The so-called Fintech Revolution has drawn much commentary from the media and filled bank managers with dread of the threats posed by new fintech challengers, but is it really all that revolutionary? Even if it is not, progress is being made toward a more open financial sector that fosters healthy competition and innovation.
With the number of reports suggesting that fintechs are bad news for banks, it may come as a surprise, that the opposite is in fact true. Fintechs may actually be the best thing to happen to traditional banks and the banking sector for a long time. No, really.
Traditionally, banks have provided up to 80% of the financing for the trading of commodities worldwide. However, since the financial crisis, an increase in regulation and accountability has forced many banks to repair their balance sheets, tighten their credit policy and adhere to a more punishing regulatory environment.
The Sarbanes-Oxley Act was introduced in 2002 in the US to provide assurance about the accuracy and completeness of financial statements in the wake of a variety of accounting scandals involving Enron and Arthur Andersen, among others.
New regulation forcing businesses to provide consistent and timely evidence of accountability are hitting processes and operating costs hard and are leading to the emergence of third-party, specialist “financial crime and compliance risk utilities”. Matthew Long of Oracle looks at the pros and cons of outsourcing compliance and risk to third parties.
On October 31, the US Federal Reserve Board (FRB) introduced a unanimously approved rule that will hold the eight biggest US banks—JPMorgan Chase, Citigroup, Bank of America, Wells Fargo, Goldman Sachs, Morgan
Top Chinese banking authorities are in the process of gradually releasing the country’s banking system from the state’s ironclad grip. The People’s Republic of China’s top banking regulator, China Banking Regulatory Commission (CBRC), is planning to open the banking sector to more private capital. It will accomplish this by easing approval procedures for interested private firms and by involving CBRC’s local offices more.