Fintech – balancing innovation with regulation

We are at a stage where technology is advancing at breakneck speed. Unlike other generations, today’s society is accompanying technology, allowing it to develop without fear. Unfortunately, regulation and laws are unable to advance at the same speed. This is creating dangerous gaps that can destabilize the economy as we know it today.

Throughout the last decade, the crisis has shown the shamefulness of the economic system and its fragility in some aspects like, such as bank dependence. This has allowed investment to hatch many fintech tools, blockchain systems, peer to peer based tools, etc.

However, due to constante mentality of pure innovation, the basic rules are being forgotten: data protection, right to privacy, capital control, retailer protection, and so on. If these basic rules are forgotten, we would be going back in time, even though we are in the most advanced technological cycle in history. This could lead us into a vicious spiral, causing the same or even more danger than the crises we have experienced in the last few decades.

The passion needed to move forward in a disruptive business should not be confused with moving forward at any price. The next decade will be marked by major changes in many sectors: Fintech, Insurtech, Foodtech, Legaltech, etc.  As we can see from their names, they all rely on technology. In most cases, there is no regulation or jurisprudence. This is why we must be cautious with the regulations we write about, if we do so in the wrong way, we will waste the opportunity we are being given.

ICO and Cryptocurrencies

The majority of Cryptocurrencies, which as we all know are written under Blockchain technology, are a clear example of the above mentioned. Blockchain technology is very good, but it is not infallible. Unfortunately, states are not prepared for its supervision and control. Therefore, even though its survival and development is clear, the market in Spain is not ready for its hatching. However, we are witnessing how it is advancing at a panic speed. It is possible that we will see some scares, since the interests created on it are very high, and possibly some of them are not entirely legal.

Another example is the famous ICOs. In 2017, we saw how this type of product multiplied by 5 the volume managed in direct investment on the same type of asset. This is not bad but when we see that companies that have not been able to finance themselves through normal alternative investment, manage to do so by this method and also get 3 times the capital they needed; we are facing a bubble. If this is not controlled, it can bring problems to the system. Possibly, the ones who will pay for it will be the usual ones, the retailers. This brings fear to the tools that are being born today, becoming a frustrated attempt, instead of a complement to the future.

Both of these examples are allowing the generation of inflation in value and price, which we all know what it leads to…

Stock control

It is clear that crises, like wars, generate poverty. However, in the long term, they make the pillars on which we build more solid, and with that comes certain evolution and improvements. That is why I insist on control: companies can take risks, but while being concerned about citizens.

In general, the fintech sector has a huge market for its development, and disintermediation and the creation of value for the user will mark the next decade.

The new generations want a product that provides value and does not generate captivity of anything or anyone. This is my reflection: generating value for the user is more than just giving him a user-friendly and easy-to-use tool; we must protect him and explain the risks assumed. We are seeing how many investment platforms sell high-risk products to their users through marketing. It is clear that it is impossible to live off banking products, however, it is not permissible to violate the rules for the protection of retail investors. Otherwise, we will be destroying a valuable complement to the traditional banking product.


Almost all Fintech tools have a long life ahead of them. Regulation lags behind, but if we want them to last over time we must not forget the basic rules of user protection.

Although there are no rules in most cases, we must make use of common sense, which in many cases we are proving to be the least of the senses. Users are our loudspeaker to change things and if we mistreat them the only thing they will say is that we are another failed attempt at evolution.

Do you want to help us achieve our goals, do you want to join the Fellow Funders world, we are waiting for you!

Francisco Mariscal
Equipo Fellow Funders

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