Episode Details

Is the structure of regulation in need of refactoring? Do we have a kind of Reg Debt situation – cf Tech Debt – where organic growth has led to complexity, inefficiency and indeed regulations stretched beyond their original purpose?

In this episode Alistair and I discuss some specific examples that would indicate that after as much as a decade of evolution it is perhaps time for a rethink or a refactoring of the reg base.

Integrated Finance was founded when the co-founders found challenges in scaling their prior Fintech startup. Alistair has worked in FS, founded a Fintech and now a Fintech to help Banks and Fintechs so has experienced the regulatory issue in the round.

Topics discussed include:

• robot vacuum cleaners – good/bad? Use cases.
• “endless nuance”
• Alistair’s career journey from FX, through building a banking as a service provider and now infrastructure to help Fintechs and others who need to incorporate some elements of finance scale their businesses more easily
• the challenges that unbundling the banking stack leads to when one needs to recombine it again to deliver a seamless product or service
• the importance of understanding nuances in an industry when searching for innovative startups
• reactive regulation always playing catch-up
• e-money licences as a Case Study of where the explosive growth of the largest Fintechs has outstripped the original intention or envisaged parameters of the regulation
• Revolut and Wise have around 20 million customers each
• operating at scale across multiple jurisdictions and multiple regulations really stress tests the regulation and over-/under- laps
• context of banking regulation and the unbelievable lack of a sustained rise in interests in the Fed’s stress tests – so the challenges of regulation go well beyond Fintech into the biggest Banks
• the “dear CEO” letters from the FCA as a measure of challenges the FS/Fintech industries are facing
• comingled client funds and treating customers fairly as key examples of barometers of issues
• the priority of VC investment is always growth rather than making things robust ASAP and the inflow of VC funds as major factors in this context
• a further context of banks going bust right now
• Railsbank’s challenges as an example of major FinTechs in London running into problems post failed funding raises
• interest rates as the common factor behind bank problems and a tighter funding environment
• which segments of tech are finding it less of a challenge to raise right now
• current focus in Fintechs and how that relates to regulation/compliance
• regtech as being fine but the challenge of buying more and more computer systems and then having to manage them all
• the operational overhead of regulation and tis computers even if one is the scale of a Citigroup
• crypto as another challenge
• the need for greater collaboration – whether mergers of regtech or of shared data or of enforcing more sharing of data
• important necessary new directions for regulation – esp. standardisation
• major example of bad actors where each fintech on its own has to manage the situation but the whole situation would be much easier if the sector shared data in re