Fintech Friday: fintech news round-up of the week
12 May 2017
Notable developments this week include signs that President Trump is being forced into being less ambitious with his plans to rollback US financial regulation
PSD2: Fintechs slam moves to ban screen scraping of banks’ customer data
Many payments focused fintechs expecting to benefit greatly from the EU’s Payments Services Directive coming into force are up in arms over moves by the European Banking Authority to ban screen scraping of customer data from online banking interfaces.
CNBC reports that over 60 fintechs, including Klarna and Trustly and lobbying organizations such as the European Fintech Alliance (EFA), have joined forces to fight the EBA’s proposal. They have signed a manifesto in which they argue the EBA plan has the "potential to negatively impact our companies' business models", and could "reverse what has been achieved by fintech companies over the last years in Europe".
The manifesto further contends that the EBA’s proposal unfairly positions the banks as "gatekeepers of the fintech sector" and enables them to fight off competition from newcomers to the market.
Screen scraping is the process of collecting screen display data from one application and translating it so that another application can display it. PSD2 is scheduled to come into force January2018.
Trump’s rollback of US financial rulebooks ‘to be carried out in stages’
The big bonfire President Donald Trump is hankering after for US financial rulebooks will now likely be a series of little campfires, with Reuters reporting his officials will be reporting on a review of US financial laws in stages rather than all in one go.
Trump has pledged to do a "big number" on the Dodd-Frank financial overhaul law. In February he ordered Treasury Secretary Steven Mnuchin to review the law and report back within 120 days, saying his administration expected to be cutting large parts of it.
But the Treasury Department is still filling vacancies after the transition from the Obama administration and there are not enough officials to get the full review done by early June, three sources told Reuters.
According to the sources, the Treasury Department will first report back on what banking rules could be changed, including capital requirements, restrictions on leverage and speculative trading.
Examinations of capital markets, clearing houses and derivatives as well as the insurance and asset management industries and financial innovation and banking technology will come later, the sources said. It could be several months until these other stages of the financial reform review are completed, some of the sources said.
Breaking the law no bar to getting into bed with Bank of England
The Bank of England has come under fire for getting into bed with a blockchain start-up that was fined $700,000 by a US regulator for breaking banking secrecy laws. The firm, Ripple, has been selected by the bank to help it research new blockchain technology.
According to Financial News, Ripple, which has developed an internet-based bookkeeping system for cross-border payments and raised nearly $100m, was fined two years ago for “wilfully violating” several requirements of the US Bank Secrecy Act.
The appointment is a bit puzzling, if not irritating, for rival firms. Peter Randall, founder and CEO of UK blockchain start-up SETL, told FN: “It perplexes me that compliance officers [at the Bank of England] have clearly never Googled Ripple’s regulatory background.” He added that if a chairman at a commercial bank had “done this sort of thing” he or she would be in jail: “$700,000 is not a slap on the wrist, it’s a slap on the leg”.
Another fintech co-founder, who did not want to be named by FN, described Ripple’s fine as “pretty hardcore” and expressed surprise the central bank had decided to work with the company. “There’s no shortage of fintechs with a clean record,” the person said.
Ripple’s fine related to it selling its virtual currency, known as XRP, without registering with the regulator and for failing to implement and maintain an adequate anti-money laundering programme to protect its products from use by money launderers or terrorist financiers.
The Bank of England declined to comment to FN on whether it was aware of Ripple’s fine when it selected the company in April.