This March, The Fintech Times is shifting its spotlight towards insurtech, exploring the potential impact of blockchain technology on insurance processes and its role in instilling trust in digital transactions.

Navigating the intricacies of regulatory frameworks presents a formidable challenge for insurers operating on a global scale, as regional variations significantly influence their strategies and operations worldwide.

These regulatory disparities dictate product development, distribution methods, capital requirements, risk management practices, and market entry decisions.

To delve deeper into this, we consulted industry experts for their insights on how regional regulations shape insurers’ approaches and activities across diverse markets.

Unified approach

Regional variations in regulatory frameworks have significant impacts on insurtechs and insurers’ strategies and operations worldwide, says Caroline Hanotiau, general counsel at insurtech Qover.

“The operational complexity of managing compliance efforts and monitoring updates and changes in regulations can be resource-intensive. Additionally, stringent regulatory requirements in certain regions may act as a barrier to market entry, limiting potential expansions for insurers.

“Innovation can also be constrained by regulatory requirements in certain regions, which may restrict product development and distribution rules.

“However, at Qover, we have developed a unified API that allows us to navigate these challenges and ensure compliance across all countries, while still innovating and providing consumer protection.”

Central bank regulation

Mustafa Melhem, business development manager for insurance at Eastnets, a global provider of compliance and payment solutions for the financial services sector, addresses the importance of central bank regulation in fostering stability and mitigating fraud in well-regulated insurance markets.

“In many regions, the insurance sector is regulated directly by the central banks through a dependent or independent insurance authority. We consider these regions as well-regulated insurance markets.

“They offer a strong and stable insurance market, empower the local insurance sector, foster better partnerships with the global reinsurance and financial sectors, and protect policy holders and beneficiary rights.

“These markets also offer protection of any third parties’ rights, such as healthcare providers and other insurance service provider. They also empower the insurance companies’ solvency margins and ensure strict control of fraud and money laundering.

“In other regions, where the insurance sector is reporting to different governmental departments or ministries, the central banks are not fully involved and therefore these regions are poorly regulated. So, these markets are lacking the above benefits, which encourages increased fraud.”

Robust IT systems

“Insurers are, and have always been, under enormous pressure to make their products conform to the regulatory needs of every geography they serve,” says Sam A. Shay, creative director at Socotra, which provides a modern enterprise platform  to insurance businesses.

“Even a small insurer that sells only one basic personal auto product in the U.S. has to create a variant of that product for each state, greatly increasing the complexity of doing business across any kind of border. The resulting amount of compliance work, product definition and more that goes into growing into larger regions or offering a more expansive product portfolio can be incredibly cumbersome.

“The insurers best-poised to handle this are the ones that use IT systems with robust insurance product inheritance models that allow them to easily configure each of their products to suit every regulatory environment the product is offered in – rather than offering unique products for every geography.”

Managing compliance

“Regulatory differences significantly shape the strategies and operations of global insurers, influencing product development, distribution methods, capital requirements, risk management, compliance, and market entry, including mergers and acquisitions (M&A),” says Ryan Cox, senior director and head of AI Business at digital transformation consulting firm Synechron.

“Insurers must customise their products to comply with various regulations, align distribution strategies with legal frameworks and maintain adequate capital to meet solvency requirements. They also need region-specific risk management strategies to navigate varying compliance standards and associated costs from one region to another.

“Market entry decisions hinge largely on regulatory landscapes, with insurers preferring markets with more favourable regulations while acknowledging regulatory challenges.

“M&A activities require thorough assessment of regulatory impacts and approvals across jurisdictions. Despite regulatory complexities, insurers can find opportunities by proactively managing compliance, maintaining operational flexibility, and using technology to enhance regulatory processes’ efficiency.”

Adaptable strategies

Highlighting the dynamic impact of regional regulatory variations on insurers is Javed Akberali, co-founder and managing director of insurtech Wellx, who said:

“Regional variations in regulatory frameworks significantly impact insurers’ strategies and operations worldwide. Differences in data protection laws, licensing requirements, and compliance standards require insurers to adapt their business models and strategies to each jurisdiction.

