Source: Corporate Counsel
By Stephanie Forshee, Corporate Counsel
FINANCIAL TECHNOLOGY, OR “FINTECH,” has emerged as a force to be reckoned with. According to a speech delivered by former U.S. Comptroller of the Currency Thomas Curry in December 2016, global investment in the sector skyrocketed to $24 billion from $1.8 billion over the previous five years. The rise of fintech, which harnesses technological innovations to change the way people lend and borrow money, make payments and receive investment advice, to name a few uses, has put traditional financial institutions on notice that disruption is here.
The sector’s growth has led to the creation of fintech specialties both in-house and at firms, and given regulators opportunities to shape the industry’s future. For instance, the U.S. Office of the Comptroller of the Currency (OCC) has pro- posed a new bank charter for fintechs. But as with any emerging sector, there are still plenty of questions as to who the winners and losers will be when the dust settles.
One open question is: Who will run the fintech legal departments of the present and future? Combining the skill sets of finance and technology has been challenging, and in-house counsel aren’t always coming to fintech from the most obvious places.
In fact, fi in-house lawyers are being hired from several industries and coming from varied backgrounds. Some major players have joined fintechs from major financial institutions, and seem to be coming more from finance than tech.
In the U.K., for instance, Richard Given moved from HSBC as its deputy general counsel to become the top lawyer at fi startup 10xBanking. Hiring from bigger banks has been the trend for the more established fintechs in the payments business for several years, with companies such as PayPal Inc. making hires from Citigroup Inc. and Bank of America Corp. First Data Corp., another payments company, has hired lawyers from banking giants such as JPMorgan Chase & Co. But only recently have these types of hires started to catch on for other types of fintechs like online investing, wealth management and robo-advising.
As fintech continues to evolve under the watch of various regulators, Brian Burlant, managing director of the in-house practice group with legal recruiting firm Major, Lindsey & Africa, says that hiring in-house lawyers with regulatory backgrounds is becoming increasingly common—and smart. “Fintech brings together a cross functionality you don’t see in many worlds,” he says. “By and large, a familiarity with regulatory and privacy issues is critical to this space.”
Many of these new hires are coming from law firms. Burlant says that firm lawyers may have more experience with the complex and fast-developing regulations important to fintechs, such as those around privacy, while in-house lawyers “could be deep in the weeds” with other issues and not as familiar with these developments. “It would be difficult for someone to step into this role if they’re a complete novice to regulatory issues,” Burlant says.
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