What role should governments play in the growth of the FinTech industry?

The answer to this question varies from country to country. For instance, in some places, companies are freed from extensive and burdensome regulations, and given the opportunity to foster innovation outside of the conventional framework.

Switzerland was the first country to create the so-called regulatory sandbox, which gives FinTechs room to breath and not be restricted by the legal environment. At a certain point, firms grow out of this system and face regulatory responsibilities that are relevant to their size, but before that they are free also to receive large-size investments without any restrictions. Jorg Gasser, Switzerland state secretary for international financial matters, has expressed hopes that such policies can facilitate strong market growth and bring Switzerland to the forefront of digitalization. The state also provides firms an opportunity to acquire a tailor-made FinTech license, which assumes lower taxes on smaller firms, as opposed to those that come with a banking license. It is a win-win situation, as such system is also easier to establish and manage for the government itself.

Moving from Europe to Asia, Singapore’s central bank, the Monetary Authority of Singapore (MAS), has created a similar sandbox one year ago. The model seems to work quite effectively, as 30 applicants have expressed the wish to join the program of MAS and test their developments outside of the usual restrictions.

Needless to highlight, Singapore and Switzerland have a similar approach towards FinTech, which makes them ideal hubs for the companies that operate in the industry. Both of the countries are neighbors of massive economies that allow them to be well-connected within the financial and tech networks, have high-level educational facilities, and modern infrastructure.

With the regulations they have put in place, these two jurisdictions set example to other economies, stressing the importance of growth and development within the sphere of FinTech.