In my ‘About Me’ article (which you can read here), I briefly mentioned that I’m quite interested in FinTech. For those that don’t know, FinTech is short for Financial Technology and describes the intersection of finance and technology. I’m conscious that most of our readership are law students or at least interested in law. And, if you’re anything like me, you chose law because the thought of studying anything finance-related sends shivers down your spine. If you’re tacitly nodding your head right now, I would urge you to keep reading. In this article, before I touch upon how I remain in the loop on developments in the FinTech space, I thought I’d share how I went from finance averse to “finterested”. (If your spine is unaffected by thoughts of finance, it may be more useful for you to skip ahead to the list of resources below.)
My interest in finance first piqued when I took a banking law module in the second year of my LLB degree. I remember thinking that I probably wouldn’t find it interesting, or that the issues would be too complex. Nevertheless, I took the module on the basis that I really enjoyed contract law in my first year and wanted to challenge myself. To my surprise, I found myself really enjoying the module. When using the words “enjoy” and “finance” in the same sentence, I have some friends that find it difficult to understand me. For these individuals, I like to explain the judgement of the landmark case of Foley v Hill[1] and I typically start by explaining that the bank in your bank account, is no longer “your” money…
I’d highly recommend indulging in the reasoning of LJ Cottenham for a more detailed explanation (especially to the law students reading this), but in short, this case decided that the bank-customer relationship is one of contract, specifically, a debt contract. What this means is that when you open and deposit funds into an account with a bank, you’re entitled to bring a legal action for the amount deposited in that account against the bank. To break that down further, your money is the property of the bank, but you can get the same amount back by legally enforcing the contract.
I found this so interesting. This reasoning dictates how money is legally held, which has an array of serious ramifications. One pivotal example being that without this rule, banks would not be able to make money from the money you deposit. Banks would not be able to give mortgages for people to buy homes or do other things with their customers' money, which is how banks make a profit. This 1844 case is so exciting as it is fundamental to you and me, the everyday customers of retail banks, while also being foundational to the infrastructure of the international banking system.
So, with the necessary introduction into the marvels of banking law out the way, I’ll turn to why I find FinTech interesting. And to do so I’ll start by outlining what I think are a few relatable use cases in retail banking, the sector where positive impacts are already being felt. You may have already noticed these changes without realising it if you’ve noticed the sudden proliferation of bright coral payment cards. These cards are a product of the FinTech bank Monzo – a fintech that is rapidly encroaching on the traditional banking sector.
The reason companies like Monzo are posing such a threat is because it’s changing the face of modern banking, and not just through issuing prettier cards. CEO of Monzo, Tom Blomfield is actively seeking to do just this by providing banking services that are completely different from those provided by so-called “legacy” banks[2]. Bloomfield claims that Monzo’s focus is not on selling financial products but rather “solving people’s problems”[3]. Unlike traditional banks, Monzo does not have bank branches – it has an app. And it is through this app that Monzo is making banking feel easier and appealing to modern consumers. The typically clunky process of effecting a peer-to-peer transfer is far simpler in the app[4] than through traditional online banking, and all payments are categorised to help users organise their spending. Other great advantages of Monzo is that you don’t incur fees for using your card abroad and, if an exchange rate applies, this is calculated at the point a transaction is made[5].
While these changes are great, they are just the tip of the iceberg. The really gripping stuff, in my opinion, is the potential of blockchain technology and virtual assets. Take Facebook’s proposed cryptocurrency, Libra, for example. The reason this is so exciting is best put by the projects’ mission statement, which describes the aim to be to create a “simple global payment system and financial infrastructure that empowers billions of people”. Although this hasn’t come to fruition yet, cryptocurrencies and the technology that supports their existence and transfer have the power to revolutionise the banking system or, indeed, bring banking to the so-called “unbanked”[6].
it would be wrong to suggest that my interest didn’t have a legal facet. In contrast to the Foley case, cryptocurrencies are so new, which makes the question of their legal significance incredibly interesting. My LLB dissertation, for example, attempted to legally classify a particular type of cryptoasset, the stablecoin, before looking at how this arguably threatens the integrity of the UK’s anti-money laundering framework (AML). While I focused on AML issues, cryptocurrencies pose challenges to a range of legal areas, such as tax law. The sheer breadth and technicality of the issues presented by cryptocurrencies makes this nascent area of law really quite interesting.
I hope by now I’ve convinced you on banking and FinTech. Obviously, my insights only scratch the surface of what there is to know. With this in mind, my ‘5 things’ are resources that I have used and continue to use to learn more within this space. They include the following:
1. The Crypto Curry Club
I owe a lot of my knowledge about this sector to the Crypto Curry Club. This organisation regularly distributes a newsletter and hosts events on all things blockchain, virtual currencies, and more. These events are completely free to sign up to and can act as a great opportunity to learn more and network with some very interesting people. These events are being held online at the moment, but they are very much in full force – you can sign up to them here. Hopefully, some of you will be inspired to attend one in the future!
2. Finimize
I am certain many of you are familiar with Finimize, as it’s widely promoted – and for good reason. For those who are not, Finimze is an app which regularly summarises news and updates on the financial markets in an accessible and digestible form. They also hold events on the same and for the same reason, so do go check them out.
3. Social Trading Platforms
I think these are widely advertised, so you may have heard of popular social trading platforms like eToro and Trading 212. For me, having a virtual portfolio (i.e. having an array of fake investments in real markets) has kept me really engaged in the price of different companies and commodities. I am quite impressed by those that can read stock indices and find it interesting, but unfortunately, I find it hard to relate to these. Luckily, having a vested interest, albeit virtual, helps to keep me interested.
4. LinkedIn
LinkedIn is probably one of my favourite resources. I use this platform to engage with a range of people in FinTech, ranging from lawyers through to people at start-ups. By following and connecting with these individuals, I’m able to see what they’re liking, which leads to more insights and contacts. I’d also encourage you to directly contact people if you have specific questions – who knows where it could take you!
5. Blogs
There are so many blogs out there, and so many good ones at that. To keep up with all things crypto, there are a range of specialised blogs. I mostly read CoinDesk and Cointelegraph, but I would encourage you to read a few to see which you prefer. These blogs tend to publish the latest news, including any legal and regulatory changes across a range of jurisdictions.
[1] (1848) 2 HLC 28, 9 ER 1002
[2] Available at: https://www.virginstartup.org/how-i-made-it/how-i-made-it-tom-blomfield-monzo
[3] Ibid.
[4] This feature is only applicable to customers sending money to persons who also bank with Monzo
[5] More information about this and Monzo’s general service offerings are available at: https://monzo.com/help/travelling/going-abroad
[6] This is such an exciting area; I could definitely dedicate an article to it. In the meantime, I’d recommend: https://www.worldbank.org/en/news/infographic/2012/04/19/who-are-the-unbanked
