Fintech Global Year in review 2019 | Year to come 2020 GLOBAL PREDICTIONS 2020 Regulatory response to India and China to continue fight stablecoins and other new for top spot as Asia’s hub for 01 payment models 05 online payment services Improvements to legacy payment More guidance for firms around systems – tackling inefficiencies the ethical deployment of AI 02 in cross-border payments 06 Scrutiny of the financial sector’s Increasing use of DLT and smart resilience to cyber risk including 03 contracts in the capital markets 07 potential fines for previous IT failures Increasing industry and Greater scrutiny of Big Tech in policymaker collaboration on 04 finance 08 tackling cyber crime in financial services GLOBAL FINTECH SWEDEN UK GERMANY BELGIUM LUXEMBOURG PEOPLE’S REPUBLIC OF CHINA USA ITALY JAPAN FRANCE HONG KONG SAR SPAIN UNITED ARAB EMIRATES SINGAPORE Click to choose INDONESIA a country AUSTRALIA AUSTRALIA Year in Review 2019 Year to come 2020 Open Banking enforceable undertaking from a major Australian bank in response to privacy breaches dating back several years, which included far Initially expected to start on 1 July 2019, the commencement of the more detailed and far-reaching obligations than previously seen. This open banking scheme has been deferred to 1 February 2020. In reflects the increasingly pro-enforcement stance taken by the OAIC. the interim, the Australian Government is conducting a pilot scheme involving Australia’s major banks, consumers and other fintech Regtech industry participants. The new regime will afford individual and business consumers the right to access specified categories of data Australian regulators are investigating the potential of “regtech” about or related to them that is held by designated banks, and direct to transform the compliance landscape, particularly with regard the transfer of such data to accredited third parties. to financial service providers. The Australian Securities and Investments Commission (ASIC) is actively seeking engagement from The rise of neobanks regtech providers and hosted several industry events to promote awareness of regtech options and knowledge sharing. ASIC hopes Neobanks are exhibiting an increasing interest in the Australian market. that increased adoption of regtech will help detect misconduct, The past year has seen the Australian Prudential Regulatory Authority improve regulation and promote a culture of compliance in (APRA) issue licences to four neobanks (Xinja, Volt, 86400 and Judo), Australia’s financial services industry. with other international players considering forays in Australia. The provision of full, unrestricted banking licences to these challenger AML/KYC considerations in the banks demonstrates a clear regulatory shift, which has the potential to have significant impacts on the Australian banking landscape. fintech market The complex or novel business models of many fintechs has ASX increasingly attractive for tech historically presented a challenge in respect of the sector’s 2019 saw the Australian Securities Exchange (ASX) become an compliance with anti-money laundering and counter-terrorism increasingly attractive place for foreign fintechs to raise capital. While financing (AML/CTF) legislation. However, as the fintech market the ASX has not traditionally been a focus for technology stocks, expands, Australia’s financial intelligence regulator, AUSTRAC, more foreign fintechs looked to Australia when raising capital this is taking an increasingly active approach when it comes to non- year than ever before. traditional financial services. The message seems to be that Australian fintechs should carefully consider what designated services they Increased regulatory focus on privacy are providing, and what AML/CTF processes (including the extent of ‘know your customer’ identity verification) are required for their Throughout 2019, Australia’s information and privacy regulator, products from day one. Entities cannot treat AML/CTF controls or a the Office of the Australian Information Commission (OAIC), has culture of compliance as an afterthought. significantly expanded its enforcement activities. This year’s Australian Government budget saw the OAIC’s funding increase AUD25.1 Contributed by Allens million over three years for the OAIC to “facilitate timely responses to privacy complaints and support strengthened enforcement actions in relation to social media and other online platforms that breach privacy regulations”. Simultaneously, we have seen the OAIC’s regulatory approach shift from conciliatory to one that makes greater use of its enforcement powers. In June 2019, the OAIC accepted an AUSTRALIA Year in Review 2019 Year to come 2020 Consumer Data Right to expand Blockchain and digital currencies: more