Year in Review 2019 and Year to Come 2020

Global Fintech Year in Review 2019 and Year to Come 2020

As part of our Year in Review, Year to Come series, our global fintech team has contributed to a global fintech Year in Review and Year to Come. In this publication, teams from 16 countries have summarised legal and commercial developments in the fintech space for 2019 and looked forward in predicting likely themes in 2020.

Looking from a global perspective we have also identified 8 key predictions for the year to come.

Visit our dedicated Fintech page to find out more about our solutions-driven advice, explore the top things we heard at the Singapore Fintech Festival 2019, watch our video covering AI in Financial Services or read our fintech-focused news and updates from around the world.

An Introduction: The Linklaters Global Fintech Year in Review, Year to Come 2019 / 2020

Jennifer Calver, Global Tech Sector & Fintech Professional Support Lawyer

Jennifer introduces our Global Fintech Year in Review Year to Come publication, explains our thematic approach and announces our complementary publication, Tech Legal Outlook 2020

Fintech in 2020: UK Predictions

Lindsey Brown, Managing Associate, TMT

Lindsey looks ahead at; digital and cross-border payments, Big Tech moving into the financial sphere and the continued growth of AI and machine learning, as prominent themes likely to impact the UK fintech landscape in 2020.

Fintech in 2020: US Predictions

Joshua Klayman, US Head of Fintech & Head of Blockchain & Digital Assets

Focussing on the 2020 market, Joshua, our US Head of Fintech, assesses the likelihood of Libra proceeding outside of the US and secondly, how the SEC enforcement action may answer some securities law questions.

Fintech in 2020: Singapore Predictions

Peiying Chua, Partner, Financial Regulation

Peiying discusses the fintech outlook from a Singapore perspective, touching on three key developments we are looking out for in 2020, relating to new payments services legislation, the new digital bank regime and proposed updates to MAS risk management guidelines.

8 Fintech Predictions for 2020

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We have also identified 8 key predictions for the year to come.

Regulatory response to stablecoins and other new payment models

Addressing the risks posed by so called “stablecoins”, like Libra, is a G7 priority. The Financial Stability Board will be reporting on the adequacy of existing regulatory approaches, and we may see national regulatory frameworks shift as a result. Some jurisdictions may also revise their payments regulations in response to the growth of alternative payment providers and an unbundling of the value chain.

Improvements to legacy payment systems – tackling inefficiencies in cross-border payments

Central banks are likely to remain focused on addressing the shortcomings of existing payment systems. These include lingering inefficiencies in cross-border payments. Collaborative efforts between central banks to ease frictions (for example, in harmonising standards) are likely to continue. In some jurisdictions (notably China), we could see the launch of a central bank digital currency.

Increasing use of DLT and smart contracts in the capital markets

As the legal, regulatory and tax status of cryptoassets and smart contracts continues to become clearer, we are likely to see further deployment of distributed ledger technologies and smart contracts in the capital markets. As the industry matures, we expect growing consensus as to the areas in which these technologies are likely to add value and where they are not.

Greater scrutiny of Big Tech in finance

We expect to see continued and more coordinated scrutiny of the moves by Big Tech into finance by regulators in the finance, data and competition spheres with the potential for more enforcement action as regulators focus on the protection of consumers.

India and China to continue fight for top spot as Asia’s hub for online payment services

While Chinese regulators progressively level the playing field for foreign and domestic investors in the Middle Kingdom’s finance sector, we similarly expect increasing M&A activity from Asia and other parts of the world in the Indian payments sector. India, being a leader in mobile-based shopping, also has huge potential for growth in digital payments, particularly following the abolishment of larger banknotes and regulator’s efforts to develop domestic infrastructure.

More guidance for firms around the ethical deployment of AI

The ethical use of AI is also likely to get a lot of attention following the publication of principles and guidelines by the OECD and EU and by financial regulators in Singapore and Hong Kong in 2019.  Regulators in the UK have been urged by the Treasury Committee to monitor the discriminatory potential of AI and set clear guidance for its use, from the starting point that firms should not use this technology if the discrimination risks cannot be addressed.

Scrutiny of the financial sector’s resilience to cyber risk including potential fines for previous IT failures

We expect firms to intensify their focus on operational resilience in 2020 to address commercial risks and meet mounting concerns amongst regulators. This is in the wake of larger and more frequent systems failures and hacks, and in the context of certain systemic risks being concentrated as firms increasingly outsource key functions.  Firms will look to collaborate where appropriate including on cybersecurity arrangements.

Increasing industry and policymaker collaboration on tackling cyber crime in financial services

Regulators will prioritise public-private engagement and industry outreach to find tech-driven solutions to cyber crime threats, including on threat assessment and action plans, information sharing, payments systems and authorised push payment fraud, digital identity services, the use of cryptoassets for money laundering, and the detection and reporting of suspicious transactions (including through the innovative use of cryptography and machine learning).  Whilst some of the necessary tech already notionally exists, in 2020 regulators and major firms will strive to agree on market-wide solutions that are more effective than siloed efforts.

Technology Legal Outlook 2020

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