FinTech head says peers should act more like banks

FinTech start-ups must start behaving like banks if there are to tackle the major infrastructures of financial services, according to the global head of technology provider Currenex.

Speaking to Global Custodian, David Newns insisted that smaller start-up companies must start adopting traits of traditional banks and doing so in a timely fashion to comply with regulations.

“There is a reason banks have the regulatory frameworks around them and in the long run nobody can be immune from those even if you are a technology company and not a bank,” said Newns.

“Just because you’re not acting as a bank today, it doesn’t mean that you cannot avoid acting like a bank and it may be less comfortable to start doing so tomorrow.

“There remains a question over how Wall Street and FinTech get along but FinTechs should be aware that if you want to play in that pool you have to play by the rules.”

The emergence of FinTech in financial services has lead to numerous discussions over how FinTech and traditional banking culture can be amalgamated.

At the recent Sibos expo, panellists urged European FinTech firms to focus on their credibility in order to partner and collaborate with larger institutions.

Industry experts regard such partnerships as crucial for the future developments of major institutions.

Newns suggested that FinTechs and banks could partner successfully and pointed to the recent development of blockchain firm R3 as an example of this.

In September R3 revealed that it had signed up Brazilian exchange group BM&FBOVESPA to work with its consortium members – now consisting of 60 institutions including financial industry, technology and blockchain experts – to develop the ‘commercial applications’ of blockchain and apply the technology to its markets.

“Looking at R3 they have the right mindset and character to bring both of these communities together,” said Newns.

“The industry needs to think about how FinTechs are going to interact with legacy systems and the cultural divide is being addressed by larger industry initiatives.”