Some countries require (or will be requiring in the close future) financial institutions to disclose to regulators on how the projects and investments they are working on/financing are impacting the environment. Assuming FinTech companies are regulated in that country, will they also be required to provide this information?
RESPONSIBLE DIGITAL LEADERSHIP IN THE FINANCIAL SECTOR | April 2021 Center for Human Rights and International Justice, Stanford University
Case Dilemma Template – CC2 Cristian Fuenzalida H.
E x p l o r a t i v e
p a r t | What is the ethical dilemma? | Should we regulate FinTech companies the same way we do with traditional banking and financial institutions knowing that this could potentially slow down and/or hamper their development? [a][b] |
What is the content? | Some countries require (or will be requiring in the close future) financial institutions to disclose to regulators on how the projects and investments they are working on/financing are impacting the environment. Assuming FinTech companies are regulated in that country, will they also be required to provide this information? (Here is a link to the discussion that is just beginning in Chile, unfortunately it is written in Spanish https://www.df.cl/noticias/economia-y-politica/politica/tras-la-huella-de-nueva-zelanda-mocion-obligaria-a-instituciones/2021-05-04/094815.html ) Relevant comparable example of European Union legislation https://ec.europa.eu/commission/presscorner/detail/en/ip_21_1804 A similar dilemma could be seen in any industry where a taxing regulation on incumbent corporations would hurt new technologies that could have a positive impact in the environment for the sake of fair regulation[c][d] of an industry. | |
What are the technologies or types of data-usage involved? | FinTech in general. | |
What is the application? and what drives the use in this scenario/case/example | FinTech companies in Chile, in general, have low standards as to whom they provide their services. In some cases people just need a valid ID or a minimum investment of 10 USD (aprox) to be used. With just that in a couple of minutes you can be investing in stocks and crypto currencies, making and receiving online and international payments, crowdfunding projects, etc. Why are FinTech companies growing fast in Chile and Latam? A lot of people and businesses are left behind by the traditional financial institutions and FinTechs are picking up the slack, to a certain point:
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Which ethical issues are at play here? | Should we put FinTech companies helping finance/develop small and medium businesses and people that otherwise would be left out of the banking system to the same standards we expect from traditional banks and financial institutions? | |
What group of people are at risk? What group of people might gain? | Small and medium companies, people left out of the banking system or looking to invest where the traditional institutions do not want to invest.[e] | |
What is the wider impact of this dilemma? |
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Cultural aspects important for this dilemma | I think the debate as to regulate or not will be more political than cultural, but of course there will be cultural differences and subjective experiences that make us differ on how to tackle this dilemma. Let’s begin the conversation. | |
S o l u t i o n
o r i e n t e d
p a r t | Possible controls and comments on solution | Give some kind of regulatory exemption to companies that focus exclusively or extensively on what we would consider a service that helps improve society (I know, this creates a new problem as to how we define and determine what is desirable), and in the topic of our group, the environment and the climate change problems we are facing. As soon as the privileged company no longer fulfills the requirements, they are no longer benefited by this exemption. |
Could this be acceptable if…? |
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Any other observation and conclusion | (Do you have other relevant observations not covered above? Relevant learnings? Concluding remarks or observations on your work with this case. Dissenting opinions within the group?) To be filled after further discussion. |
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[1] More info available here: https://www.oecd.org/daf/fin/financial-education/OECD_CAF_Financial_Education_Latin_AmericaES.pdf
[a]its become best practice to impose ESG requirements in the financial sector and by extension Fintech. i.e. Greenpeace report on carbon accountability ( https://www.greenpeace.org.uk/news/uk-banks-and-investors-responsible-for-nearly-double-the-uks-annual-carbon-emissions-report).
However should the financial sector bear the brunt of ESG requirements whilst Government Institutions are not required to comply with carbon accountability
[b]Since Fintech companies satisfy the financial inclusion objectives which is a social good, should they not have more permissive and flexible legislative framework compared to traditional finance institutions?
[c]When considering the criteria for Standards imposed on Fintech vs Traditional financial institutions consideration should be given to the narratives of protesters against current reforms like the EU Climate Action Bill. These narratives help open up the requirements of affected groups like farmers (who are also a large constituency in the global south)
[d]Use of personal data as collateral must be proposed in the context of data privacy protection rights. How much privacy should one accede to access financial services ?
[e]I don’t understand if they gain or are at risk ^^