Data Analytics – Page 3 – FinTech and Blockchain Law Watch

FCA Feedback Statement on RegTech

Jul 25 2016

The UK Financial Conduct Authority defines RegTech as “a sub-set of FinTech that focuses on technologies that may facilitate the delivery of regulatory requirements more efficiently and effectively than existing capabilities”. In November 2015, the FCA asked for views on how it should progress and prioritise its RegTech work. It received more than 350 responses from established financial services firms, technology suppliers and FinTech start-ups and the FCA also convened roundtable meetings. The feedback statement was released on 20 July.

The main themes that emerged concerned technology that:

allows more efficient methods of sharing information
drives efficiencies by closing the gap between intention and interpretation
simplifies data, allows better decision making and the creation of adaptive automation
allows regulation and compliance processes to be looked at differently

Bank of England Launches FinTech Accelerator

Jul 21 2016

By Jonathan Lawrence

On 17 June 2016 the Governor of the Bank of England announced that the Bank is launching a FinTech Accelerator to work in partnership with FinTech firms to harness innovations for its own requirements as a central bank. In return, it will offer firms the chance to demonstrate their solutions for issues facing policymakers. The Accelerator will deploy innovative technologies on issues that matter to the Bank’s mission and operations. The Accelerator will appoint FinTech firms to run short Proof of Concept (POC) projects in a number of priority areas.

Some examples of current projects:

BitSight: Uses publicly available bulk data to assess firms’ cyber resilience, including looking for evidence of malware on a firm’s systems, signs of known software vulnerabilities, or weak encryption, which can be used to form a view on the information security of a firm over time. For the POC, the Bank’s own resilience will be evaluated.
Privitar: Provides tools to anonymise and desensitise data. The Bank will first test this software on a manufactured dataset to examine the analytical value of the desensitised data. It will then look to assess the capability of the tool on data held internally to establish if this will allow the Bank to provide wider access to data for researchers within the Bank.
PwC: Understanding the technology of blockchain and distributed ledger, working with PwC. The team built a multi-node scalable distributed ledger environment, which contained several smart contracts to illustrate the applications of the technology. This has enabled the Bank to better understand the resiliency benefits and practical limitations of the technology.

The Bank is interested in new ways of structuring and analysing large data sets and data gained in regulatory reporting. Other areas of interest are around machine learning, particularly in relation to anomaly detection and pattern recognition. The Bank would welcome expressions of interest or proposals for the Bank to participate in, or act as a silent observer or partner with an existing pilot distributed ledger network. Pilots should test how the technology functions in ‘real world’ scenarios.

Blockchain catches a righteous break and avoids becoming unchained

Jun 15 2016

By Tyler Kirk (ed. Cameron Abbott and Giles Whittaker)

Blockchain is alive and well – one of the greatest threats to blockchain’s success appears to have been seen off with the end of efforts to legislate “exceptional access” to all encryption in the United States. Tyler Kirk explains this in more detail in his article, “Blockchain Catches a Righteous Break and Avoids Becoming Unchained.”

You can read his full article on K&L Gates Hub here.

EU Fintech developments

Apr 19 2016

By Jacob Ghanty

In the linked article, Jacob Ghanty discusses some UK and EU regulatory developments affecting the FinTech sector. This article was first published on Thomson Reuters Regulatory Intelligence on 1 April 2016.

EU Oversight on payments

Apr 18 2016

By Jacob Ghanty

The second EU Payment Services Directive is set to change the banking landscape in Europe. In the linked article, Jacob Ghanty describes some of the changes that PSD2 will bring about. This article was first published in inCOMPLIANCE, member publication of the International Compliance Association www.int-comp.org.

FCA Encouragement for Roboadvice

Apr 18 2016

By Jacob Ghanty

The UK’s Financial Conduct Authority published its final report on the Financial Advice Market Review on 14 March, which stated that there is a “clear need for intervention by the regulator and the government” to aid the provision of new and more cost-effective ways of delivering financial advice and guidance. The FAMR sets out recommendations to address concerns relating to the affordability and accessibility of financial advice, which includes recommendations to help firms develop automated “robo-advice” models. In the linked article, first published in E-Finance & Payments Law & Policy, Jacob Ghanty expresses his views on robo-advice developments.

PREPAID ACCESS GARNERS REGULATORY ATTENTION

Mar 25 2016

By Sean Mahoney

Bank regulators are paying more attention to the role of banks in the prepaid card industry as evidenced by their new guidance on the applicability of know your customer requirements and proposed regulations on record-keeping with respect to master deposit accounts for prepaid cards and other products utilizing “pass-through” deposit insurance.

