FINLAND Law and Practice Contributed by: Olli Kiuru, Jere Lehtimäki and Essi Hietaoja, Waselius
1. Fintech Market 1.1 Evolution of the Fintech Market
fore comprised of the general regulations applicable to financial institutions. In Finland, financial regulation derives mainly from EU law, which applies as set out below. Capital Requirements The Capital Requirements Regulation (CRR) and Capi - tal Requirements Directive (CRD) are applicable to: • credit institutions; • investment firms; • portfolio management companies; • central institutions of amalgamations of deposit banks; • holding companies of credit institutions; • holding companies of investment firms; and • parent companies of financial and insurance con - glomerates. Financial Instruments The Second Markets in Financial Instruments Direc - tive (MiFID II) is applicable to: • investment service providers; • market operators (including the trading venue maintained by them); • central counterparties; and • data reporting service providers. Payment Services The Second Payment Services Directive (PSD2) has been transposed in Finland in two parts by way of amendments to the Payment Services Act (PSA, 290/2010) and the Payment Institutions Act (PIA, 297/2010). For the most part, these amendments entered into force on 13 January 2018. Apart from certain minor details, the scope of application for the PSA and the PIA is identical, meaning that both acts apply to companies engaging in the following pay - ment services: • services related to depositing or withdrawing funds in/from a payment account; • the management and offering of payment accounts; • the execution of payment transactions by means of credit transfer, transfer of funds to a service pro -
The fintech market in Finland has evolved rapidly over recent years, with the focus having shifted from quantity to quality. Traditionally dominated by lend - ing businesses and peer-to-peer (P2P) platforms, the market has seen some firms take the next step by upgrading their licences to become credit institutions or payment/e-money institutions. There has been a rapid increase in services offered to SMEs, while the investment and wealth management scene is still awaiting a breakthrough. Advances in technologies such as artificial intelli - gence, blockchain and quantum computing continue to drive innovation in the fintech sector, with a focus on enhancing existing services. There is also rapid development in crypto-asset business, boosted by a newly implemented unified framework for crypto- assets. 2. Fintech Business Models and Regulation in General 2.1 Predominant Business Models The following verticals predominate in Finland: • payments; • financial software; • financing; • data and analytics; • application programming interfaces (APIs) and plat - forms; • wealth management; • investing; • customer service and acquisition; • security and compliance; • insurtech; • crypto-assets; and • blockchain. 2.2 Regulatory Regime Due to the lack of fintech-specific regulation, the regu - lation applicable to fintech companies is contingent on the business model being undertaken. The regula - tory regime applicable to fintech companies is there -
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