by Randall Finke

 

If there will be one thing most people remember about FinTech in 2022, it will be about fraud. The main headliner involved FTX, which had a giant conflict of interest between its cryptocurrency exchange and the way its assets were invested and allocated. Other examples of fraud this year include one very large US bank misleading its customers with illegal mortgage rules, student loans, and various lending practices (among other things), as well as the lending and exchange platform BitConnect being exposed as a Ponzi scheme. These are the biggest frauds, but many others are not yet talked about and still occupy the minds of many people who became victims.

Regulation Technology, or RegTech, is a subcategory of Fintech wherein companies look to provide services to various businesses to allow them to keep up with the changing regulatory landscape. In simpler terms, RegTech’s allow different businesses to cut costs, abide by local and global laws while still performing their main objectives, and stay risk compliant. They provide numerous tools and software solutions to help risk management teams with efficiency, accountability, internal alignment, and future growth plans.

Different global financial committees are in charge of protecting consumers and businesses from fraudulent practices, including the Financial Conduct Authority (FCA) in the UK, The Federal Deposit Insurance Corporation (FDIC) in the USA, the Israel Securities Authority (ISA) in Israel, and the European Systemic Risk Board (ESRB) throughout much of Europe. These very important agencies have their work cut out for them as new companies and bad actors explore the newest technology to scam, cheat, and steal as much financial, intellectual, or other important property from people and businesses.

Some agencies are now considering amendments to many concepts created decades ago that many take for granted (Yes!). One such example includes the FDIC open to updating its sign for deposit insurance coverage and adding specific language making it clear what would be covered by the FDIC. With the rise of digital banks, embedded finance, banking as a service (BaaS), and ancillary products for banking, having clearer advertisements to the common person who knows little to nothing about certain financial products and services from companies would definitely receive great value from this. Some businesses and startups are also taking steps to increase fraud protection for the consumer with different features. These include ID Proofing and protecting document templates, among other things.

 

Write to Randall Finke at Randall.Finke@israeltrade.gov.il, if you are interested in connecting with various RegTech or FinTech companies from Israel who are looking to solve these prolific issues, which are becoming more and more common.