Not restricted by the many regulatory requirements expected of traditional banks, fintechs have leveraged their position as disruptors in the market, promoting their ability to offer more agile services at lower prices.
But, says Ibrahim Toyeeb, CEO of technology company, Leatherback, while there is no doubt that fintechs have disrupted the financial services market, the word ‘disruption’ has been over-used in the fintech field.
“Technology, innovation, regulation and experience should go side-by-side. It should not be a matter of one or the other. The ability of fintechs to sidestep regulation has created distrust amongst consumers, who are increasingly voicing their need to be assured that their money is safe.
“That is why – when we started Leatherback – we decided to view regulation as our friend, rather than our enemy. From the beginning, our model was always to get licenses in the countries we operate in,” he says.
Leatherback’s licensing approach is rooted in the understanding that getting directly licensed helps build trust with clients, and provides them with the peace of mind that comes with knowing they are dealing with a fully regulated entity.
Leatherback commenced the licensing process in the United Kingdom (UK) and Canada. “Notably, we are licensed with the Financial Conduct Authority (FCA) in the UK, which is the highest regulatory body in the world. This means we are held to extremely high standards. We benchmark all our processes against the FCA and our systems are structured to adhere to all FCA requirements.”
Despite the onerous processes involved in obtaining licenses, Toyeeb says Leatherback is also Electronic Money Institution (EMI)-licensed in the UK, which allows it to offer electronic money services in the country.
“At the same time, we obtained a license in Canada as a money service business, a move that was aimed at making our Canadian clients feel comfortable with our platform and providing them with the same level of comfort they get from their banks and other financial services providers,” he adds.
Leatherback is currently licensed – or in the process of being licensed – in about 13 other countries it operates in. “Every regulator expects us to meet specific technological requirements and partnership standards. We are going through all of these regulatory processes and applications to make sure when consumers hear the name Leatherback, they feel comfortable hearing it. They know they are working with a properly structured and fully regulated organisation that will keep their money safe and give them the best possible service,” says Toyeeb.
The technology company is being licensed in developed and frontier markets. While regulators in some of these markets may not be up to date, Leatherback has liaised with regulators to ensure that it offers the best services to its clients.
By becoming licensed, Leatherback does not have to leverage third party providers. “Because we are licensed, we can tap directly into the local infrastructure in every country, which means we are able to offer first-layer services to our clients. This means not having to look to a local party, with its own layer of pricing. Licensing helps us offer more affordable services to our clients, which is why our global accounts are free. Nobody does that in the market today,” notes Toyeeb.
Leatherback has, however, joined hands with recognised and reliable solutions providers such as Currency Cloud, which provides account solutions in the United States and parts of Europe, ClearBank, one of the largest banks in the UK. It has also partnered with 4Stop, a Know Your Customer (KYC), compliance and anti-fraud solution provider, and Yes Bank in India. Today, Leatherback has more than 40 partners globally, and partnerships with about three banks in each country it operates in.
Ensuring it operates within regulatory confines does not mean Leatherback has compromised on innovation. “We are committed to providing our clients with a unique financial technology experience that helps them explore different opportunities, while at the same time not erring on the wrong side of regulation.
“We understand that regulation, in one way or another, has to catch up with innovation, but we are happy to help play a meaningful role in bridging the gap with various regulators in the sector,” concludes Toyeeb.