Digital markets, funding and payment servicesi Crowdfunding
Italy was one of the first countries in Europe to introduce specific legislation governing equity crowdfunding, which is laid down in the Italian Financial Act and Consob Regulation No. 18592 of 26 June 2013. Under this legislation, the management of equity crowdfunding portals is limited to:
- investment firms and banks authorised to provide investment services, which are considered 'de facto managers' and require no specific licence; and
- portal managers other than those under point (a), which need to be duly authorised and enrolled on a special register managed by Consob.
Equity crowdfunding portals may only be used to offer to the public financial instruments that are issued by small and medium enterprises (SMEs), collective investment schemes and social enterprises.
In this respect, Law No. 145/2018 (the 2018 Budget Law) recently introduced the possibility to also offer debt instruments, provided that this is carried out through a separate area of the portals and these instruments are addressed only to professional investors and other categories of investors identified by Consob. To date, the relevant implementing regulation of the 2018 Budget Law is yet to be published.ii Debt financing and lending platforms
One main area in which Italian fintech companies are growing is debt financing, which includes lending activities and secondary market trading using online platforms.
More specifically, peer-to-peer lending and social lending have experienced rapid growth in recent years and represent one of the more mature fintech sub-sectors, even though no specific regulation governs them so far. At the end of 2016, the BoI clarified that peer-to-peer lending and social lending may fall under the definition of the following activities, which are reserved to duly authorised entities: lending, collection of savings and payment services.
Additionally, the BoI defines lending-based crowdfunding as an activity carried out through an online platform that allows several parties to collect repayable funds and clarifies, among other things, that the following activities do not constitute 'collection of savings':
- managers of the online platforms: if they receive funds to be held in payment accounts that can be used only to provide payment services by entities authorised to carry out payment services or to issue electronic money; and
- individual lenders (following personalised negotiations) that are supported by the platform manager only to enable the execution of the agreement; or
- entities subject to prudential supervision.
Invoice lending and invoice trading are other businesses that an increasing number of online platforms are breaking into. Fintech firms involved in these activities adopt business models that normally require prior authorisation to operate as banks or financial intermediaries. However, limited cases exist of non-regulated fintech firms managing online platforms without entering into any lending agreements with the final customers.
With regard to trading loans on a secondary market, purchasing receivables qualifies as a lending activity that may be performed only by banks, financial intermediaries enrolled on the BoI's register under Article 106 of the Italian Banking Act, and alternative investment funds that invest in receivables. Furthermore, as to securitisations, special purpose vehicles may purchase receivables under a simplified procedure that reduces transfer costs. This also ensures that all charges and guarantees retain their validity and priority, without the need for any additional formality, provided that all notification duties are complied with.iii Payment services
Innovative payment services represent one of the most prominent and widespread fintech developments in Italy. The provision of payment services in Italy is subject to the BoI's prior authorisation under Article 114 novies of the Italian Banking Act.
Following PSD II's implementation in Italy with Legislative Decree No. 218/2017, the Italian Banking Act now includes two new payment services: payment initiation and account information services. Italian implementing rules introduced a specific regulation governing third-party providers (TPPs), which are typically payment initiation service providers (PISPs) and account information service providers (AISPs). PISPs and AISPs are fintech companies that must be duly authorised and comply with the regulatory framework on payment services; and must offer payment initiation and account information services by exploiting the new business opportunities provided by technological innovation. These new services require access to data and accounts held by credit institutions or other payment services providers. Therefore, as the BoI recently pointed out, each payment service provider with payment accounts accessible online (mainly banks) is now required to provide access – through at least one access interface – to their clients' data and accounts to other TPPs to enable them to carry out their business effectively.iv Collective investment schemes
Collective investment schemes are mainly regulated in Italy under the Italian Financial Act and its implementing regulations, which do not envisage any ad hoc provisions applicable to fintech entities falling under the definition of managers of collective investment schemes. Therefore, these fintech entities must comply with the general legal framework on asset management activities under the Italian Financial Act.