Clause 1, Definitions — “FinTech” means…
So, after a couple of months retweeting and favouriting other people’s content, I thought it was about time to generate my own.
Let’s start with first principles. The angle of this blog is going to be FinTech and so it is only logical to start with an explanation of what I consider the term to mean.
Financial institutions have always invested in technology as a way of making their businesses more efficient and less reliant on their greatest expense of headcount.
“Financial Technology” (the long form of “FinTech”), as something that banks and insurance companies rely on to run their businesses, has therefore always existed as a thing from their end of the market, even if the term hasn’t. As a former Global Head of Legal & Compliance at an international bank, I had never heard it coined in this way until I recently returned to private practice, which is ironic considering I am now Head of FinTech at my firm.
Whether it is down to the financial crisis causing the younger generation to be sceptical of institutions or some other cultural ideal, there appears to be a dearth of innovation within the tech incumbents which is forcing financial institutions to look more broadly than their “no one ever got fired for buying IBM” approach.
The biggest buyers of technology are now turning their attention towards the other end of town where the leaner, younger ventures hang out. Where these ventures would have previously been considered too flimsy and fly-by-night to procure from, financial institutions are taking notice of the great things happening in the incubators and accelerators located around Charlotte Street (London) (other locations are also available).
Historically (i.e. in the last 3 years), this end of town has focused on lifestyle apps that make the world a better place. But with the investors wanting a more sustainable return on their ROI, the start ups have had to settle on making the financial world a better place. Solutions for financial services is now what the cool kids (and the happier investors) are striving to create.
And that is how FinTech was born and grew from both ends of the market (buyer and seller).
The sector has in fact now reached a stage in its maturity where we are seeing convergence of the two ends. Banks run innovation labs (Standard Chartered’s SC Studios has scouted for SV’s latest tech from downtown SF since 2009) and accelerators (Santander’s Innoventures and Barclays Accelerator powered by Techstars) and start ups have become banks (Atom) and insurance companies (Metromile). Some are slower to the party, however, with UBS only last week pledging money and mentorship to the sector.
I am fortunate enough to have visibility of both ends of the FinTech sector which, as well as requiring a split personality, encompasses a wide range of legal practice areas from corporatore fundraising to commercial contracts to speciality advice on financial regulation, IP strategy, data protection and information and cyber security.
Although the FinTech sector has been around for a while, it is only now alive and kicking and ready for a boom. I predict that boom will be upon us as soon as from next month (Sept 2015) when the investors return from their villa holidays in Tuscany with the confidence to spend their budget before the end of the year! Innovation is fueled by confidence, not just money. I, for one, am looking forward to it and am prepared for what I am hoping will be a tidal wave of work.
Whatever your FinTech law needs are, me and my team have a wealth of experience and expertise on (what really is) an amorphous subject. We aim to provide legal services to you that will drive value into your business.
Drop me a line at email@example.com with your thoughts, if you need some FinTech legal support or just to let me know what you are up to in the FinTech space. I would love to hear from you!