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FinTechs belonging to this category offer advisory and broking services for investments usually via an internet platform.
Robo advisory services usually offer an investment proposition following a series of questions concerning the personal financial background and the risk-bearing capacity of the user. Sometimes the respective platform also enables the user to directly execute the proposed investment.
Auto-trading concerns all services which automatically trade on behalf of the customer according to his or her specifications.
Apart from that some FinTechs collect and offer merely or as an ancillary service market information or operate comparison portals to increase the transparency of the capital markets and to help the investor with his decision-making.
There are also FinTech-advertising-services which advertise various financial services or products.
Introduction
Attitude of the country towards modern financial advisory and broking services
Although the robo advisory market is beginning to develop, the first concerns raised by many institutional players Regulators are focusing specifically on consumer’s awareness regarding the type of offered service and data protection issues.
A Regulatory sandbox on FinTech has been set up by the Italian Regulators in 2022 also to incentivize the use of AI and RPA in the advisory services, and let innovative projects thrive under a protected framework. Based on the Bank of Italy Annual Report on 2024, there is room for a suggested, broader use of the sandbox.
Legal affairs
Obligations and requirements to provide financial advisory and broking services, or ancillary services described above
Even if a specific statutory or regulatory framework governing FinTech services has not been issued yet, the described services may fall under the definition of investment services/activities provided by Section 1, paragraph 5, of the TUF when they are related to such services and activities and are provided to the public and on a professional basis. In particular, consulting and robo-advisory services may fall under the category of investment advice. Also auto-trading could be considered as investment service/activity depending upon the specific characteristics of the service offered.
Only authorized entities can provide investment services/activities to the public, that are banks, investment companies and other intermediaries that may be authorized to provide specific investment services/activities. Requirements regarding financial reserves apply depending on the regulated subject providing the services and on the type of provided service. Ancillary services and connected/instrumental activities may be generally provided without the need of ad hoc authorization by authorized entities.
Additional comments regarding the legal situation for financial advisory and broking services, or adjacent services or what FinTech’s must be aware of in this business area
Based on the last Bank of Italy’s Report on FinTech-related investments, the main banking group are currently investing significant budget on robo-advisory, therefore there may be greater room for innovation in the forthcoming years.