Why we have chosen to be regulated
When talking about FinTech companies, the topic of regulation is often rapidly tabled, be it to demand that their activities be more stringently regulated - a natural argument for more traditional financial institutions to make - or to request a more flexible framework, favorable to financial innovation and client service - which is the position taken by more aggressive parties who have given themselves the objective to disrupt the financial services industry.
When we started Cashbee approximately one year ago, we were well aware of the challenges created by the regulatory aspects of our endeavour, and we agreed from the start that these had to be considered as a priority, alongside our technological objectives and marketing strategy. We then deliberately chose the most demanding path, whereby Cashbee would carry the necessary regulatory approvals to carry out its activities itself, rather than go for the easier solution which would have been to rely on the approvals and regulatory statuses of our partners (a model adopted by several FinTech companies which, like us, operate in the savings sector).
Cashbee has recently obtained its regulatory approvals from Cashbee the Autorité de Contrôle Prudentiel et de Résolution (ACPR), the department within the Banque de France in charge of accrediting and supervising both credit and payment institutions. Our payment institution license enables us to execute specific financial operations, recently codified and falling under the Second European Payment Services Directive (PSD2). The operations are those of an aggregator of accounts and payments initiator. In plain English, this allows us, with the explicit approval of our users, to access their bank account details, in order to be able to offer them savings services adapted to their specific needs, in a simple, fully digital way.
These regulatory approvals were obtained following a rigorous and formal approval process, which mobilized every part of the Cashbee team at its different stages. Our exchanges with the regulatory authorities were intense, but, we have to admit, in many instances beneficial and useful. WIth hindsight, beyond the satisfaction procured by the receipt of the formal regulatory sign-off, required to initiate our commercial operations, we believe to have learned a lot during this process.
The elaboration of the official request for approval, and the subsequent back-and-forth with the regulator, forced us to construct a highly detailed description of our activities and processes, and allowed us to validate and indeed adjust certain hypotheses which we made initially. It is often said that the pragmatism and responsiveness constitute key values for start-up companies. That does not mean that careful planning and anticipation should be ignored, and that is exactly what we were incentivized to do during this period.
In its assessment, the protection of confidential and personal data and the security of the financial flows were undoubtedly key areas of attention for the ACPR. Cashbee’s model is designed in such a way that the money of our users is always in an account in their name, in a French bank, covered by the Deposit Guarantee Scheme. This “closed-circuit” system, and the fact that we are never the depository of the funds of our users was much appreciated by the supervisory authorities. That being said, they nevertheless insisted we reinforce our internal controls, and that we mandate external specialists to verify our security systems regularly. Similarly, they requested that we strengthen our governance by creating a Supervisory Board, including independent and qualified members. They reviewed and approved our significant (at our scale) investments in our data storage and data encryption solutions. All of this obviously comes at a cost, but also with an important comfort : the assurance that we operate at the highest standards.
And this assurance is crucial in the individual savings industry in which we operate. Whatever the value and the novelty of the services we offer, our users will only adopt our solutions if they feel absolutely confident that Cashbee can be trusted. We will have to earn this trust, and will do so, in part because of the demonstrable trust we have been awarded by the regulatory authorities, through their approvals. And that’s why we Cashbee has chosen to be regulated.