Cyber and regulation key obstacles to fintech innovation

Author: Lizzie Meager | Published: 25 Apr 2017

Concerns around cybersecurity and regulatory compliance are the two main barriers to tech innovation at financial institutions, according to research conducted by Simmons & Simmons.

Seventy-one percent of respondents to a survey conducted by the law firm said that cybersecurity is the number one risk arising from collaborations with fintech firms. Meanwhile uncertainty about the regulatory status of potential partners is a worry for 51% of respondents.

The depth and scope of incoming EU regulations including the second Payment Services Directive (PSD2) and the General Data Protection Regulation (GDPR), as well as Europe’s first cyber law, the Network and Information Security (NIS) Directive, go some way in explaining firms’ concerns.

"Cyber is clearly a very big issue and that in part is because the regulators are so focused on it," said Lee Schneider, counsel at Debevoise & Plimpton. "Another big motivation is the reputational risk. There have been many...