Laura Molinera Ortiz: “The pandemic has leveled the playing field between financial service entities and fintechs.”
The Director & Counsel for Financial regulation EMEA at American Express discusses changes to the fintech and financial sectors.
Leaders League: To what extent have you seen financial regulations and/or fintech be affected by the pandemic?
Since I started teaching fintech regulation at IE Law School in 2017, both financial and fintech regulations have changed drastically. Since the pandemic, the financial sector has been forced to quickly shift to online services. That is something that fintechs already did well but has helped more traditional financial sectors that have managed to adapt extremely quickly under complex circumstances. It is true that most financial entities had already been providing online services prior to the pandemic, but the unprecedented situation has confirmed that trend.
Financial entities and fintechs have also had to put measures in place to counteract the pandemic’s effects on their clients (whether consumers or companies) and create financial plans to help financially distressed customers. Some of those measures will probably remain part of their core financial services.
Finally, the pandemic has leveled the playing field between financial service entities and fintechs, where more traditional models are providing services very similar to those of fintechs. In turn, fintechs can be great platforms for clients to learn about and compare different services and products that the traditional financial sector offers. I believe we will see financial entities and fintechs complement each other more and more.
What are the key factors you look at when choosing external legal counsel?
The key factors I look at vary depending on the advice we are looking for. There are core elements that are key for an external legal counsel to have to be a good fit, primarily being a results-driven, practical legal counsel that does not limit themselves to theoretical advice but explains how that advice should be implemented. It is also important that they have a holistic and cross-border approach to financial services. Financial services are not just provided within one territory but on a cross-border basis, so legal advice cannot be limited by territory. Obviously, thorough expertise in the financial sector and payment services specifically is also critical.
Legal advice cannot be limited by territory.
To what extent have financial regulations either succeeded or failed to adjust to changes in technology or society in recent years?
On one hand, regulators have adjusted to changes in technology and society by creating increasingly digital-oriented regulations, such as the changes introduced by the 5th AML Directive (e.g. KYC of non-face-to-face clients) or the second payment services directive, PSD2 (e.g. SCA, open access). We also need to consider regulations on crypto assets and developments in blockchain.
Moreover, regulations have expanded to include a new range of products and services that have appeared in recent years, such as national laws and European regulations on crowdfunding and crowdlending platforms or the inclusion of new payment service providers (payment initiation and account information service providers) in PSD2. Given that new services will emerge in the future, the creation of a regulatory sandbox has been a great improvement in the Spanish financial sector.
On the other hand, there is still room for improvement as some regulations only take into account the traditional service structure of banks in order to establish their requirements, without considering the wide range of financial services that differ from traditional models. This may create doubts about whether and how these regulations apply to other types of financial service companies or fintech. In addition, regulations still need to increase their focus on cross-border services. In the increasingly online world in which we live, the territorial divisions in the provision of financial services have been blurred and will start disappearing.
What is the most important aspect of your role as Legal Counsel for Financial Regulation EMEA at American Express?
One of the most important aspects of my role is to face new challenges in a rapidly evolving market. Financial entities such as American Express are constantly working to adapt and comply with new financial regulations and guidelines that come up every year and changes in what clients want from financial services. At the same time, we are constantly looking to create new services or enhance existing ones to provide clients with the services that best suit their needs.
The most compelling issues I find myself working on include the creation of new products and services and lobbying for critical regulations both at the European and Spanish levels.
What developments are you expecting in the next 12 months in fintech and financial regulations?
There are several that are going to be critical for the financial sector. These include the development of a pan-European solution for instant payments for all service providers in the EU, the implementation of the EU anti-money laundering rulebook which aims to provide a single set of harmonized AML rules, and the regulation on Markets in Crypto Assets (MiCA) which will likely significantly impact the EU crypto market. Beyond the regulations, I am keen on seeing how blockchain technology evolves and is used for new applications and innovations.
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