WHAT ARE FINTECH ENTITIES?
The term FinTech comes from the union of two words: "finance and technology". Designates companies and services that enable financial operations using cutting-edge technology.
Traditional financial companies, including banks, are slowly replacing their physical offices with the FinTech system. In this way and although still a small sector of users does not end up agreeing, in general the public receives these changes with pleasure.
With these new systems, transfers and displacements are avoided and waiting times are shortened. Users now have the bank at home or in their own office; all you need is a computer, smartphone, tablet or any device connected to the internet.
TYPES OF FINTECH ENTITIES
In addition to banks, there are other FinTech entities widely used in Europe. In most of the European countries, and in Spain in particular, the most developed are:
- Transaction platforms and online payments
- Online loan platforms
- IT security companies
- Entities dedicated to collective investments
- Financial advisory and wealth management companies
These types of companies are reinventing the financial world. They have created a new business paradigm that is imposed on the market; investors are putting the focus on this type of FinTech companies, as their value grows rapidly.
REGULATION OF FINTECH ENTITIES
The detractors of the FinTech system make their voices heard in Spain and throughout Europe. They argue that the legislation has fallen behind, so these new companies are not regulated. According to his arguments, it is a case of unfair competition with traditional companies, which must comply with a strict regulatory framework.
These kinds of reasons can find basis in reality. The FinTech system is not regulated with the same thoroughness as the traditional financial market. The real advantage is that, lacking a complete regulation, the processes are simpler and cheaper and the prices more competitive.
WHAT DO THE AUTHORITIES SAY IN TNE MATTER?
The Joint Committee of the European Supervisory Authorities recognizes risks in the implementation of the FinTech system. According to said Committee, the deterioration of business conduct and the number of cyber attacks is increasing.
At the same time, states are advised to build regulatory frameworks that guarantee consumer protection. In Europe these councils have not yet fully materialized, although in some countries some standards are gradually emerging.
WHAT HAPPENS IN SPAIN?
Spain moves at a slow pace in the FinTech innovations, if we compare with other European countries. The competent Spanish authorities have established a communication channel, so that financial institutions can be informed about the legal norms that are applicable in this matter.
For their part, the FindTech entities have created the Spanish Association FindTech and Insurtech. Its purpose is to promote the advantages of this system and collaborate with state agencies.
The FindTech system is a global phenomenon, therefore, international collaboration is necessary for a secure regulation of the system and to offer all guarantees to the parties involved, organizations, entities and users.
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