No puppies protection for FinTechs

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Established banks take FinTechs not only as a competitor but also as an opportunity to strengthen our own business model true. Recent studies show that six out of ten global banks are facing a partnership with FinTechs open-minded. In addition, strategic investors Like FinTechs.

Kein Welpenschutz für FinTechs

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A prerequisite for an Investment, to ensure the Compliance requirements of the FinTech product, however, is always. Shortcomings can be seen in particular in the field of IT law. This can be explained by the fact that Start-ups focus naturally first of all on the development of the (FinTech)product, while the comprehensive examination is to parallel legal issues are often time – and cost reasons, a lower priority. Investors are therefore well advised to make a careful risk analysis of the IT-law issues. Conversely, it is for FinTechs, with a view to possible Exit scenarios are required to consider at an early stage legal issues and Compliance requirements, in order to increase their own attractiveness for investors.

Here are some of the important topics at a Glance:


Regulatory Requirements


FinTech products and related services may require, depending on the embodiment, a permission from the BaFin. Thus, the operation of payment services, the provision of financial services, banking or insurance transactions, without permission, for example, is liable to prosecution and may also lead to a prohibition of the continuation of business operations. FinTechs enjoy a “prudential puppy protection” and must comply with the regulatory requirements as well as established financial services provider. In this case, the network of regulatory requirements for IT-specific issues is always recognizable by the poet. This concerns, for example, in the case of the currently pending MaRisk amendment in particular, topics such as IT security, the technical implementation of the principles for risk data Aggregation and risk reporting, as well as comprehensive rules for the outsourcing (IT-)processes. Other Bank regulatory requirements can result in, among other things, the “minimum requirements for the security of Internet payments (MaSI)” and other special announcements by the BaFin, as well as legal requirements, for example, in accordance with the provisions of the act on the supervision of payment services (ZAG).


Rights on FinTech product


FinTechs and investors should clarify whether the necessary rights, in particular copyright, rights of use – the FinTech product is available in the required extent. Especially in the case of copyright, rights of use, this can be sometimes doubtful, because “the copyright” first of all, in the Person of the author, i.e. the programmer himself. Although there are programs special arrangements, which lead to exist for a computer that (at least) the copyrights of an employee programmer are transferred automatically to the FinTech. However, this rule shall in the absence of employee status does not apply to the managing Director of a FinTechs. The same applies to the use of freelancers. For this reason, the owner of a FinTechs should regulate the transfer of Rights through explicit contractual agreements. As the FinTech product are the Central Asset of the FinTechs and the main aim of an Investor, it is necessary to minimize the investment risk, a careful examination of the legal chain and in the FinTech product, where appropriate, included Open-Source components.


Investment in FinTech products in the development stage


The FinTech product is still at the beginning of the development, the question arises as to the extent to which the investment can be linked to a project’s progress. Or put differently: How can we ensure that the FinTech product hits at the end of the development process, the expectations of the investors? Investors can spread their investments on several partial services, and pre-defined and measurable milestones to establish. A side-effect of this approach is that the formulation of the milestones (and thus the services to be performed) leads to a critical examination of the expectations of all Stakeholders.


Compatibility with existing systems


In particular, strategic investors will need to clarify the question of the extent to which the FinTech product can be integrated in already existing IT-systems. This is especially true if the Investment is to be integrated in existing products or processes, or linked to, a.


Data protection law


FinTech products can be processed, as a rule, highly sensitive data and customer confidence in the security of this data is one of the decisive factors of whether the business model will be accepted on the market. Therefore, data protection legal issues in the development of FinTech products a very important role. In addition to the risk of a (possibly fine proven) objection by the competent data protection authority protection breach, reputational risks, which can ultimately mean the quick end of FinTechs is threatening, in the case of Data.




It is not uncommon that FinTechs have to resort to the provision of the services to subcontractors. Also conceivable is the reverse, for example, is the handle on a Hosting and service provider with a cloud-based FinTech product. In addition to FinTechs specialized sub – contractors, which – equipped with its own banking licence to establish, but increasingly through APIs and interfaces back-to-back almost all the Bank provide professional services. The use of such subcontractors, requires compliance with the aforementioned regulatory and legal obligations is ensured by the subcontractor in the contract. In addition, the contractual agreements with subcontractors should be examined prior to an Investment to see if they are not configured power factory in such a way that the rules relating to performance, quality, scalability, maturity, payment, liability to a strategic development of the business model.




For FinTechs and their innovative products with the applicable legal requirements are complied with. A early employment is worthwhile in many respects, since deficits in this area can have a massive negative impact on the business model and possible investment in a FinTech. So a lack of law – in particular, IT legal Compliance is regularly constitute a Dealbreaker.

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