“This variation necessitates a flexible, informed approach to global insurtech operations, underscoring the importance of understanding and navigating these disparities to succeed on the international stage.”

As global fintech investment levels are projected to rebound in 2024, offering numerous firms the opportunity to expand their services, one sector stands out for its resilience amid recent challenges: the global foreign exchange (FX) services market. With new players poised to enter the space, Currencycloud, a Visa solution, has released a new book guiding organisations on how to navigate and succeed in their FX endeavours.

The e-book FX for Business, for Dummies, explores the technical nuances of FX, a global market valued at $7.5billion by The Business Research Company. The book covers a spectrum of topics, ranging from risk management strategies to hedging mechanisms, shedding light on how advanced analytical tools, market forecasting, and liquidity management can significantly influence the success of businesses operating within this space.

The five key talking points covered in the book:

• Embracing the benefits of FX
• Generating revenue with FX
• Growing and scaling your business through FX
• Looking to the future through FX modernisation
• Ten FX challenges

Understanding the basics and benefits of FX

FX for Business, for Dummies is tailored for those looking to transition a segment of their business into the FX arena, scale up existing FX operations, or prepare for cross-border business opportunities. While primarily aimed at this audience, it also accommodates those wanting to enhance their understanding of FX, regardless of their expertise.

Before delving into the advantages of FX, Currencycloud lays the groundwork by explaining the fundamental principles of FX, including its trading mechanisms and an overview of the eight major currencies. Additionally, it outlines the three primary approaches to FX for companies:

• Building a proprietary platform, which can be resource-intensive;
• Purchasing an all-in-one solution for rapid deployment, albeit with limited flexibility or:
• Collaborating with industry experts to develop tailored solutions that evolve alongside business needs.

The book emphasises there is no universal solution for FX endeavours and that it is important to conduct thorough research before selecting a partner. Ultimately, the chosen partner should align with the business’s goals and have the capability to serve its customers effectively. Currencycloud emphasises the significance of prioritising the customer journey from the outset, highlighting how cost efficiencies in FX can drive revenue growth and elevate the overall customer experience.

Generating revenue with FX

While it’s tempting to suggest that entering the FX space automatically translates to new revenue streams, the reality is far more nuanced. The book explores how firms can manage exchange variabilities while reducing cost, primarily noting that firms should harness hedging strategies and diversify their currency holdings.

In the recognised ‘For Dummies’ style, Currencycloud leaves symbols next to certain points showing important tips, things to remember and warnings. One of the key revenue-generating strategies highlighted is the importance of forging robust banking partnerships. Collaboration with banks facilitates  smoother introductions, creating favourable conditions for businesses’ FX operations.

Once management strategies are understood, the focus shifts to optimisation. Currencycloud notes that businesses must grasp the dynamics of FX costs and strategically approach cost reduction. However, revenue optimisation comes with inherent risks. The book provides solutions to mitigate these risks, such as limiting exposure through spreads. By capitalising on competitors’ mistakes and utilising strategies like rolls – where open FX positions are adjusted at the settlement date – businesses can further enhance their revenue potential.

However, there are big risks involved with rolls. Businesses must remain aware of prevailing interest rate differentials of their currencies. Otherwise, a negative interest rate differential can result in a cost to the business.

Growing and scaling a business through FX

The FX space is often perceived as complex, yet it is incumbent on a business to shield their customers from these complexities. As a result, we believe that the user experience should be the top focus, even when exploring cross-border payment solutions which can be difficult.

Technology is a pivotal tool in ensuring smooth FX processes for firms. Forward trades, enabled solely through technology, offer a year-long security blanket, helping create the assurance and stability firms need in their financial endeavours. While these trades help mitigate adverse currency movements, they also can restrict access to favourable ones, prompting firms to assess the necessity of added security in advance.

Despite the benefits of technology, we believe true success hinges on meeting customer expectations. Regardless of the FX approach adopted, a robust platform fosters smoother transactions, thereby facilitating consumer loyalty. Moreover, by offering competitive rates and avoiding exorbitant fees, firms solidify their standing with consumers.

