FinTech50 report calls for more adaptable EU regulations

A flexible regulatory climate is key to promoting innovation, say industry players in this year’s edition

The European Central Bank (ECB) has been urged to adopt a more flexible regulatory framework to spur the development of the fintech sector in EU states with slower legislative systems.

In an afterword to this year’s FinTech50 report – an overview of the most vital firms in the segment across the UK and Europe – Niels van Rossem of specialist index VROA and Holland FinTech founder Don Ginsel cite the slow-paced Dutch regulatory system as the type of problem that could be addressed through a more adaptable, EU-wide model.

Ginsel and van Rossem write: “A recent study within the Dutch FinTech ecosystem suggests that, right now, there are three main barriers [to innovation]: outdated regulations, insufficient knowledge on the side of the regulators and flawed collaboration within the ecosystem.

“Dutch regulations are among the [strictest] in the EU and take a long time to process. Which is not beneficial to start-ups whose short time-to-market is essential to success. Next to this, many fintechs cannot be easily labelled as, for example, a ‘bank’ or ‘insurer’ using the traditional framework, making it even harder to obtain the required permits.”

The pair argue that a “whole new approach would be beneficial to us all” – and cite the UK’s move to absorb Europe’s revised Payment Services Directive (PSD2) into a scheme for an open-baking API standard to improve the interchange of financial data.

They ask: “Could the Dutch Central Bank – or even the ECB – go as far as to launch a ‘bank out of a box’, so everything is plain vanilla, easy to regulate and would leave companies free to experiment and focus on delivering excellent customer experience by leveraging fintech?”

Ginsel and van Rossem’s plea chimes with a recent Financial Conduct Authority (FCA) announcement – covered on The Treasurer – indicating that entrepreneurs will be given more space to experiment with different fintech models under a special ‘Sandbox’ measure, complete with a regulatory amnesty.

Just a glance at the FinTech50’s other pages is enough to reveal the sheer variety of schemes currently under way in the sector – reflecting Ginsel and van Rossem’s points on the need to support innovative projects. For example, the Hot 10 list of ‘ones to watch’ contains:

  • Brolly A personal insurance concierge powered by artificial intelligence that tells customers whether they are over- or under-insured;
  • Ormsby Street A platform that enables SMEs to check the financial health of customers before deciding whether or not to extend lines of credit; and
  • Mondo A digital bank that exists only as a website and app, which hit its £1m funding target on Crowdcube in just 96 seconds.

This year’s FinTech50 is also the first edition of the report that has shone a light on initiatives that are making waves in Hong Kong. Among the featured firms are:

  • Lenddo An alternative credit-referencing tool that uses ‘non-traditional’ types of data to score budding borrowers with no credit histories;
  • Cashyou A mobile social app that enables fee-free, person-to-person payments with the aid of QR codes; and
  • Ironfly Technologies A software as a service (SaaS) provider of real-time, data-visualisation tools, combined with a multi-asset class portfolio order and execution management system.

In their foreword, FinTech50 founders Julie Lake and Nicky Cotter say that “whatever their vintage, provenance or specialist niche, this year’s 50 have one thing in common: customers, and a growing number of them”.

Read the full FinTech50 report here

Scroll to top