Regulators must evolve or risk hindering fintech growth

Financial market regulators need to innovate or run the risk of slowing growth in the global NZ$24 billion technology-based financial services industry, according to a new report by Chartered Accountants Australia and New Zealand.

The Regulator of 2030: Regulating our digital future acknowledges growing challenges faced by all regulators as new technologies emerge at a pace many are unable to match.

EY research commissioned by the United Kingdom’s HM Treasury indicates “that jurisdictions with supportive and flexible regulatory regimes have relatively successful fintech industries,” the report says.

“If Australia and New Zealand are to continue to attract investment, and move from ‘up-and-coming’ fintech centres to ‘established respected’, we must ensure that our regulatory regimes protect investors while remaining at least as progressive as those of neighbouring countries.”

The emergence of digital platforms and new business models is no match for current regulatory structures, many of which were designed with bricks-and-mortar firms in mind.

“It’s a challenge for regulators to keep up as a tidal wave of new technologies emerge daily,” says Chartered Accountants ANZ interim chief executive, Simon Grant, in a statement.

“But it is vital regulators understand them before they even consider intervening.”

Grant predicts that regulators in 2030 will “be digitally transformed, they will collaborate, they will have to be flexible and quick to adapt.

“Funding is an important factor – the level of digital transformation required by regulators requires significant government investment and cross agency sharing of information.”

Also discussed in the report is the need for regulators to supplement their financial and legal skill sets with technologists, computer scientists, engineers and analysts. The workplace of the future regulator will mirror the organisations they regulate.