The fintech sector is growing, and that growth is gathering pace. Fintech will be the tech battleground of the future, as financial services providers of all stripes fight it out for primacy.
We hear a lot about the companies and the technology at the fintech cutting edge. What we don’t hear a lot about are the people behind those companies, and behind that tech, making sure everything is legal and above board.
It might not sound as ‘sexy’ as being the creator of a tech start-up, but being one of the lawyers supporting the industry means being an essential part of its growth.
That’s the message that Finuas, the Law Society and Fexco are trying to get across with the FinTech Symposium, taking place this Friday (2 September) at Blackhall Place, Dublin.
Eleanor Daly, general counsel at Fexco and someone who has been instrumental in organising the symposium, spoke to us earlier this month about why a better legal understanding of fintech is essential to growing the sector.
“It’s one thing to work within Fexco, where you have a framework and you are supported in getting your regulations correct and your compliance correct, but I do have a lot of sympathy for people in start-up organisations. That’s quite a hill to climb to get yourself to the point where you’re ready to go to market,” said Daly.
According to Daly, lawyers well-versed in all aspects of fintech regulation will be a huge boon to these fledgling companies.
“Nobody’s going to know all of this law straight away. [Lawyers] will probably have a particular focus on one aspect of it. But the idea is to get them exposure and give them the materials to go and get more information, and to develop an understanding of it. And to be available to start-ups – to be available to promote and support this fintech industry.”
A broad church
The other reason that should push lawyers to take part in symposia such as this is that fintech regulation is immensely complex. The legal aspects don’t just centre on compliance, but take in operational risk, business opportunities and much, much more.
“It has a lot of legal aspects to it, and you need to try and have an understanding of the corporate side, the IT side, the data protection, the regulatory… It’s a fascinating mix of legal issues in one product or one service,” said Daly.
While many lawyers would be well-versed in one or more of these aspects, few would be experts in the whole fintech sphere.
“Lawyers are well placed to understand fintech, but they do need upskilling, they do need training, and they do need to pull it together a bit, because [fintech] doesn’t fit in one area of expertise – it’s a broad church of knowledge.”
The fintech sector has exploded in the last number of years, but that’s nothing compared to what is still to come – both in the sector and in attendant legislation.
Brexit is one of the more immediate change-drivers. According to Daly, “it could be a massive issue for a fintech business, because if you set up in Ireland and you’re going to be passporting out into other European countries, but you also have a business separately regulated in the UK – where you’re holding your data, where your BCP [business continuity plan] site is – all of that will impact.”
That’s a maze that fintech lawyers will have to learn how to unravel, but it’s not the only one they will face.
The implementation of the EU’s Directive on Payment Services 2 (PSD2) will also open a new frontier in fintech, making it easier for start-ups to operate on the same level as banks and other established financial institutions.
Furthermore, blockchain and bitcoin are likely to grow wildly in popularity. That will bring a massive amount of work from a regulatory and legislative standpoint.
“In the context of bitcoin and blockchain, those technologies are not effectively regulated. At the moment, they’re still very much nascent. They’re still very much at development stage, and being used in very specific circumstances.
“There isn’t a general uptake of that type of technology. But as soon as governments see consumers actively participating in that technology, they’re going to have to regulate and they’re going to have to get stuck in it and actually try and understand what the technology does,” said Daly.
That will lead to a period of supernational regulation.
“You’re going to have Ireland talking to England, talking to Europe, talking to America, as opposed to Ireland regulating for Ireland, because [fintech] is a global technology.”
Exciting times, therefore, for fintech lawyers. And, in the future, they will have to get their heads around a whole lot more than they do now. But, with a broader scope comes broader opportunities.
In addition to opportunities working with and supporting start-ups, jobs are available within fintech businesses and in other arenas altogether.
“It’s a bit like 30 years ago when people thought doing computers was mad,” said Daly. “I think people now realise – or should realise – that fintech is an industry in and of itself, and will give opportunities for further employment.”
These jobs aren’t solely the preserve of young up-and-comers. In fact, it’s senior level lawyers who will do best out of the fintech sector growth. And it’s senior-level lawyers who are best prepared to succeed in the sector.
“There’s so much to fintech that you need a bit of knowledge to grasp all of the issues. You need a little bit of business experience as well,” said Daly.
Beyond that, there are numerous entrepreneurship opportunities for those who are well-versed in fintech law. Speaking at the symposium on Friday will be Deposify’s Jon Bayle, a former corporate lawyer who was able to commercialise a market opportunity because of his background.
And, of course, the opportunities aren’t just there for lawyers. “There is a recognition at government level that fintech gives opportunities not just to lawyers, but to professionals, generally.”
The learning curve
So for those interested in learning more about fintech regulation, but who are unable to attend this Friday’s Symposium, what would Daly suggest?
Find other sources of information, she said. Look at the Central Bank website. Read Silicon Republic. Develop a personal interest. Watch out for opportunities on mentoring panels for start-ups and, if you work in a firm, put yourself in the way of fintech-related work.
“A lot of it is down to personal development and personal reading, and upskilling,” said Daly. “So whatever organisation you’re in, opting to take whatever course you can and accessing whatever information you can [would be a good place to start].”
To register for the FinTech Symposium, taking place on 2 September at the Law Society of Ireland Education Centre, Blackhall Place, Dublin 7, email email@example.com.
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