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?

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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?

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:

• Small businesses can opt for plastic and online transactions.

• People that would normally not be able to access to financial services (poor, uneducated, women, immigrants^[1]) like credit cards in the big banks suddenly find themselves with multiple options to opt for online-only credit cards and prepaid cards that work just like credit cards, enabling people to buy things online, internationally, with monthly installments not available otherwise, etc.

• People that want to invest in stocks or any other financial instrument (be it traditional or not) have new options with low commissions.

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?

• Unfair treatment to competing companies in the same market.

• Hampering the development of an industry that might end helping small companies and people that have been left out of the financial sector.

• Lack of regulations and financial institutions are never a good idea/combination (in my opinion and political view).

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.

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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…?

• If it does more good than harm (I personally don’t think this is good enough).

• Implement for the a couple of years and if it’s not working as intended it could be reformed/backtracked/modified as necessary.

• I’m open to ideas.

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.