What’s top of mind for Fintech Legal?
This report looks at what is top of mind for lawyers in the fintech sector, from payments and AI legal trends, the landscapes for fundraisings and international expansion, to the best way to develop a good culture and where the focus points are when it comes to developing fintech products or building partnerships within the Fintech ecosystem – we have you covered.
Digital currencies and payments landscape
When it comes to digital currencies and payments, lawyers remain concerned about the stability and security of cryptocurrencies and the increased risks that may come with the development and rollout of new digital asset-based products. However, impending regulation and the possibility of central bank-backed digital currencies being issued in major jurisdictions including the UK and EU come with a number of potential benefits for the fintech sector.
Fundraising and M&A climate
Legal counsel at investors and scale-ups alike are seeing much more caution on the deployment of capital, with a significant expectation gap on valuations, particularly from companies that raised in 2021-2022 and believe they have the reserves to ride out the current market. Flat and internal-only rounds are helping some scale-ups keep afloat. One key market adaptation is that investors are starting to deploy more aggressive legal protections.
Global expansion
Expansion in an ever-changing regulatory and geopolitical landscape means lawyers are faced with an array of considerations when it comes to going global. In-house counsel play a key role in managing global expansion, including navigating a patchwork of evolving international regulation and interactions with a host of global regulators.
The role of legal when it comes to fintech products
Legal collaboration with product teams throughout the development cycle is crucial for adherence to regulatory standards when developing new fintech products - and the earlier the better. To work seamlessly with business colleagues, lawyers must focus on understanding and communicating key aspects of regulations, preparing businesses for changes and strategically advising on parameters for product development.
Banks and fintechs
Lawyers are taking a central role in enhancing partnerships between banks and fintech companies, from streamlining processes to optimising relationships. To ensure success, lawyers must adapt to the unique needs of fintech companies through establishing effective governance, fostering collaborations and ensuring proportionate agreements.
AI and its crunch points
The rise of AI is reshaping what the world looks like - and the potential for that reaches the legal industry too. Its fast development prompts a close examination of the regulations spanning privacy, intellectual property, and technology-specific rules, as well as causing lawyers to ask what the future of the legal industry will look like.
Ethics and culture
Ethics and culture remain focus points for lawyers in fintechs. Ethics sits at the heart of a lawyer's role, while maintaining a healthy corporate culture is vital for innovation and talent retention, as cultural failings can lead to reputational damage and regulatory scrutiny. Ex-Wirecard's Pav Gill's experience highlights the importance of fostering cultures that encourage speaking up, emphasising the ethical obligation of whistleblowing and its impact on both individuals and companies.
Fintech regulation
One of the biggest challenges for fintech lawyers is grappling with the fast-paced evolution of regulation impacting the sector as it develops. A common question from many of the fintech GCs we speak to is: “what am I failing to think about that others are thinking about?” We asked Laura Douglas, senior ssociate from Clifford Chance for her views on the biggest fintech regulatory changes impacting UK and EU firms that we can anticipate in 2024 and how lawyers can best keep up.
