Surprising. Incredible. Unbelievable. The superlatives for 2016 can’t do justice for the type of year it’s been. While we can’t cover all the year’s events in just one blog post, we’ll take a look at changes in the technology, innovation and regulatory landscape for the online identity industry. And, as identity has wide-ranging impacts on fintech and RegTech, we’ll look at what’s happened in the overall sector.
One of our first posts of the year, RegTech: Solutions for Regulatory Compliance Requirements, set a trend that we keep going back to; technological innovation helps improve efficiency and transparency in regulation. To show the growing significance of RegTech, in the year so far we‘ve mentioned the term in 65 posts or articles, while it only has three mentions in all the previous years.
On January 12, 2016, the revised Payment Services Directive (PSD2) came into force in the European Union (EU). While the actual implementation date is for 2018, the impact on payments will be substantial including requirement for banks to open access to customer accounts, allowing third-party providers to access that information via APIs (application program interface). [tweet_dis excerpt="The dawn of #openbanking, new host of financial products built on top of bank data"]This signifies the dawn of open banking, where a whole new host of financial products and services are built on top of the existing bank infrastructure and data.[/tweet_dis]
A new deal, dubbed the EU-US Privacy Shield, brings with it tougher new requirements for American businesses and government agencies. It promises to hold U.S. companies more accountable for how they handle personal data entering the country from Europe and to place clear restrictions and limits on how U.S. law enforcement and national security agencies can access this data. Most importantly, the Privacy Shield agreement introduces methods by which EU citizens file complaints and seek corrective action when they believe that their personal data has been misused.
KPMG awarded Trulioo a spot in their Global Top 10 Emerging Fintech Stars. We’re overjoyed to be recognized by the industry with numerous awards this year, including CNP Award in the ‘Best Identity Verification and Authentication Solution’, ‘Top ID Verification Tool’ by Global RegTech Report, and Startup Canada’s Innovation Award among many others.
Trulioo took a look at some emerging technologies and its implications. We looked at crowdfunding regulations and noted regulation is identified as the biggest impediment to growth time and time again. Some of the biggest issues include ambiguity and confusion on what regulatory agencies govern what industries, which rules apply to specific aspects of financial services, and whether or not startups are expected to navigate the highly complex regulatory environment.
We also looked at payment systems and how a growing demand for real-time payments will increase pressure on central banks and financial regulators to mandate the overhaul of archaic payment settlement systems. Just as the world’s banks have moved away from using paper, bank notes, and checks as the primary means of carrying out financial transactions, [tweet_dis excerpt="Financial institutions infrastructure needs real-time digital, including distributed ledger technology."]the infrastructure that supports financial institutions needs to catch up and enter the real-time digital era, including distributed ledger technology.[/tweet_dis]
In March, Trulioo also launched a new UI for the GlobalGateway Portal.
The leak of the now infamous Panama Papers in April 2016 has drawn global attention to the use of off-shore shell companies by high-profile individuals to avoid paying income taxes in their home countries. As the names of many high-profile politicians from around the world were found to have ties to the law firm in Panama that set up the companies, the U.S. Department of Justice has already been actively investigating over 200 U.S. citizens named in the Panama Papers.
In April 2016, there were developments in the area of cross-border regulation between Singapore (MAS) and Australia (ASIC) authorities. One interesting aspect is examining using a regulatory sandbox to allow fintech firms to test their products and services in a safe environment where they would not be subject to penalties or fines due to lack of compliance. The UK already has their regulatory sandbox in place, and now (Dec. 2016) Australia, Singapore and Malaysia all have specific implementation plans.
In May, Lending Club, the P2P (peer-to-peer or marketplace) lending giant encountered major turbulence and had to fire their CEO. This, of course, led to a major re-examination of P2P lending regulations as many companies, investors and borrowers are in this fintech sector. As regulators face the new reality of P2P lending going mainstream, they must deal with the challenge of striking a balance between looking after the best interests of lenders and borrowers and encouraging continued innovation for loans.
On June 24, 2016, voters in the UK decided by a majority in a referendum to leave the European Union (EU). After months of debate by those supporting and opposing the move, the decision has now been made for Britain to exit the EU, commonly referred to as Brexit.
In June 2016, FINTRAC (Financial Transactions Reports Analysis Centre of Canada) updated its regulations in regarding acceptable methods to determine individual clients identity to ensure compliance with anti-money laundering (AML) and know your customer (KYC) regulations. These new rules are setting the trend for increased clarity on how underserved and underbanked groups, such as millennials or immigrants, can access financial services.
Tomorrow, we’ll look at the second-half of the year, stay tuned for Part 2: A Year in Identity!