Andrew Masson is an IPilogue Writer and 2L JD candidate at Osgoode Hall Law School.

I recently had the pleasure of interviewing , an experienced lawyer, litigator, self-described “Serial Entrepreneur”, and Founder and CEO of . In her career, Heather-Anne has tackled very diverse roles, including as a successful international tax law litigator. She has also succeeded outside of traditional legal practice. She established a consulting firm in Jersey on the Channel Islands and is now CEO and Founder of a financial services platform (Phundex) operating out of the United Kingdom. She provided great advice both for lawyers that want to practice outside of traditional law firms and for entrepreneurs at all stages. Heather-Anne is an inspirational person, one who encourages you to make the most out of life. Her advice and stories would make you believe that you can accomplish anything.

Heather-Anne spoke of taking risks and not being afraid to face new challenges from a place of experience. She did not start her professional career as a lawyer. She worked for several years before attending Osgoode Hall Law School, where she got her LL.M. in tax at night while continuing to work. She then went on to practice in tax litigation, start a consulting company, and eventually faced her biggest risk and stopped practicing law to focus on Phundex full-time. She said the day she decided to stop practicing law was tough, but she knew the skills she had learned as a lawyer would stay with her for life. This strategic way of thinking allowed her to branch out and explore other interests and take advantage of new opportunities as they arose. She transitioned from one job to another without trouble.  

Many may advise against a major life change like starting your own company after working for  3 decades as a lawyer. However, Heather-Anne has a unique perspective; she was simply motivated when “an opportunity presented itself that was really interesting!” Through her experience, she recognized that a lot of her work could be simplified and accomplished on a single platform – Phundex.

To protect users’ information, the Phundex platform allows an administrator to control user permissions from the same or different companies to collaborate on the same accounts and documents without compromising other private information. Developing Phundex was an iterative process and there were many steps and failures before reaching the final product. Heather-Anne believed this is an important part of the process and follows the motto of “fail early and fail often” about being an entrepreneur. For example, Phundex spent six months in development to ensure the platform was secure and encountered both failures and corrections to develop a final product having the functionality she envisioned. As a lawyer, Heather-Anne had the experience to understand what was required of her platform in terms of privacy laws. But she kept learning and still sought outside expertise with different parts of this process as needed. As an entrepreneur and lawyer, she stressed that you do not need to know and do everything yourself. It is important to seek help and utilize all resources available to you. For example, through Osgoode, entrepreneurs can use the to get legal IP advice. Additionally, for both lawyers and entrepreneurs, she stressed the importance of building a diverse network of people with different expertise and reaching out to them for advice. Legal work and lawyers tend to be insular, but experts across different areas add value to your network. From a strategic perspective, she encourages everyone to not simply network but to surround themselves with good people who give good advice.

In addition to her practical advice about being a lawyer and an entrepreneur, Heather-Anne also emphasized the importance of being a good person. With her companies and when looking for jobs, she suggests that you should determine what they offer in addition to money, notably in the context of fostering diverse and welcoming spaces. For example, after a co-worker informed her that they found the terms “whitelist”, “masters list”, and “blacklist” derogatory, Heather-Anne banned those terms from being used within her company. Additionally, during Ramadan, she changed her team’s eating habits to be conscious of others' fasting. Heather-Anne believes that these changes  are “little things, but really important to other people”. Heather-Anne provided some excellent life advice: build a network, ask about opportunities that intrigue you, empathize with others, and fail early and often. For anyone feeling unsure about their future, Heather-Anne’s story shows that you can take chances on opportunities you find interesting.

On behalf of the IPilogue Team, I am especially grateful to Heather-Anne Hubbell for her time. I would also like to thank 91��ɫ’s Provost, Lisa Phillips, and the Provost’s Office for introducing us to Heather-Anne and helping us arrange this interview.

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On March 23 the European Commission organized a conference devoted to institutions, regulators, professionals and scholars from all Europe  on .

The conference was also the occasion for the Commission to announce an .   The existing EU legislative framework on financial services for consumers is considerable and therefore the Commission does not foresee the adoption of fresh legislation. The innovations in the retail financial services determined by the burst of Fintech require instead to enforce and adapt the existing applicable rules to the new technological scenario. Online payments, robo-advisory, P2P lending and virtual coins are only some examples of such disruption which proposes new legal challenges at all levels.

