Global regulation is continuing to slow the speed of disruption across financial services, according to a former investment banker and FinTech entrepreneur.
Speaking at MoneyConf – a specialist FinTech conference in Madrid – Louis Beryl, founder and chief executive officer of Earnest, said regulatory hurdles are still far greater for FinTech innovators.
He explained: ” In terms of regulatory abitrage and, if you think about barriers to entry, regulation can be a very significant barrier to entry. It is one of the reasons that financial services and healthcare are one of the last to experience this fundamental disruption.
“If you think of financial services, it is bascially half of global GDP. What is the reason that is disruption happening later in the cycle? One really big reason is that the incumbents are very large and they have been able to get very large because of a regulatory barrier that protects them.”
Harvard graduate Beryl – who previously worked at Morgan Stanley and Deutsche Bank – warned that “insurgents” aren’t succeeding because of regulatory arbitrage.
He added: “The incumbents are being protected because of regulatory barriers. If we were to level the playing field… we would see disruption faster.”
The San Francisco-based entrepreneur said the financial services industry had just witnessed a “fundamental shift” with recent FinTech launches for mobile devices, which will give new innovators a head start in the future.
He concluded: “That is a shift from the world we lived in before. The businesses that are being built now are being built with a mobile-first design. We are seeing software automation, machine learning, big data, artificial intelligence – all of that is being baked in now.”