Stability & Fintech

We discuss the future of banking technology with Mario Gassner, CEO of Financial Market Authority (FMA) Liechtenstein

CEO Insight: Mr. Gassner, how do you assess the current situation of the Liechtenstein Financial Center and what do you consider to be the strategic priorities?

Mario Gassner: Liechtenstein is home to a highly specialised financial center which stands for stability, long-term thinking, and innovation. The financial industry is undergoing a thorough trans-formation though: The business of traditional financial service providers is changing whilst technology companies are entering the financial sector with innovative products.

On the basis of its strong position, the Liechtenstein financial center is adapting to this transformation. The Government has recently adopted a financial center strategy which defines the goals and strategic measures for further development.

The Government and the Liechtenstein FMA view financial technologies as an opportunity and pursue the approach of implementing regulation in a way that encourages innovation and attracts new financial intermediaries. This approach has proven to be successful as numerous international FinTech companies have settled in Liechtenstein.

“Technologies such as blockchain have the potential to change our lives decisively in many areas.”

The regulatory environment is not yet tailored to FinTech business models though. Therefore, the legal questions dealt with by the FMA in regard to new financial technologies can be very complex. Adapting regulation in a way that suits innovative business models is a strategic priority of the Liechtenstein Government.

As a major step, the Government plans to enact the so called Blockchain Act in the near future. On part of the FMA, straightforward and fast access to the regulator and a high level of FinTech competence are factors with which Liechtenstein can position itself in the competition among locations.

CEO Insight: We understand that a fast and straightforward access approach is fundamental to the FMA methodology in the field of FinTech currently, thus encouraging both established financial service providers and new enterprises to implement their business models in Liechtenstein. Can you tell us how the FMA ensures an adaptable access for FinTech companies?

Mario Gassner: In 2015, we set up the Regulatory Laboratory (RegLab) as a center of competence for issues concerning new financial technologies. At the interface between regulation and the market, the team is the contact point for innovative companies working in FinTech as well as established players with new business models, thus guaranteeing easy access to the regulator. In addition, the manageable size of Liechtenstein also entails flexibility and short decision-making channels in all matters.

CEO Insight: What’s your long term prediction concerning the Liechtenstein financial market and new financial technologies?

Mario Gassner: Digitalisation does not only have an impact on finance. Technologies such as blockchain have the potential to change our lives decisively in many areas. As for the financial sec-tor, new business models and specialised providers are leading to a fragmentation of the financial industry as well as a greater variety of products and services. Cooperation and outsourcing are gaining importance and will change rapidly and dynamically. New technologies enable new business models that can be only partially captured by regulation and that entail new risks.

CEO Insight: How is the FMA focusing on these risks associated with FinTech activities and can you share any insight into how these activities will be better understood and man-aged on an ongoing basis? 

Mario Gassner: As a supervisory authority, the FMA has to ensure that client protection is up-held, that trust in the financial market is maintained, and that the stability of the financial sector is not put a risk. In order to be able to deal with the risks of new business models, it is essential to deeply understand how these innovative models work.

The RegLab has gained comprehensive knowledge in the field of new financial technologies in the past years and stands in close dialogue with the financial market participants. This allows us to tackle potential threats for the financial market and investors such as providers with fraudulent intentions pushing into the market.

Our focus not only lies on new business models though. Digital transformation implies new risks such as cybercrime or data security threats for traditional business models as well. The FMA has addressed these risks and enacted guidelines for financial intermediaries which specify the requirements for IT security and the handling of cyber threats.

For more information: FMA Liechtenstein