The Action Plan focuses on two main issues:

1. cross-border provision of services across the EU single market, by enhancing the eIDAS regulation infrastructure (which enables consumers to be recognized via an electronic identification system) on one hand and, on the other, by introducing common creditworthiness assessment standards;
2. consumer protection and in particular pre-contractual disclosure requirements in light of the new technologic environment.

In the context of the Action plan, the Commission launched a public consultation on ‘Fintech: a more competitive and innovative European financial sector’ (is the consultation document) to collect the stakeholders’ views on the following policy objectives that according to the Commission constitute the main opportunities, and the relevant challenges, related to Fintech:

• fostering access to financial services for consumers and businesses;
• reducing operating costs and increase the efficiency of services;
• improving market competitiveness by removing or lowering entry barriers;
• finding an appropriate balance among data sharing, transparency, security and privacy needs.

Based on the and the work of the EU Fintech task force, the Commission will propose an European strategy for FinTech, to develop and improve the most promising sector in financial services area.

The UE Commission’s interest in Fintech as a new frontier of financial services is meaningful. Also, it should be stressed that the Commission decided to focus on the characteristic areas of the European action, such as creation of an integrated internal market and consumer protection.  To this purpose the consultation document is particularly interesting as it presents the main challenges raised by the innovations in the financial services.  From the use of AI and big data analytics for automated financial advice and execution, to the use of sensor data for risk evaluation in the Insurtech sector, to the Regtech impact on compliance costs, to the use of DLT in financial services, to the regulatory barriers for new market entrants, etc.

According to the Commission the EU policies on Fintech should be:

1. Technology neutral – to ensure that the same activity is subject to the same regulation;
2. Proportional;
3. Integrity-enhancing with a focus on market transparency to the benefit of consumers and businesses.

In the above depicted scenario, consumers’ protection appears to be particularly challenging. An example is the pre-contractual information allowing consumers to make well-informed choices. In this respect, the spread of online services determines a growing need of simplicity in the access of information.

This aspect, however, will certainly require adapting the existing rules.  An example of this issue is the robo-advisory, where the traditional information asymmetries are combined with significant technological information asymmetries. Do the consumer have to be informed, for instance, about the characteristics of the robo-advisor’s algorithm? How detailed should be consumer information, considering the great influence that the calculation power might have on investment choices?

A first answer to the above questions may be found in the and addressing the issue of disclosure. These guidelines, amended where necessary, might be a model for one of the action of the announced EU Fintech strategy.

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Similar to other traditional industries, a digital revolution for financial services is underway. Financial technology, or ‘‘FinTech,” is an accelerating technical sector gaining in popularity with both traditional financial institutions and new market entrants.  Competitors are forming constructive partnerships to collaborate, efficiently develop, and deploy new FinTech products and services. Patents for core technology provide a mechanism to exclude others from making, using or selling patented technology. A company may also permit use of patented technology by third parties or contribute to a patent pool using various licensing arrangements while still maintaining control of its intellectual property rights. However, recent case law and patent office guidelines make obtaining global patent protection for FinTech an increasingly complex matter.

FINTECH PRIMER

FinTech is transforming the financial sector by supplementing or replacing traditional services, business models and providers. FinTech may create brand new market opportunities or give a competitive edge in relation to traditional offerings. This may have broad ranging implications for diverse stakeholders, including major financial institutions, insurance companies, hedge funds, institutional investors, ratings agencies, audit and accounting firms, regulators, technology companies, consortiums, not-for-profits and start-ups. Indeed, large institutions may be making significant investments upgrading or replacing legacy technology systems with new FinTech products.

PAYMENTS

Digital wallet technology is currently already in public use and will likely be employed on a widespread scale in the future. Digital cards include credit cards, debit cards, public transportation cards and other value cards offered by different companies. Mobile technology companies and retailers are entering the payment space with smartphone payment tokens, networks and applications. Digital payment accounts like PayPal are also widely accepted on e-commerce platforms and by the public at large, with intramember payment exchanges often not involving traditional financial institutions. Shopify, for example, is an online and brick-and-mortar transaction platform provider based in Ottawa, and raised $131 million in its initial public offering. Another payment company, Adyen, is now valued at $2.3 billion that enables Web companies such as Facebook and Yelp to accept and process payments, and provides mobile-payment tools for clients such as Uber and Airbnb. Finally, Nanopay, a Toronto-based provider of a payment and loyalty mobile application that combines identity, loyalty and payment into a single-use transaction token for contactless payment, recently acquired the Mintchip digital payment platform from Royal Canadian Mint.[1]