use In 2019, we saw the Consumer Data Right (CDR) commence in the and more regulation form of Open Banking and receive legislative backing in the form of the Globally, 2020 is expected to be the year of the digital currency. Treasury Laws Amendment (Consumer Data Right) Act 2019. In 2020, Following the launch of Australia’s national blockchain strategy and we expect to see greater moves towards expanding the CDR regime. China passing cryptocurrency legislation to facilitate a national digital This will include not only an expansion of the Open Banking regime to currency (see People’s Republic of China Year to Come 2020), we new information and entities, but also an expansion to other industries, expect that digital currencies and blockchain technology in financial including energy and telecommunications. services will be a key focus both globally and in Australia. This trend has already been seen in Australia with the Big Four Banks and Stricter data regulations ASX beginning to invest more heavily in blockchain technologies. The Australian Government has indicated its intention to bring This growth is also expected to attract the attention of Australian Australian privacy laws and associated penalties in line with lawmakers. “community expectations”. This could see radically increased financial penalties and new powers for the OAIC, in light of a growing ASX replacing CHESS with distributed consensus that Australia’s privacy legislation has fallen behind global developments, including the EU’s General Data Protection ledger technology Regulation (GDPR). The ASX is on track to replace its Clearing House Electronic Subregister System (CHESS) with a new system based on Digital Proposed reforms include increasing the maximum penalties for Asset’s distributed ledger technology (DLT). The ASX has been an serious breaches of the Privacy Act from AUD2.1 million to the larger early mover in blockchain technology, deciding in 2015 to replace its of AUD10 million, three times the value of any benefit or detriment core clearing, settlement and asset registration system, CHESS, with avoided, or 10% of annual domestic turnover, as well as introducing a DLT-enabled system. Over the past year, the ASX has engaged in new powers for the OAIC to issue infringement notices for failure significant stakeholder consultation and on 15 November 2019, the to co-operate with efforts to resolve minor breaches. Increased ASX released a consultation paper on the first of three tranches of penalties were one of the many Australian Competition and Consumer operating rule amendments required to facilitate the implementation Commission’s (ACCC) recommendations in the Digital Platforms of the new system that will replace CHESS in April 2021. Inquiry final report. Contributed by Allens The Federal Government is currently considering a number of the ACCC’s other recommendations, which include expanding the definition of personal information to capture all technical data such as “IP addresses, device identifiers, location data, and any other online identifiers that may be used to identify an individual”, as well as introducing a right of erasure, stronger data collection notification requirements, stronger consent requirements and a tort for serious invasions of privacy. BELGIUM Year in Review 2019 Year to come 2020 Belgium remains strong in fintech – in all SWIFT ISO 20022 – hybrid different shapes and sizes application solutions SWIFT recently launched a Proof-of-Concept of an e-Voting Innovation in financial services application to improve shareholder voice and corporate decision- Along with its thriving fintech start-up scene, we have seen the major making. The Belgian co-operative company intends to demonstrate Belgian financial institutions and financial market infrastructures the interoperability of its existing infrastructure and interface with investing heavily in innovation, with a clear interest in the various DLT-applications through the implementation of the ISO 20022 data and often wide-ranging applications of blockchain technology. standards, which were inspired and co-developed by SWIFT. ISO Digitalisation projects are also high on the agenda of traditional players 20022 allows for data-rich communication on the SWIFT network who are often assisted by software providers and software vendors to and serves as a common foundation that may standardise application realise their objectives. program interfaces (APIs) going forward. The payments revolution and beyond Cyber security – Belgian coalition against Belgian start-ups and challenger banks aim to use the new cyber crime possibilities offered by the EU’s second Payment Services Directive (PSD2) to revolutionise payments. These include Cake, a soon-to- During its annual meeting