Mark Adair (pictured) of Mason Hayes & Curran advises on the legal and regulatory challenges a provider of technology in financial services needs to be aware of

Technology is rapidly changing the financial services landscape. Technology applied to financial services, also known as Fintech, covers a range of innovative products and services including digital payment platforms, mobile payments, crowdfunding, peer-to-peer lending and crypto-currencies like Bitcoin.

The Fintech sector is experiencing massive growth and Accenture reports that worldwide investment in Fintech tripled to $12billion in 2014. But what are the legal and regulatory issues that a market participant should consider to ensure success in the brave new world of Fintech?

DATA PRIVACY

Modern online financial services result in a tremendous amount of digital data being created and processed every day. A critical component of your success will be understanding data protection laws and export controls, and how to comply with these in a cost-effective way. You should have appropriate terms of use, privacy policies, cookies policies and data transfer arrangements in place.

The issue of who is a data controller and who is a data processor applies to Fintech companies in the same way it applies to any organisation processing and storing personal data. In addition, your ability to show that you take data privacy and security seriously helps build your reputation in the marketplace as a trusted provider.

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SECURITY

As recent news headlines show, damages arising from a successful cyber-attack are no longer limited to financial loss. They can also include reputational damage, business interruption, data loss, customer compensation claims and regulatory fines.

Banks have historically been the main target of cyber-criminals. However, modern cyber-crime may shift its focus to Fintech companies with a completely online presence and fewer security resources than the major players. Your ultimate goal is to adequately protect your systems and data and prevent a cyber-attack before it can occur. In the event of an attack, it is critical you are able to react quickly, isolate the attack and eliminate the threat.

FINANCIAL SERVICES REGULATION

It is crucial to determine if, and how, financial services regulations and licensing requirements apply to your products, services and business governance. In Ireland, for example, a Fintech business should understand what differentiates a non-regulated entity from one which requires approval or licensing by the Central Bank of Ireland.

You also need to stay up-to-date on new compliance developments and have processes in place to implement regulatory changes within the required timeframes. Including a robust change control process in your contracts along with a shorter contract term may help to achieve this.

CONTRACT NEGOTIATION

Signing the right commercial contracts will help record the collaborations and commercial partnerships that underpin your business and its legal relationships. If you are negotiating a contract with a Fintech supplier or partner, remember that the commercial drivers and appetite for risk of an online start-up may be very different from that of a major bank or established technology corporation. You should tailor your negotiation style accordingly.

INTELLECTUAL PROPERTY (IP)

Investors will view a significant portion of the value in a Fintech business as its brand and underlying technology. It is therefore essential that all intellectual property your business owns or licenses are suitably protected. To accomplish this you should enter appropriate software licensing and development agreements, register trademarks, file patents, protect your confidential information and ensure that all relevant website and social media sites are secured for your brand.

ADVISORS

Fintech requires legal expertise across a broad range of areas including technology and telecommunications, financial regulation, data protection, intellectual property and consumer law. With the recent introduction of a range of new European and national legislation, along with corresponding penalties for non-compliance, it is important that all participants retain qualified expert advisors to help navigate the Fintech legal landscape.

• Mark Adair is a senior associate with Mason Hayes & Curran and has a particular focus on the Fintech, cloud computing and telecommunications sectors. Mark has advised a number of high profile organisations, such as Ralph Lauren, Facebook and Telstra on their technology and data protection arrangements.