Lending and Crowdinvesting
Open banking and PSD2 standards represent a crucial asset for fintechs and incumbents that intend to digitise their services and expand products range. Different types of partnerships are taking place in the market, enhancing a “platformisation” of the sector. A wise use of data and engaging UX allow more customer-centric solutions that, when leveraging technologies such as AI and machine learning, consent the automation of core and non-core processes, including tailored pricing, streamlined onboarding phase or fraud detection activities.
Corporates are increasingly looking into new solutions to sustain their activity and growth, shifting from traditional lending solutions to more agile sources. The success of minibonds, crowdfunding and invoice trading platforms, which are gaining market shares as their capability to serve quickly and effectively funding needs improves, is accompanied with regulatory innovations as the EU Crowdfunding Regulation.
Large merchants and SMEs are now increasingly looking at payment services to enable greater sales and do more than move money. In response, fintech companies and incumbents are seeking to differentiate their offerings to avoid being commoditised. Actors will try to scale (both organically and through M&A) and expand their product offering, looking to provide new high value-added products to their customers. This will accelerate the evolution of the payment sector and, simultaneously, pose complex legal questions to be addressed properly balancing compliance and business needs.
Digital Wealth and Asset Management
Regulatory changes such as MIFID II and, more recently, the Sustainable Finance Disclosure Regulation (SFDR), impose greater cost transparency and new ESG-related information duties, rewarding those businesses able to satisfy customers’ needs and regulatory requirements maintaining low fees. AI, chatbots and engaging UX are driving robo advisory solutions that allow a “democratisation” of many services once not affordable for the wider public. At the same time, bespoke AI solutions involving natural language processing (NLP) and other cutting-edge technologies are the core elements of the world’s top-class asset managers’ strategies.
Certainly relevant is also the role that blockchain technology and crypto assets are gaining in the wealth and asset management sector, with an increasing number of investors considering diversifying their portfolio searching for higher yields. On this base we are seeing more and more traditional players either teaming up with providers of crypto wallet and custody services or deciding to build their own dedicated service.
Insurtech and Regtech
The adoption of new technologies is strictly related to regulatory changes and are redefining the competition frontiers also for the insurance sector. Different types of partnerships are taking place in the market, enhancing a “platformisation” of the sector and a wise use of data and engaging UX allow more customer-centric solutions (as an example, the tailored insurance). Moreover, digitisation is driving the development of instant insurance, smart insurance and, in perspective, open insurance.
Regulators are addressing new challenges that may have considerable impacts on the regtech sectors. This will surely boost competition in a sector where we are also experiencing a growing interest in exploiting DLT technologies to cut costs and improve the effectiveness of KYC and AML compliance regulations.
DLT & Tokenisation
Blockchain is one of the “buzzwords” of the last decade. Together with the creation of crypto assets – whether “natively” digital or as representations of physical assets – new businesses are flourishing, pushing forward the technology and acting as enablers for a wider public. Wallet providers, custodians, exchanges are fundamental access points to decentralised ecosystems and, as such, will be more and more subject to new regulations. The European Commission recently presented the Digital Finance Package aiming at setting a uniform regime for crypto-assets that are not financial instruments, reserving to the latter – which are already captured by existing securities laws – a pilot regime for market infrastructures that intend to adopt DLT solutions.
However, decentralized finance protocols are also rapidly taking the scene, posing even greater challenges in terms of governance and accountability as with those solutions no (legal) entity can be considered directly responsible for the issuance and management of crypto assets.
Venture Capital & Corporate Venture Capital
Turning new technology and knowledge into commercial achievements represents a major challenge and market players are increasingly looking at venture capital as source of financing to strengthen innovative activity and entrepreneurial talent. Venture capital and corporate venture capital is keep growing also in the Italian market. Both the venture capital investors and corporates looking at engaging strategic collaboration face high-risk components. A careful assessment of the legal validation of the business model, the legal feasibility of the business plan and identification of a potential showstopper for scale-up/expansion plans are important mitigants.
Artificial Intelligence: Employment NEXT
While, in the past, AI may have been thought to be a product of science fiction, most professionals today understand that the adoption of smart technology is reshaping workplaces. AI is indeed driving significant technological changes and human resources careers are no exception.
The development and deployment of AI technologies raise however a host of novel legal issues, and a number of practical, legal and ethical challenges. Visit our Employment Next page to discover more on the issues arising from the application of AI tools in employment related areas through the experience of a number of qualified stakeholders, including owners of AI companies, experts and academics in the field as well as Linklaters lawyers and clients. Click here to explore.
Open innovation is a paradigm that assumes that companies can benefit from external ideas/technologies (Outside-In) and valorise internal ideas/technologies with external partners (Inside-Out) to get a competitive advantage. It implies accelerating internal R&D and innovation along value chains through collaboration between technological providers and innovation ecosystems.
Open innovation today is a well-known concept in large companies and also SMEs are now starting to understand the opportunities offered by it. However, the development of open innovation raises a host of novel legal issues which must be faced with a flexible and commercially driven approach where the integration of the legal support from the outset of the project is essential in developing a solution that works both from a legal and a business perspective.
Digital Customer Experience
Digital customer onboarding is not a challenge for banking and financial services only. Lean onboarding solutions but also online customer interfaces, effective digital identity systems and e-signature solutions and, in general, smooth online business interactions are, at this point, essential milestones for any business model to improve customer experience.
Legal technology can power the whole process by designing a secure and compliant customer journey able to improve the customer service, creating trust and, consequently, increasing revenues. In addition, the adoption of legal design methods can support companies in every legal-related activities, from negotiation of agreements to compliance.