Unlocking Fintech Potential: New York Fintech Week 2022 Sparks Innovation and Regulatory Insights

Fintech is a booming industry that’s on what’s everyone knows, especially investors.

According to CB Insights, the space has raised $13.4 billion in the first quarter of 2021. Meanwhile, San Francisco-based stock trading app Robinhood recently filed for IPO and demand for shares has some believing the company’s valuation could approach $40 billion.

On the other hand,

Banks aren’t the only financial institutions that have made tech-driven changes. Entire markets — from digital loans and mobile stock services to e-commerce payment platforms and digital currency exchanges — are rooted in digital financial access.

The active promotion of the fintech industry is primarily due to changes in the financial services ecosystem in the context of digitalization of society, the effects of the COVID-19 pandemic, the need for financial inclusion and easy and transparent access to innovative financial products in the global space. Fintech is a fast-growing sector that is still in its early stages, with a lot of commercial interest and regulatory uncertainty surrounding it.

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American fintech market

Today, America has the most developed fintech market. For many years, American fintech companies have continuously led the world in the field of fintech innovation, startup financing, evaluation and exit. Of the current 235 fintech unicorns around the world, more than half are 121, headquartered in the United States, demonstrating the scale of the fintech industry in the United States and its leadership in the world.

Examples of the most well-known fintech startups in various fields with headquarters in the United States are companies such as:

• Rentdrop (digital rent payments, eliminating checks and allowing for direct deposits to landlords);
• Physis Investment (platform for tracking and understanding the impact of sustainable investing).
• Vero Technologies (commercial lending platform to help banks better serve the SMB market).
• Zengines (data integration through automation to accelerate system migrations).
• Paperstack (E-commerce financing to help online merchants by offering capital to purchase inventory, for advertising, and hiring talent).
• Unum ID (digital identification card app that lets users authenticate their identity without a password and share their data with merchants and other companies).
• Merkle Science (predictive crypto risk and intelligence platform for threat detection, risk management, and compliance).

Influence of fintech events on the financial inclusion

Given the growth of the US fintech industry, a large number of fintech events and conferences are organized each year in all parts of the country to enable professionals and stakeholders to come together, build meaningful connections and keep abreast of the latest developments. Such public discussions of fintech companies’ ecosystem development trends provide an opportunity to build financial inclusion, as young financial firms and their clients will have easy access to useful and accessible information and services that meet their needs – cover gaps in unattractive financial returns in the validation and verification of the provided data, deal with concerns about prudential supervision in the country and risk assessment of the country, allow to overcome difficulties in obtaining the necessary information in time and in English, cope with high compliance costs.

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FinTech Sandbox in the development fintech ecosystem

A landmark event for financiers this spring was Fintech Week in New York, which was developed as an inclusive collaboration of the entire start-up ecosystem. It is a series of events covering various FinTech initiatives, ranging from conferences and roundtables, which are held by invitation only, to events that are free for the community [2]. The working day within the framework of FinTech Sandbox among the leaders of the financial industry provided an opportunity to highlight a number of issues in the field of financial transparency and regulatory compliance for fintech companies.

At the same time, a number of recommendations have been developed to address financial gaps in the fintech industry, which take into account that:

• fintech is a fast-growing industry with great potential.
• fintech start-ups are often high risk and high reward investments unlike traditional companies.
• many fintech companies are based on technologies that were originally created for other industries, such as data or technology companies, which makes it difficult for new entrants to enter the market.
• regulators are slowly catching up with the innovative fintech industry, so there is still some uncertainty surrounding the regulatory landscape.

The role of regulators in the fintech integration

At FinTech Sandbox in New York, a group of start-ups discussed how they can close financial gaps in the market and how the public sector’s views on financial attractiveness sound today. For example, Kelly Fryer, CEO of FinTech Sandbox, noted the high efficiency of cooperation with 260 start-ups since 2014 and the value of creating a global fintech community. Also, Adrienne Harris, a superintendent of the New York State Department of Financial Services, outlined the importance of building a fair, transparent and sustainable financial system with innovative fintech representatives that will benefit individuals and support business. This event announced changes in the regulatory approach to the fintech industry, including Adrienne Harris, who emphasized that the office’s role would be to ensure that innovative products meet safety, accessibility and transparency expectations.

In addition, the regulator should encourage the integration of a variety of fintech products and services, facilitate the availability of these services to ordinary citizens, bridge the digital divide, digital literacy, financial security and market availability. It is time to support a more inclusive and stable financial future for others. This includes the availability and digitization of resources, providing people with real-time and round-the-clock access to the things they need for their daily lives and work.

Thus, due to the approach of fintech industry to the daily needs of consumers of financial services, it is possible to ensure financial inclusion, facilitate safe and fast access to innovative financial products. Strengthening mutual understanding between the global fintech community and regulatory approaches will open new opportunities for their integration into the financial paradigm of the MetaVerse and the formation of a modern and reliable fintech ecosystem.

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