FinTech Industry & Regulation – Page 30 – FinTech and Blockchain Law Watch

More regulatory sandboxes

Oct 26 2016

Bank Negara Malaysia (BNM) has released details of the framework for Malaysia’s regulatory sandbox. The finalisation of the framework follows a consultation which began in July.

Under the sandbox framework BNM may consider granting regulatory exemptions to applicants for the purpose of testing an innovative product, service or solution for a period of up to 12 months.

Applicants wishing to apply for the sandbox should have innovations which are ready for testing and have the potential to:

improve the accessibility, efficiency, security and quality of financial services;
enhance the efficiency and effectiveness of Malaysian financial institutions’ management of risks; or
address gaps in or open up new opportunities for financing or investments in the Malaysian economy.

Will Blockchain in Healthcare Inform Fintech?

Oct 06 2016

By Susan P. Altman

Blockchain is now a focus of the financial industry, but the technology could become widely used in the healthcare industry too, according to an article in Becker’s Health IT and CIO Review. Bruce Broussard, CEO and President of Humana, believes blockchain will become the next big healthcare technology innovation, particularly with respect to payments and payer contracts. Because the parties to those kinds of contracts (healthcare provider on one side and healthcare payer (such as a health insurer) on the other) may now have a safe and reliable way to share information without going through cumbersome central databases, information, as well as contractual processes, would be automatically verified and authorized. The end benefits may include lower administration costs, faster claims processing and less fraud. These are similar to the benefits that may arise from the use of blockchain in the financial industry.

Another healthcare application of blockchain may realize the holy grail of sharing health information across many healthcare systems by eliminating the middleman holding the central database and providing formerly disconnected parties with a safe information network. As with the financial industry, eliminating the middleman will have tremendous ripple effects throughout the healthcare industry. If the healthcare industry successfully implements blockchain, it stands to reason that innovations in healthcare technology will loop back to further push innovations in fintech.

The Sandbox is getting crowded

Sep 29 2016

By Jonathan Lawrence

In a recent speech delivered at the British Bankers’ Association FinTech Banking Conference, Christopher Woolard, the Director of Strategy and Competition at the UK Financial Conduct Authority spoke about the high level of interest in the FCA’s Regulatory Sandbox for FinTech ventures. The Sandbox aims to create a ‘safe space’ in which FinTech businesses can test innovative products, services, business models and delivery mechanisms in a live environment without immediately incurring all the normal regulatory consequences of engaging in the activity.

Of 69 applications to join the Sandbox, the FCA has accepted 24 to develop towards testing. The FCA’s team has been expanded to meet demand. 40 of the unsuccessful first time applicants will be offered assistance via Project Innovate or other FCA staff, in some cases to prepare for the next cohort of the Sandbox.

FinTech hub ecosystems

Sep 28 2016

By Jonathan Lawrence

A recent EY study looks at how the UK FinTech ecosystem compares to that of California, New York, Germany, Singapore, Hong Kong and Australia based on their status as FinTech hubs. The report considers four attributes in each region:

Talent (availability and pipeline)
Capital (seed, growth and listed)
Policy (regulatory regimes, government programmes and taxation policy)
Demand (consumer, corporate and financial institution)

The analysis was commissioned by the UK Government to inform policy and support the sector. It also includes case studies on Israel and China.

The study gives extremely interesting comparative data across the regions and provides recommendations for the UK Government based on the experience in other countries.

Australia’s first listed FinTech investment company

Sep 14 2016

By Russell Lyons, David Bath and Marie Zuo

On or around 19 October 2016, H2Ocean is proposing to list on the Australian Securities Exchange as a listed investment company (LIC). Following a successful initial public offering (IPO), H2 Ocean will become Australia’s first LIC focused on investing in early and growth stage FinTech companies. H2Ocean proposes to invest in between 15 and 50 FinTech startups which will have typically graduated from an incubator or accelator program or will be backed by a reputable venture capital firm. These startups will be based in both Australia and overseas.

The H2Ocean IPO will allow potential investors to be exposed to FinTech investments and venture capital as an alternative asset class, which might not otherwise be directly accessible to the public. This unique offering in the Australian market comes at a time where global FinTech financing is trending towards venture capital backed FinTech companies and is expected to reach a record high in 2016.

So far, H2Ocean has gained support from Mike Cannon-Brookes, Atlassian co-founder, who will be subscribing for shares in the IPO. Mike Cannon-Brookes backed Australian payments company Tyro in its $100 million capital raising at the end of 2015.

Treasurer Scott Morrison also attended the H2Ocean launch last week. With high profile supporters and as Australia’s first listed FinTech investment company, H2Ocean is another encouraging sign for Australia’s FinTech future.