To learn more about the Interagency Guidance to Issuing Banks on Applying Customer Identification Program Requirements to Holders of Prepaid Cards, which provides a framework to determine whether or not a bank must apply its customer information program to holders of prepaid products for which the bank is the issuer, please visit our Consumer Financial Services Watch Blog at Prepaid Access Garners Regulatory Attention.

Australian Government gets more FinTech friendly

Mar 23 2016

By Jim Bulling and Michelle Chasser

The Australian Government has released its responses to the industry’s priorities for fintech development which it has called “Backing Australian FinTech”. As well as affirming existing commitments, such as introducing a crowd sourced equity funding (CSEF) framework and an incubator support programme, the paper includes a number of initiatives that the Government proposes to undertake. New developments include:

introduction of an entrepreneur visa in November 2016 for foreign entrepreneurs with innovative ideas and financial backing from a third party;
possibly increasing the asset and turnover eligibility threshold for CSEF to A$25 million and reducing cooling off periods for investors to 48 hours;
consultation on a potential framework for crowd sourced debt funding;
increasing the maximum fund size of Early Stage Venture Capital Limited Partnerships (ESVCLPs) to A$200 million and providing a 10% tax offset on capital invested;
introduction of a mechanism to allow Innovation Australia to issue binding advice in relation to the definition of ineligible activities for ESVCLPs;
Productivity Commission inquiry into options for improving access to comprehensive credit reporting (CCR) data;
a regulatory guide for robo-advice providers;
possibly allowing licensed insurance brokers to sell insurance policies from unauthorised foreign insurers where they offer consumers a better price and appropriate consumer protection;
possibly applying anti-money laundering laws to digital currencies;
a commitment to address the ‘double taxation’ of using digital currency to purchase goods already subject to the Goods and Services Tax (GST);
establishment of a new Cyber Security Growth Centre; and
a ‘regulatory sandbox’ in Australia to allow FinTech start-ups to test their products and business models.

Backing Australian FinTech indicates that 2016 will be a busy year for fintech regulation in Australia.

Read Backing Australian FinTech here.

We know about FinTech, but what’s RegTech?

Mar 11 2016

By Jacob Ghanty

The UK Government announced in last year’s budget its commitment to the early adoption of new technologies to support FinTech companies to meet the greater reporting requirements and higher regulatory standards imposed by the UK regulators, notably the Financial Conduct Authority (“FCA”). The name given to these technologies is “RegTech”. RegTech is part of a wider project launched by the Government to enable the UK to capitalise on the development of new financial business models and disruptive innovation and become the world’s leading FinTech hub. In November 2015, the FCA published a call for input on how it should progress its RegTech work.

The FCA’s RegTech focus sits alongside its efforts to increase innovation in financial services more broadly under its “Project Innovate” initiative and its development of a “Regulatory Sandbox” for businesses to test innovative products, services, business models and delivery mechanisms without immediately incurring all the normal regulatory consequences of pilot activities. In its call for input on RegTech, the FCA identified some early emerging themes that it considers worth exploring further with the FinTech community. Of particular interest is the proposal that real-time and ‘system embedded’ compliance and risk evaluation tools be developed for financial institutions. Other areas highlighted by the FCA as relevant to this space are: technology accelerators, big data techniques, visualisation and robo tools, software integration tools and cloud technologies.

Firms in the UK FinTech space are advised to follow RegTech developments as they are likely to have a significant impact on the interaction between businesses and regulators.

Fintech investment in the UK – a $901m business

Mar 04 2016

By Cameron Abbott and May Giuliani

Investment in fintech systems is becoming increasingly popular globally, but no more so than it is in the UK. Deal volumes in the UK have been growing at 74% per year since 2008 (compared with 27% globally). This digital disruption marks the most major period of change for financial services companies in decades.

According to recent data, the UK alone accounted for $901 million of the $12.5 billion invested in fintech worldwide last year. Five other European nations combined for $1.1 billion. This huge investment in the UK included two of the top 20 fintech deals in the world – Challenger Bank Atom raised $125 million, and peer-to-peer lending platform Funding Circle raised $150 million. Over 60% of fintech venture capital investment investments in 2015 were made into alternative finance and payment services such as Funding Circle, Currency Cloud and Transferwise.

See here for The 2015 Fintech Investment Landscape, February 2016.

Category:Data Analytics