Barton FinTech Series: Introduction

Feb 21, 2020 | Blog

Fintech is a dynamic, evolving, and seemingly esoteric industry. As a result, our team has put together a series of articles exploring the legal and regulatory considerations affecting FinTech companies and innovations.

Fintech is broadly defined as the delivery of financial services through software or other technology. This can include mobile payment apps like PayPal and peer-to-peer lending applications like LendingClub.

To complicate matters, Fintech analysts have broken the sector down into innumerable subcategories. In the interest of bringing clarity to this crowded, evolving landscape, we will focus on the following banking-related segments of the Fintech sector:

Mobile Banking: executing financial transactions through mobile devices.

Online Lending: lending money to individuals or businesses through online platforms that connect borrowers and lenders.

Cybersecurity and Data Privacy: solutions relating to regulations, processes and practices designed to protect against unauthorized access to data and information technology systems.

Regulatory Compliance (a.k.a., RegTech): the management of regulatory compliance processes within the financial industry through technology.

Payment Systems: systems used to more efficiently or effectively settle financial transactions through the transfer of monetary value.

Over the next few weeks, we will publish a series of articles discussing the principal Fintech sectors above which will include case studies highlighting the practical application of the legal requirements to real-life transactions and opportunities. We will also explore the key Banking, Data Privacy and Intellectual Property issues arising in each sector.

In the Mobile Banking sector, we focus on banking applications installed on mobile devices. Most of the successful applications enhance convenience for the end user (often a consumer), and/or reduce operating costs for financial institutions.

In the Online Lending sector, we focus on platforms that enable consumers to obtain debt financing online. In addition to the practical considerations relating to legal and regulatory compliance, we will also focus on the impact and influence of data analytics technologies, as well as the data privacy issues that relate to the use of these technologies. We will also touch on the intersection of Online Lending and RegTech.

In the Cybersecurity sector, we focus on technologies that enhance security and protection of financial data, as well as the evolving web of legal and regulatory regimes governing the cybersecurity space. Our discussion will also detail the scope of current regulations with emphasis on the circumstances under which compliance should conform with certain non-US legal regimes. This sector is evolving rapidly on the domestic front, so we will also touch on the regulations being imposed on a state-by-state basis.

In the RegTech sector, we will focus on the evolution of compliance and reporting applications that are being developed to enable financial institutions to meet their compliance and reporting obligations more efficiently and cost-effectively. We will also touch on the overlap of RegTech and Cybersecurity.

In the Payments sector, we focus on the issues applicable to payment systems that have replaced traditional bank transactions. A majority of Finechs in this sector focus on specific end-users, which might be a consumer, businesses, or regulated financial institution. We will review the status of several successful Fintechs in this sector and discuss the evolution of broader payment platforms. In our discussion of this sector, we will also look at smaller payment systems that operate on an intrastate basis to highlight state-based money transmission regulations.

We will conclude the series of articles with a discussion of the Intellectual Property issues which must be considered to successfully bring a Fintech solution to market. We will discuss trademarks, copyrights, patents, and licensing, as well as practical guidelines for facilitating effective negotiations with counterparties while protecting a Fintech’s intellectual property.