With the success of Chinese and UK based fintech and the changes in the USA allowing the likes of Amazon to offer lending to small business, fintechs are a well established member of the market infrastructure. As the volumes they handle rises the questions is what will regulators do?
On the one hand they want to encourage competition, enable the underserved and have worked to ensure data collections and sharing is regulated. Now that these goals have been met, the challenge is what to do with the new monopolies being created in fintech.
Witness the ANT group IPO shut down. Regulators will now want to ensure that no body is too big to regulate. The sheer scale of data about customer behaviour an Alibaba or Amazon can gather gives them an unbeatable advantage versus banks. These companies will also lock out new fintech competition by buying them out or restricting access to data, the same problem that banks have.
One way is to ensure as in US that the parent company has liquid assets corralled off to cover the activities of their payments and microlending activities. The capital needed will satisfy regulators but want about innovation?
Would blockchain DLTs be the answer? By providing access to payment processors via DLT they allow more entrants to what is essentially an old boys club and protect innovation perhaps.
It will be interesting to note the developments in regulations.
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