Fintech, Regtech and Impacts on In-House Legal Departments

Abstract

“Fintech” is the acronym for financial-technology. Innovation is strongly changing the finance sector and such changes affect also the legal environment. On one hand, lawyers are asked to provide legal support on fintech that is a new topic and, on the other side, the legal environment is using technology more and more often to comply with regulatory fulfilments, and this is a part of fintech known as “Regtech”. In this article we will walk through fintech and regtech, focusing on most impacting changes for in-house legal departments. Fintech has become popular also as a consequence of the recent coming into effect of the Second Payment Services Directive (so called “PSD2”) that has changed the payment service market, which is a sector growing in innovation and technology therefore substantially impacted by fintech. Also other financial sectors have been impacted by technology however are still waiting for the relevant fintech regulation. Regtech is a segment of fintech, however, not as well-known as fintech notwithstanding in certain countries is fast growing. In particular, through regtech, technology is used and applied by the legal world (in-house, outside counsel, regulators) to manage regulatory risks and also to improve day to day activities, standardize documents/processes, upgrade document storage, reduce low quality work. In-house legal departments are currently facing various challenges connected to fintech and regtech and are asked to take key steps in order to create a higher value proposition for the business and for customers.