Chapter 4 Fintech to Techfin - regulation of data-driven finance

Question 1

What are TechFins?

Answer 1

Companies with existing platforms entering into financial services.

Question 2

Why do Techfins provide unbalanced and unfair competition compared to licenced intermediaries?

Answer 2

The fixed costs of an initial license and ongoing costs of supervision and reviews will result in licensed intermediaries bearing higher costs. They also have limited flexibility to respond to challenges.

Question 3

What are key potentials Libra?

Answer 3

1. Financial inclusion through empowering of billions of unbanked people
2. Cost savings, especially in the area of remittances
3. Currency hedge

Question 4

Describe the three stages of TechFins’ penetration into financial services.

Answer 4

1. The ‘data broker’ stage is when the TechFin aggregates data from its customer-connected business model.
2. The ‘vertical integration’ stage is when data sets are used to
   guide business decisions.
3. The ‘horizontal diversification’ stage is when the TechFin
   becomes or establishes a financial institution.