It doesn’t look like global banking regulators will be rushing to change their rules for FinTechs anytime soon.
According to Reuters, traditional banks will feel the impact if FinTechs start offering services such as payments, crowdfunding, mobile banks and online trading. Some analysts even believe that banks could become a thing of the past due to FinTech.
Regulators, however, have been hesitant to offer any heavy regulation on the industry.
“Despite the hype, the large size of investments and the significant number of financial products and services derived from FinTech innovations, volumes are currently still low relative to the size of the global financial services sector,” the Basel Committee on Banking Supervision said in its report on FinTech’s effect on banks and regulators.
FinTech investments fell from $47 billion in 2015 to $25 billion in 2016, according to KPMG.
Basel did admit, though, that the fast-growing nature of FinTech makes its potential impact hard to predict. And although FinTech has its pros – including greater access to financial services and cheaper fees for customers – traditional banks are also doing their part by developing mobile banking products and services.
“A common theme across the various scenarios is that banks will find it increasingly difficult to maintain their current operating models, given technological change and customer expectations,” the Basel report said. “As a result, the scope and nature of banks’ risks and activities are rapidly changing, and rules governing them may need to evolve as well.”
The Committee recommended that regulators examine whether staff members are properly trained to keep up with technological advances. While regulators might not be overly concerned with FinTech right now, the industry is sure to grow. In fact, Britain’s Financial Conduct Authority and the U.S. Commodity Futures Trading Commission recently signed an agreement to work together on innovation in FinTech.