One of the most difficult challenges of the financial technology sector is the lack of consistency with regulations. Particularly in the European Union, each country has its own individual rules and regulations, which makes it difficult to start a business in accordance with a countries’ regulations, as well as conducting business with cross-border markets. The difficulty in these inconsistencies are that each country has their own standard of regulation. If you are an individual who wants to start a fintech company, or work in the sector, it is very important to acknowledge what regulators are searching for when applying for business licenses in different countries.
Take, for instance, a country like Austria. Austria has long been considered a strong country to develop a fintech startup. Austria had the foresight to see that financial technology would be a success, and that new fintech companies would bring money into their country from abroad, improving the Austrian economy. Austria’s FMA is a regulatory authority over financial institutions. Their mission statement follows; ‘as an integrated authority our overall perspective of the Austrian financial market enables us to conduct consistent and efficient supervision. We are part of the European System of Financial Supervisors (ESFS) and actively contribute with expertise and practical experience.”
The industry is continuously growing and governmental agencies like the FMA have worked to assist in this growth. In 2016, they invested approximately $204 million in financial technology initiatives. Because the government has a big investment in the financial technology sector, they also expect internal companies to comply by strict governmental regulations. To the Austrian government, they believe that these regulations will guarantee legitimacy and legal business. Therefore, when applying to work in a country like Austria, it is crucial to familiarize yourself with the government regulations, and confirm that your business plan will fit in the Austrian work environment.
Malta, a country that was one of the first to embrace cryptocurrency, has quite similar ideas regarding their regulation guidelines. The Malta Financial Services Authority (MFSA) states, “the organizational structure of the MFSA ensures that the regulatory and operational functions of the Authority are exercised within strict legal demarcations.” In this statement, Maltese regulators display their value in businesses. It is important to show results and a functioning business plan. This focus on the business has a lot to do with the small size of the country. This offers startups a small market size that is an ideal testing environment. Having startups with a business oriented aim is a perfect match for this country. Therefore, a startup should be open-minded and flexible in order to text and develop new products and services in a business-centric nation.
Later in their mission statement, the MFSA says, “the MFSA is also responsible for consumer education and consumer protection in the financial services sector.” It is clear that the needs and experience quality of the consumer is an afterthought and not something that will make or break startup’s chances to succeed in Malta. Again, due to the size, the consumer serves as more of a test model than the people being valued in the startups. Of course, regulators want consumers to benefit from the product, but first and foremost, regulators are interested in businesses that work.
In order to begin a fintech company, it is very important to do the research about the country you plan to start your business in. As detailed previously, different countries worldwide look for very different results from fintech companies. Typically, each country decides which sort of system works best within their country. It is possible that your fintech company might have values better set to a different country than the one you are aiming for. Either way, it is imperative to understand the financial technology environment of your country of interest, as well as understand the atmosphere in general, if you have the intentions of expanding into other countries as well.