The future of FinTech in the midst of increasing regulation

February 1, 2017 by Jen Mysliwicz

about the author:

Jen Mysliwicz

Strategic account manager

Jen has an extensive background in both the finance and SaaS industries, getting her business degree from Northeastern University in Boston, MA, where she can often be found at either the hippest restaurant or the hottest concert.

With Donald Trump now officially in office, many are wondering what the future will hold, not only for our country but for our industry. Specifically, many people have questions regarding the policies and regulation that will be put in place moving forward. Many have already speculated that the DOL Conflict of Interest Rule could be significantly changed or delayed with Trump in office, but what does this mean to FinTech as a whole?

The future of FinTech

The Obama administration made a lot of strides for the FinTech community in the last eight years, including the Open Data Initiative, the America Invent Act, and the Jumpstart Our Business Startups (JOBS) Act of 2012. With days left in the office, the Obama team set forth one last effort towards making sure that FinTech is a priority moving forward with A Framework for FinTech, a whitepaper for how our country must continue to allow innovation to bolster our future economic growth. In short, the document makes four recommendations and outlines ten principles to encourage stakeholders moving forward: 


  1. Foster positive financial services innovation and entrepreneurship.
  2. Promote safe, affordable, and fair access to capital.
  3. Strengthen financial inclusion and health in the United States and abroad.
  4. Address financial stability risk.


The ten principles encourage stakeholders to:

  1. think broadly about the financial ecosystem;
  2. start with the consumer in mind;
  3. promote safe financial inclusion and financial health;
  4. recognize and overcome potential technological bias;
  5. maximize transparency;
  6. strive for interoperability and harmonize technical standards;
  7. build in cybersecurity, data security, and privacy protections from the start;
  8. increase efficiency and effectiveness in financial infrastructure;
  9. protect financial stability;
  10. and continue and strengthen cross-sector engagement.

The effects of regulation

The DOL rule that takes effect on April 10 left a lot of firms reevaluating their processes and learning how to ensure that their advisors are acting in the best interest of the client. This rule reshaped and defined our industry in 2016. Firms like Janney are announcing their strategies which more often than not have technology as an important catalyst to continue to act in the best interest of their clients.

Recently, we announced a new partnership with Janney as a core part of their DOL compliance strategy, which further hits home the need for technology in the face of regulation. Advicent is well-positioned to help firms in the wake of the DOL fiduciary rule and has been working with some of the largest names in the industry like Janney to help firms comply with the rule. Janney's head of wealth planning, Martin Schamis stated in InvestmentNews, "Financial planning is the core element of fiduciary advising," and we at Advicent couldn’t agree more.

Whether its DOL or another regulation coming from the new administration one thing that is true is technology is going to be an important part of the solutions moving forward. DOL specifically affected the financial services firms offering advice today but this also needs to be thought about in a broader sense to where the traditional financial services sector is heading, FinTech.

According to Statista, the “transaction value in the FinTech market amounts to $1,025,519m in 2017.” Additionally, it is expected to show an annual growth rate of 17.9 percent over the next four years. With the growth in the space, regulation is beginning to worry this sector—especially start-upswhere many are attempting to make investing more accessible by also moving away from typical banking standards.

FinTech is all about disruption and these firms are seeking ways to help the public make better financial decisions and achieve the goals. However, the Achilles heel of many of these firms is operating in this regulatory world that is constantly changing. The question still remains, what will happen in the battle of “new technology vs. old regulation?”

Click here to learn more about how The Compliance Blueprint from Advicent can be leveraged in your DOL compliance strategy.

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