Regtech Earns a Name

Sep 12 2016

By Susan Altman

Technology solutions for bank regulatory requirements have been around for decades, but their soaring popularity has led to them earning their own nickname within the fintech world: they’re now “regtech” solutions, according to a new report issued by Bain & Co. in the American Banker. Regtech products are designed to benefit banks’ efforts to comply with growing regulatory burdens and improve internal governance controls. Bain estimates that governance, risk and compliance costs account for 15% to 20% of the total “run the bank” cost base of most major banks. It’s no small wonder that banks are struggling to devise a robust and efficient approach to compliance and are outsourcing the implementation and hosting of advanced compliance tools with nimble regtech-focused outside vendors. Bain has identified more than 80 emerging regtechs that extract and structure data, integrate data from banks’ proprietary systems, third-party data providers and public sources, and crunch the data in automated, scalable ways. Artificial intelligence, or machine learning, continuously improves the quality, precision and reliability of the insights that emerge.

Bain predicts that banks’ relationships with regtechs will be significantly shaped by regulators, in the form of governance, risk and compliance standards and approval of proposed solutions. As new requirements go into effect, banks will need to continuously assess the level of functionality, complexity and efficiency of current technology, systems and data. And did we mention, this all has to be done in a very secure environment?

HKMA’s support to fintech development in Hong Kong

Sep 09 2016

By Michael P. W. Wong

The Hong Kong Monetary Authority (HKMA), announced on 6 September 2016, the launch of Fintech Innovation Hub (FIH) and the Fintech Supervisory Sandbox (FSS).

The FIH will be jointly established by the HKMA and the Hong Kong Applied Science and Technology Research Institute for the purposes of supporting and promoting the research and development of fintech by the local financial services industry. The FIH will be equipped with all the requisite IT systems and supported by technical teams, enabling industry players to pioneer or build upon new fintech solutions, such as enhanced biometric authentication and integrated mobile payment services. In addition, operation of the FIH is expected to facilitate dialogue between the HKMA and the relevant industry players on emerging technologies by serving as a common training venue. For instance, the HKMA may wish to explore “regtech” solutions to improve its regulatory efficiency in the FIH.

Bank of England Governor remarks on FinTech

Aug 22 2016

By Jonathan Lawrence

In remarks that were rather overlooked in the run-up to the Brexit vote in June, Mark Carney, the Governor of the Bank of England, talked on several FinTech topics. He mentioned five ways the Bank is enabling the FinTech transformation:

Widening access to central bank money to non-bank Payments Service Providers
Being open to providing access to central bank money for new forms of wholesale securities settlement
Exploring the use of Distributed Ledger (DL) technology in the Bank’s core activities, including the operation of Real-time gross settlement systems (RTGS)
Partnering with FinTech companies on projects of direct relevance to the Bank’s mission
Calibrating its regulatory approach to FinTech developments

UK grants FinTech a banking licence – another tier of regulation?

Aug 21 2016

By Jim Bulling and Michelle Chasser

Has the age of the digital bank arrived in the UK? Following the authorisation of Atom Bank last year, 3 additional digital banks have been issued with banking licences by the UK Prudential Regulation Authority (PRA) since May 2016.

These new licensees are the result of the PRA’s focus in recent years on lowering the barriers to entry for new banks and promote competition in the UK. As part of this focus, in 2013, PRA lowered the initial minimum capital requirements for Small Specialist Bank applicants to €1 million or £1 million (whichever is higher), plus a capital planning buffer (CPB). PRA and the Financial Conduct Authority (FCA) also launched a New Bank Start-up Unit in January 2016 to assist applicants with the authorisation process. Read More

A road map for UK FinTech standards

Aug 16 2016

By Jonathan Lawrence

New research has revealed the important role that standards could play in helping to strengthen and speed-up FinTech’s development in the United Kingdom. The research was published by the British Standards Institution (BSI), the national standards body of the UK. BSI produces technical standards on a wide range of products and services, and also supplies certification and standards-related services to businesses. The research was prepared by Finextra and gathered insights from a cross-section of FinTech companies, banks, trade associations, technology vendors.

BSI commissioned the research to investigate where standards could best support UK FinTech and help provide leadership in global standardisation following interest from the industry in 2015. This latest research shows there could be a further opportunity to complement regulation with standards, to promote the UK’s position in FinTech. The analysis found a number of priority areas where standards could help promote the streamlining of the procurement and onboarding processes between banks and FinTechs; integrating FinTechs into the standards and language of the financial services industry and providing consumer assurance and the gaining of trust.

To read the full report, please click here.

Category:FinTech Industry & Regulation