AUSTRIA Law and Practice

Contributed by: Markus Fellner, Florian Kranebitter and Florian Henöckl, Fellner Wratzfeld & Partners

software is offered to individual customers, warranty and compensation claims can be asserted if the software is defective.

All these aspects, as well as regulatory framework conditions, should be considered at an early stage in order to avoid later problems with ordinary business operations.

2.11 Review of Industry Participants by Parties Other than Regulators

The expertise of auditing firms is an important factor in the establishment of a fintech company. Auditing firms monitor the companies economically under the given legal framework conditions. From a legal point of view, the entrepreneur has the obligation to run the company with the care of a prudent businessperson. In order to comply with this standard, the entrepreneur must make a sufficiently detailed plan with regard to their entrepreneurial activity. This plan must consist of short, medium and long-term objectives. The liquidity of the company, the planned income and the asset situation of the company must be presented. The presentation should not be limited to a mere representation of numbers, but should provide a comprehensive description from which these numbers can be derived. The auditing firms support the preparation of the business plan with an analysis of the strengths and weaknesses of the business case including an assessment of the market. As a result, the company is continuously accompanied and, if necessary, supported in the individual aspects mentioned.

Further, the market is increasingly showing that companies specialising in fintech firms and their foundation and management are also establishing themselves. Here too, the constant growth of the fintech market has led to the emergence of advice that is increasingly specialised in subareas.

2.12 Conjunction of Unregulated and Regulated Products and Services

It can be seen that primarily regulated entities are expanding their business area with the involvement of fintechs. In addition, new fintechs are coming onto the market that have a focus on banking. A third category combines different business models, regulated as well as unregulated. In this way, banking can be linked to a wide variety of other business models. Various business cases are combined, whereby in addition to well-known business models, emerging areas such as e-sports are also included. However, in the case of start-ups, it is clear that the regulatory requirements are one of the biggest hurdles.

2.13 Impact of AML Rules

Fintech firms have to comply with AML requirements if they provide activities that require a licence and are therefore subject to the FMA’s supervision. This applies to credit and insurance institutions, securities companies, alternative investment funds, payment service providers and e-money institutes. In addition, the AML requirements are also applicable for service providers of certain business models based on virtual currency.

3. Robo-advisers

3.1 Requirement for Different Business Models

Different asset classes initially require different business models, but the advice itself increases in quality with the most comprehensive data processing possible.