Fintech seen as a force that will push regulators together

Financial technology, or fintech, should boost integration between regulators in Asia Pacific, though the sector’s novelty means that the form such integration might take remains unclear.

“Fintech is accelerating the debate about how we modernise our financial infrastructure and our legal and regulatory frameworks,” Hiroyuki Suzuki, chair of the finance and economics working group of the Apec Business Advisory Council and vice chairman of the Nomura Research Institute told the South China Morning Post.

Julius Caesar Parrenas, senior advisor at the Nomura Institute for Capital Markets Research, pointed out that a lot of laws around data protection, secure transactions, banking regulations and so on, were enacted in a different age.

“We are moving towards regional integration. Look at supply chains for example, and even before fintech arrived there were already issues around areas like cross border data flows,” he said.

Suzuki said regulators were not sticking to old fashioned methods. “They feel fintech can create a pathway towards economic development, and financial inclusion and it is especially important for SMEs [because] if you put services on a Google or Alibaba platform you can expand across borders,” he said.

The fintech companies themselves are hoping to internationalise as well. “The only way the fintech companies can grow and gain access to more consumers is to look across borders,” said Ian Wood, a partner at law firm Simmons and Simmons. “The issue for regulators is how to manage this. Currently the normal arrangement is that regulators require companies that are based in their jurisdictions, or sell into it to have licences to do so. Unfortunately, at present, things are not as clear as they ought to be.”