BLOCK CHAIN

A block chain is a decentralized peer-to-peer network of nodes recording authenticated, encrypted transactions as a distributed public ledger, thereby providing a trust and verification system [2] by using programmed rules to govern the replication of the ledger across the computing nodes of the networks. Initially invented as a solution to the weaknesses of a trust-based model,[3] the increased use and development of block chain infrastructure is changing payment and secure transaction ledgering services by providing increased security, integrity and verifiability of transactions. Currently, public block chain technology may be used under open license with transparency to help third parties understand the technology offering and associated security levels to build interoperable, trusted solutions. Private and hybrid block chain networks are also being developed by companies individually and working together through consortiums.

While block chains are well known as the technology underlying the transaction database for digital currency,[4] block chains can also be utilized in other types of applications. These include verifying proof-of-existence, smart contracts that automatically execute when certain conditions are met, verifying origin and delivery of products, and peer-to-peer exchanges. For example, Slock develops technology that combines block chain and the Internet for peers to rent, share or sell ‘‘things” such as parking spots and apartments.

LENDING

New lending, investing, and fundraising models are emerging. Indeed, crowdfunding platforms like Kickstarter enable an organization or individual to reach out directly to a community to raise capital for a business, product or creative endeavour. SeedsUp, another example, is a Canadian equity crowdfunding platform for limited private placement offerings for early stage businesses.

FinTech also generates financial inclusion and opens new markets through the provision of microfinance solutions, which offers small amounts of financing to new customers that may not have been qualified for traditional funding sources.[5] A prime example of this is M-Pesa, a mobile-phone microfinancing service that launched in 2007 by Vodafone for the largest mobile network operators in Kenya and Tanzania — Safaricom and Vodacom.

New personal investment solutions are also emerging. Toronto start-up Borrowell offers online lending technology to provide low-interest personal and business loans, and the low-fee automatic rebalancing system by another fellow Toronto start-up, Wealthsimple, recently raised $10 million in Series A funding
from Power Financial Corporation.[6]

REGULATORY COMPLIANCE AND AUDIT

Establishing fairness and trustworthiness of financial transactions becomes increasingly complex as different types of financial transactions emerge. Organizations expend significant resources to adhere with evolving regulatory requirements.[7]  The rise of FinTech provides innovative tools that may help alleviate the burdens of such compliance, validation and verification.

Companies can leverage technology such as distributed ledgers, block chains, encryption, automation, and others to perform tasks which otherwise would have been impractical or impossible with traditional methods. While these technologies are starting to gain in capability and acceptance, it is a challenge to understand how evolving jurisprudence and regulatory activities apply to FinTech innovation. Legal requirements may develop out of step with technology, and compliance may be uncertain where regulation is drafted around outdated or obsolete technologies.

The full article is available in the latest issue of the , volume 28(3), pp. 303-314.

Maya Medeiros is a lawyer, patent agent, and trade-mark agent at Norton Rose Fulbright LLP Canada (Toronto). Maya Medeiros’ practice focuses on the creation and management of intellectual property assets in Canada, the United States and around the world.

Brian Chau is an Associate at Norton Rose Fulbright, focusing on intellectual property, primarily patent prosecution, strategy, and portfolio management.

[1] There are several other examples: Adyen also provides point of sale technology for retailers, and Braintree (acquired by PayPal) provides an online and mobile payment application that aggregates different payment options and currencies, and offers an API for developers.

[2] The Standing Senate Committee on Banking, Trade and Commerce, Digital Currency <http://www.parl.gc.ca/Content/SEN/Committee/412/banc/rms/
12jun15/home-e.htm>.

[3] S. Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System (2008).

[4]  A digital currency secured with encryption is a cryptocurrency. A prime example is Bitcoin, which is the most widely used cryptocurrency-issuing system built on a block chain framework. Cryptography greatly decreases the vulnerability of the block chain to unauthorized or malicious changes.

[5] Many people worldwide, for example, do not have access to traditional banks.

[6] Financial Post, online: <http://business.financialpost.com/entrepreneur/fpstartups/wealthsimple-aims-to-turn-financial-services-industry-on-its-headwith-
new-low-coast-approach-to-investing>.

[7] Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L. 111-203, H.R. 4173), Sarbanes-Oxley Act of 2002 (Pub. L. 107-204, 116 Stat. 745).

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