only as long as it does not unreasonablyexpose our financial system to tech-smart criminals eager to abuse thelatest and most complex products.”

- Jennifer Shasky Calvery, Director of the Financial Crimes, U.S. Financial Crimes Enforcement Network (FinCEN)

Source: FinCEN Press Release, July 2015

“Our aspiration is that the [regulatory] sandbox not only enablesinnovative ideas to be tested and brought to market, but also helps toreduce the time and the cost of getting them there."

- Tracey McDermott, Director of Enforcement and Financial Crime, UK Financial Conduct Authority (FCA)

Source: FCA Press Release, May 2016

Regulatory fines –what for?

FINTECHBANKS

Data Sources: FinCEN, CFPB, U.S. Dept of Treasury, State of FloridaData Sources: Reuters Graphics, 2015

(in billions of dollars)

FinTech Fines

Data Sources: FinCEN, CFPB, U.S. Dept of Treasury, State of Florida

Regulatory Challenges

FINTECH STARTUPS

Understanding the requirements (Ripple Labs)

Creating a compliance program, procedures and training employees (PayPal)

INCUMBENTS

Creating efficiency within the existing compliance program

Enabling informed risk decision-making across functions

Lessons Learned by FinTech Startups

Engage in early dialogue with the regulator

Appoint Chief Compliance Officer and get staff trained

Create a scalable and responsive compliance program

Do not reinvent the wheel

Key RegTech Trends

Big Data Technologies

Machine Learning

Blockchain and Distributed Ledgers

Discussion

What are the regulated entities?

How do new regulations affect banks vs. FinTech startups?

How can startups prepare for the regulations?

What role does RegTech play in helping organizations remain compliant?

Do regulators have the scope to accommodate FinTech companies?

Why is it difficult for the existing financial structure to deal with the FinTech startups?

Questions?