Regulation biggest threat to fintech growth - survey

The only way to solve this is to have modern regulators that nurture innovation rather than killing it!!

Who buys lunch for the regulators, who swings the revolving door when they've had enough of making do on a government salary ?  Regulators always be looking after the established players with the big lobbying budgets, red tape always be accidentally-on-purpose tying the new players in knots not the incumbents.

If regulators embraced DLT to allow for a “regulator app” to allow any regulator instant access to any data within the financial chain, this could ensure that all players capture data correctly and remove the need for “centralised” data stores that constantly need upgrading and monitoring with the risk that a single cyber attack could capture all relevant market or individual data in one go.

By “mining” data as and when needed, the regulators could rip millions of dollars of expenses out of the cost of reporting whilst maintain immediate oversight and supervision.

If fintech companies were really so innovative, they'd take a leaf out of Uber and AirBnB and operate in the regulatory gray areas. If they were really so popular with the consumer, they'd amass such a huge following at the grassroot level that they'd be able to thumb their nose at the regulator à la Uber and AirBnB. Looks like fintech is neither innovative nor popular. There's nothing new about regulation in fin services. IMHO, fintech is raising it to divert attention from the massive humble pie it's going to eat very soon for having to partner with banks. As Dwolla co-founder Ben Milne says in this WSJ article (http://www.wsj.com/article_email/banks-and-fintech-firms-relationship-status-its-complicated-1447842603-lMyQjAxMTA1MzE5ODYxNzg4Wj), '“Time humbles you,” Working with banks, he says, is the difference between running a sustainable business and “just another venture-funded experiment.”' Regulation is just a smokescreen.

Some good comments and points of view. I believe that regulaton is essential. It is the equivalent of our police force and we all know that there are differences in the qualtity of security around the world! So go where the peace makers are innovative and where they work with you to make a better, safer world.

When investors lose money invested in blade companies, they file lawsuits. When employees lose their jobs in startups, they call their local politician. When cardholders lose money to fraudsters making unauthorized use of their NFC cards / mobile wallets, they lodge police complaints. If fintech were unregulated, wonder what these people will do - take their losses on the chin and treat it as their contribution to fostering innovation?

A partner from a major law firm and former public prosecutor observed that for fighting financial crime, two big advantages of using the block chain to move payments are that there are no data retention issues (the record remains) and that it is borderless (they can follow the chain through the system). My point wasn't about the need for regulation but about the way to monitor and report thus saving all participants time and money

Earlier this year US prosecutors made use of the public blockchain to investigate and convict that corrupt DEA agent for extortion and money laundering.  So clearly a blockchain can help fight some sorts of crimes.

But regulation of fintech is a different use-case.  Regulators want to measure the health of institutions on an accrual basis not just a payments basis.  The blockchain is only a record of payments not liabilities.  A financial institution could be in seventeen different kinds of trouble that wouldn't show up on a payment ledger.

However the blockchain makes possible a class of financial businesses that do not require their customers to trust them.  Non deposit-holding institutions, that neither hold a customers assets nor are a liability threat (eg. stolen credit cards).  Such companies have a good claim to minimal regulation.