In Unchartered Territory - Banking Supervision Meets Fintech
Corporate Finance 2017, 373-378
14 Pages Posted: 13 Oct 2017 Last revised: 23 Jun 2018
Date Written: September 15, 2017
Abstract
There is uncertainty among financial markets participants as to how to apply the traditional banking regulation to fintechs. This article focuses on fintech regulation through the lens of banking supervision. It discusses the trend towards co-operation between banks and fintechs, the applicable legal framework, potential banking license requirements and the obstacles of outsourcing of banking functions to fintechs under the current framework.
This article lays out the current German legal framework. However, in the EU credit institutions and financial service providers, including outsourcing, are regulated under EU laws, most notably Directive 2014/65/EU (‘MiFiD2’), Directive 2013/36/EU (‘CRD IV’) and Regulation (EU) 575/2013 (‘CRR’). Thus, the rules and principles discussed in this article apply in other EU jurisdictions accordingly.
Keywords: Fintech, Outsourcing, Banking License, Robo-Advisory, Crowdfunding, Payment Solutions
JEL Classification: K22, G21
Suggested Citation: Suggested Citation