ARE THE STATE REGULATORS BEING CHALLENGED OR UNDERMINED BY FINANCIAL TECHNOLOGY & BORDERLESS DIGITAL PAYMENT PLATFORMS?

 ABSTRACT

The traditional Banking laws, Central Banks’ regulations and international Correspondent Banking Relationship (CBR) protocols, have been the key driver of global trade for more than a century. Without movement of money across jurisdictions and supporting legal framework and electronic communications, commercial trade could not have flourished to the present levels. The technological advancement in the internet age is fast surpassing the electronic or digital transaction platforms established in the 1980s, after reliance on Morse code & telegrams for money transfers. There is a nostalgic aura with the term Money Order followed by TT i.e. telegraphic transfer, about which the future generation may have no clue. However the internet technology based financial systems termed as FinTech are transforming nostalgic term TT to IST (International Swap and Transfer), a futuristic term.

The FinTech based platforms promise to reduce costs of transactions and offer full control to the users as “the customers”, instead of being dependant on the Banking protocols and delays. This Paper surveys the current regulatory regime and challenges being posed for the authorities, in support of businesses and trade while trying to curb or detect money laundering and subversive activities. The key objective of this Paper is, to identify the need for a regulatory regime through UNCITRAL conventions, in support of the new FinTech entities, which can complement the prevailing World Bank and BIS[2] recommendations. The Paper also aims to identify how FinTech helps the internationally trading business entities through bypassing the transactional models of rigidly regulated Banks and the impact on the sources of revenue through remittance transactions fee and forex commissions for Banks.

Keywords: FinTech, Financial Technologies, IST, International Payment System, Forex Swap, Remittance Service Providers (RSPs), Payment Service Providers (PSPs).

[2] Bank for International Settlements, Basel, Switzerland a member organization with Central Banks of 60 jurisdictions as members, making up to 95% of world GDP