Financial Technology is also known as FinTech. It is a new form of financial dealings that deals with the delivery of new and advance methods, as opposed to traditional techniques been brought down through the ages. A general example of FinTech is the smartphones we use every day in our daily routines for all sorts of financial dealings online and through phone banking. It involves the use of technology to provide financial services and replace the old and outdated methods. Here’s how we can judge the whole FinTech industry as a whole, by identifying the pros and cons of it.

Pros

  1. If a FinTech industry receives a national level identification, it will not have to comply with the different laws across different states. This significantly reduces the opposition it may face since it will become a single body that has the same laws across all states.
  2. If it gets registered with a national level identification, a FinTech firm could possibly provide services at very low rates because it won’t have to comply with different state laws.
  3. With national license, also comes national security. Which means that any FinTech company would be equally scrutinized as a bank, and will have to follow similar laws and regulations.
  4. A FinTech will also have to agree to some fundamental aspects of customer dealings, including customer data protection, transparent transaction details and much more.
  5. Since FinTech firms would receive national identification, they would have to become more and more competent and efficient to level their services with a highly rated bank and their functions.

Cons

  1. To receive a national level identification or charter, any FinTech company would have to match the capital and liquidity requirements that have been set at basic by the OCC.
  2. However, FinTechs also have different standard operations and procedures, including business activities, which differ from a traditional bank, they might have to pay for higher capital charges imposed by the OCC. This eventually means that only FinTechs that are top performing companies can survive the requirements and fees imposed by OCC, leaving behind any company that cannot perform well.
  3. If FinTechs are not nationally recognized under any government laws and regulations, it would mean that they would eventually operate outside the normal boundaries set by the OCC. In turn, would create a gap in the level of service the customers would demand, and what the company would provide.
  4. A major downside of having national identification for a FinTech is that it will be able to bypass all state laws and regulations. This is a disadvantage as, most central and federal financial regulations have severe setbacks and gaps in their laws, which are to be filled by the states. If a FinTech is allowed to bypass these, they could have dangerous loopholes.
  5. Having FinTechs go through state-level scrutiny gives the consumer a more positive side since now this same technology will be monitored by a lot of people, rather than just one council sitting in the federal government.