Regulatory Changes in Fintech 2024: Insights from Farnoush Farsiar
In the dynamic world of fintech, where innovation and regulation intersect, few voices carry the weight of expertise like Farnoush Farsiar’s. As a distinguished authority in the field, her insights are crucial for navigating the evolving landscape of fintech. In this article, we delve into the regulatory changes in fintech for 2024, exploring opportunities and challenges.
AI’s Dominance in 2024: A Cybersecurity Odyssey
Farnoush Farsiar emphasizes that the constant influx of new technologies introduces new risks for financial institutions. Open banking, GenAI, and increased partnerships with tech vendors provide benefits but also expose firms to potential vulnerabilities and cyber threats.
In 2024, financial services providers face challenges in adapting to the evolving compliance landscape associated with GenAI, while operational resilience requirements are expanding, creating additional compliance hurdles. Farsiar adds that sustaining customer trust is vital in this dynamic risk environment, making it a top priority for all financial services providers.
Third-Party Tracking Technologies: Under Regulatory Scrutiny
In 2024, third-party tracking tech faces intense regulatory scrutiny, especially for sensitive personal data. Regulators are closely examining companies’ use of third-party tracking technologies, such as pixels, cookies, and software development kits, particularly when involving sensitive personal data for purposes like profiling or advertising. The U.S. Federal Trade Commission recently cautioned tax preparation companies, insisting on affirmative express consent before sharing financial, marital, or family information for advertising.
Farnoush Farsiar says that lawmakers have echoed concerns, calling for investigations into potential privacy law violations by tax-prep firms using tracking technologies. These developments signal increased scrutiny on fintechs sharing financial or transaction data for advertising, drawing parallels with enforcement actions in the medical data transmission realm. Farsiar also admits that regulators may soon extend their focus to behavioral advertising practices within the fintech sector.
Financial Data Rights: A Rising Tide in 2024
2024 is also the year of financial data rights, says Farsiar. The CFPB is expected to issue its final rule implementing Section 1033 in the fall. It also impacts on the fintech industry.
The CFPB is considering mandating fintechs to provide consumers with enhanced access and portability rights to their financial data. The proposed rule would apply to various entities, including financial institutions, card issuers, digital wallet providers, and other companies with data on covered financial products and services.
In case of successful implementation, the rule would compel these entities to furnish consumers with specific transaction, balance, upcoming bill, and other personal data upon request. Consumers could also authorize third-party companies, including competitors, to request and use this data.
For CFPB, this initiative fosters competition by enabling seamless switching between financial service providers.
Regulatory Winds in the Crypto Space
According to Farsiar, the global outlook for blockchain technology remains positive despite an extended crypto winter marked by the unexpected collapse of major firms like FTX, Blockfi, Celsius, and Voyager.
However, the expert says that 2024 still expects key use cases like border transactions and credit scoring to gain global traction. At the same time, financial institutions are focusing on blockchain pilots, particularly in central bank digital currencies (CBDCs) and interoperability.
As the crypto industry faces challenges of diminished investor trust, regulatory clarity is necessary to restore confidence and facilitate mainstream growth. Additionally, the involvement of traditional financial institutions and wealth management firms in offering new services related to digital assets could further boost investor confidence in the cryptocurrency space.
Farnoush Farsiar’s Conclusions: Navigating the Regulatory Landscape
In conclusion, Farnoush Farsiar’s analysis of the 2024 fintech regulatory landscape unveils a dynamic interplay of challenges and opportunities. From the impact of GenAI to evolving compliance demands and the ascent of financial data rights, successfully navigating these intricacies demands a nuanced approach, blending innovation with strict adherence to regulatory frameworks. As we move forward, it remains to be seen how events will unfold for the fintech industry in 2024.