The book also underscores the importance of transparency in meeting consumer expectations. A key component of maintaining consumer loyalty is to be transparent and to communicate fees and rates clearly. Not doing so may lead to a loss of trust and a decline in customer growth and retention.

FX for Business, for Dummies crucially identifies that transparency is a must when it comes to consumer expectations. Opaqueness can result in potential legal issues in addition to a loss of trust. To avoid this, we reiterate the importance of fees and rates being clearly communicated.

Another warning surrounds a lack of communication between businesses and consumers. Providing channels for customer feedback is important. Furthermore, it is paramount to take action on the feedback to help maintain  a low churn rate.

Looking to the future

There is no downtime in the FX world. As noted by Currencycloud, “the weekend presents a golden opportunity for businesses engaged in FX”. This is especially the case if global events, political shifts and economic indicators take place over the weekend when others may be switched off.

Currencycloud cautions that while digital banking has a massive role to play in the future of FX, firms must understand how to manage it properly. With the correct management and forethought in place, digital banking can massively enhance customer experience, giving them the freedom and accessibility 24/7.

Overcoming hurdles

The book concludes by analysing some challenges that may appear for firms looking to enter the FX world. While many hurdles are immediate concerns, others may surface as firms set up their FX practices.

Among these challenges, Currencycloud identifies choosing the right partner as the key thing to remember. “The right partner should align with your business goals and needs, providing not just services but also strategic support to help your business thrive in the global market.”

View the full e-book FX for Business, for Dummies by Currencycloud, a Visa solution

Best Practice Disclaimer

These materials and best practice recommendations are provided for informational purposes only and should not be relied upon for marketing, legal, regulatory or other advice. Recommended marketing materials should be independently evaluated in light of your specific business needs and any applicable laws and regulations. The Currency Cloud Limited and its affiliates are not responsible for your use of the marketing materials, best practice recommendations, or other information, including errors of any kind, contained in this document.

Elon Musk, Mark Cuban, with others, have collaboratively submitted a shared amicus brief to the Supreme Court, wherein they raise concerns about the Securities and Exchange Commission’s (SEC) approach to conducting internal proceedings without the inclusion of juries.

Mark Cuban, a billionaire crypto investor and DeFi advocate who actively engages in the cryptocurrency space, and Elon Musk, the CEO of Tesla and SpaceX, who recently reshaped Twitter into X and wields influence and controversy in crypto, both assert that these administrative proceedings produce disparate outcomes for individuals facing SEC charges. Consequently, this approach has raised concerns, particularly in light of the potential infringement on the Seventh Amendment right to a jury trial.

The context of this legal challenge centers around the SEC v. Jarkesy case. In this specific case, George Jarkesy contends that his Seventh Amendment rights were violated. He argues that the SEC’s internal adjudication process, which lacks a jury and is overseen by an administrative law judge appointed by the commission, contradicts these rights. This effectively results in a single entity fulfilling the roles of judge, jury and enforcer.

Musk and Cuban pointed out a notable shift in the SEC’s approach between 2013 and 2014. They observed that the SEC started handling a greater number of cases internally rather than through federal courts. This change occurred after a string of unsuccessful insider trading cases tried before juries.

Musk is facing his third notable legal dispute with the financial regulatory agency. This comes in the wake of prior lawsuits in 2018 and 2019. Currently, the regulatory body is pursuing the involvement of a federal court to request Musk’s testimony regarding his acquisition of Twitter, with a specific focus on his public statements about the transaction, as disclosed in legal records.

Related: Elon Musk trials $1 subscription signup fee for new X users in New Zealand, Philippines

Nonetheless, Musk and Cuban maintain a steadfast position. They are appealing to the justices to endorse the decision made by the 5th Circuit. Their legal representatives contend that opting for administrative proceedings over the option of federal court juries runs counter to the SEC’s stated mission. Furthermore, such decisions could have the potential to negatively impact both investors and the markets that the SEC is committed to protecting.

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