The European Union is considering lowering requirements for FinTech startups across the continent. The move is aimed towards spurring the growth of new age financial technologies and help companies that are just starting out by making the path easier for them.
Fintech is a term used to refer to an assortment of emerging technologies that attempt to come up with alternative, tech-driven modes of payment. The main idea with Fintech is the introduction of payment channels that can leverage technology to cut transaction costs, reduce overheads and facilitate easy payments no matter your location. These technologies are also highly concerned with security.
EU could be driving at an easing regulations and lowering legal or capital requirements. The move could well serve to reduce costs for fintech companies. However, banks might not particularly appreciate it considering the fact that it could apply further pressure on them. European banks already have issues of their own thanks to low interests and an extremely competitive market landscape.
Speaking on the topic, Commission vice-president Valdis Dombrovskis said:
We will have to answer many fundamental questions. For instance, shall we introduce new licensing categories for fintech activities?
A special license would not only mean lesser pressure and more incentives for the startups operating in the sector, but it will also lead to lower capital requirements.
Fintech is an important sector. Any major changes in the industry are likely to reflect across other industries as well, specially considering the fact that many corporations are transitioning or have already made the move to newer modes of payments. In view of all this, any change here will have to be implemented after careful consideration of the wider impact of the same.
The European Union has already launched probes into the matter. A three month long consultation is taking place and once it presents its findings before the commission, we can expect some legislative changes.