FinTech Industry & Regulation – Page 32 – FinTech and Blockchain Law Watch

Gamification and financial services

Jun 07 2016

How would you use gamification to enhance the mobile and online experience for banking customers? That is the question Barclays Bank is asking developers during its Launchpad Business Challenge. Challenge applicants will have access to Barclays’ sandbox banking data and APIs to pitch their ideas. The Challenge will run for 3 weeks in June with successful applicants’ products being released on Barclays’ Launchpad platform for customers to explore and test.

Gamification involves applying game design elements and principles in non-game contexts and is used to improve user engagement and learning. A simple example of gamification is using a points based quiz to improve financial literacy.

This is not the first time that Barclays has experimented with gamification. In 2010 it released an interactive virtual city game in which players’ characters experienced the consequences of good and bad money management decisions.

Gamification is also a novel way to present important information to consumers in a way that is more approachable than traditional methods. In 2015 the Australian Securities and Investments Commission (ASIC) published a relief instrument which allows regulated disclosure documents such as Product Disclosure Documents and Financial Services Guides be disclosed in innovative ways. The accompanying good practice guidance issued by ASIC in Regulatory Guide 221 stated that disclosure documents can now incorporate a range of digital features including gamification.

Regulatory Guide 221 can be found here.

Brexit: the effect on UK FinTech

Jun 07 2016

By Jonathan Lawrence

On 23 June 2016, the United Kingdom will hold a referendum about whether to remain in or leave the European Union. A British exit from the EU has been labelled a “Brexit”.

A recent Financial News poll has showed that the UK FinTech sector is substantially in favour of staying. Financial News surveyed 118 FinTech professionals to gauge their opinion.

More than two-thirds said Brexit would be detrimental to UK FinTech. However, nearly 18% believe it is still unclear what the long-term impact would be. The remaining 13% think UK FinTech would benefit from a decision to leave the European Union.

Often tech talent is sourced from countries such as Bulgaria, Estonia, Hungary, Romania and Slovenia. The ability to access talent was a major concern of some business people interviewed. The other key potential issue is regulation. There’s a circular debate over whether there would be lighter regulation after the UK left the EU, or whether it would be forced to stay in line with the rest of Europe as a price for continued market access. One theory is that the European market – already smaller than the US – would, in effect, be divided in two. US FinTech firms already have the advantage of addressing a bigger market – partitioning Europe would make this advantage greater still.

More than 84% of those who said Brexit would harm UK FinTech said it would make London less attractive for foreign FinTech companies as a location for their European HQ. However, the largest share believes London would maintain its dominance as a FinTech hub. Asked which European cities would most threaten London, 28% answered “none”, closely followed by Berlin, 25%. Frankfurt came third with 15%.

On the other hand, some 13% said the sector would be better off and 18% were undecided. Of those who believe UK FinTech would benefit, 63% thought it would free up resources that could be reinvested in innovation. Some 58% said Brexit would make it easier for FinTech companies to do business with clients in non-EU countries.

New “FinTech Bridge” between UK and Singaporean FinTech companies and investors

May 17 2016

By Jonathan Lawrence

The UK Government has announced a new “FinTech Bridge” to help UK FinTech firms and investors access the Asian market and expand to Singapore, as well as attracting Singaporean FinTech companies and investors to the UK.

The launch on 11 May 2016 included the signing of a regulatory cooperation agreement between the Financial Conduct Authority (“FCA”) and the Monetary Authority of Singapore (“MAS”). The agreement will enable the regulators to refer FinTech firms to their counterparts across the globe. It also sets out how the regulators plan to share and use information on financial services innovation in their respective markets.

ASIC update on fintech regulatory sandbox proposal

May 09 2016

By Jim Bulling and Jack Fraser

ASIC has put out a media release on the proposed regulatory sandbox licensing exemption and will release a public consultation paper on the proposal in June of this year. The purpose of the sandbox is to foster innovation in the FinTech industry by allowing eligible businesses to test their products in the market without initially being subject to the usual regulatory mechanisms and requirements.

ASIC Commissioner John Price said that this “consultation paper will seek feedback on additional steps that ASIC may take to facilitate fintech innovation while maintaining protections to ensure investor and consumer trust and confidence”.

Latest UK Government announcements on FinTech

May 04 2016

By Jonathan Lawrence

On 11 April 2016, the UK Government Economic Secretary, Harriett Baldwin, spoke about FinTech at Innovate Finance’s Global Summit. She talked about the UK as the global capital for FinTech and how the UK FinTech sector generated £6.6 billion (US$9.5 billion) revenue in 2015 with a workforce of over 60,000 employees. She made several announcements about UK FinTech initiatives:

The creation of an industry-led FinTech panel, working with key representatives of the FinTech community. The panel will oversee the overarching strategy for FinTech in the UK and ensure the delivery of key initiatives. A particular goal is the implementation of an open banking standard – to allow innovators to use bank data to provide a range of value-added services to consumers.
The Tech Nation Visa Scheme was enhanced in October 2015 to include new qualifying criteria for digital experts. This will allow for a wider range of FinTech specialists to obtain a visa to work in the UK.
The building of an information hub that makes it easier for FinTechs to navigate through the range of service providers including in relation to legal and accountancy services.
The UK Treasury will work with UK Trade and Investment (“UKTI”) to establish “FinTech bridges” with priority export markets. UKTI is a Government department working with businesses based in the UK to assist their success in international markets, and with overseas investors looking to the UK as an investment destination. These “bridges” will help UK FinTech firms expand internationally, as well as attracting international FinTech companies and investors to the UK.

For the text of the full speech, please click here.

UK Government opens consultation on draft innovation plan for financial services

Apr 29 2016

By Jonathan Lawrence

According to the UK Treasury’s recently released draft innovation plan for financial services, the Financial Conduct Authority (“FCA”) “intends to broaden engagement with large incumbent institutions”. “To facilitate increased dialogue the FCA plans to proactively engage with large incumbents to ensure their potential for consumer-friendly innovation is not being held back by regulatory considerations,” the Treasury said. “In particular, it will seek out opportunities to pilot research on new initiatives.” The regulator is recognising that innovation does not just happen within the start-up environment and that it is within its power to support a broader appetite among the traditional players in the market to use the latest technology to innovate, whether on their own or in collaboration with others.

In March 2016 the FCA and Australia’s Securities and Investments Commission (“ASIC”) signed a deal to make it easier for financial technology firms based in each country to win authorisations to operate in the other country. The Treasury said the FCA can help “put UK-based innovators in touch with the right regulators when they look to start doing business in other regulatory jurisdictions” and is “ready to help non-UK innovators interested in entering the UK market”. The FCA wants to put more “co-operation agreements” in place “with key regulators”, the Treasury said.

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.

FinTechs get ready to play in the sandbox

Apr 17 2016

By Michelle Chasser and Daniel Knight

In a recent speech at the Innovate Finance Global Summit, Christopher Woolard of the UK Financial Conduct Agency (FCA) provided details about the UK regulatory sandbox due to launch 9 May 2016. The sandbox will allow two FinTech cohorts a year to test their ideas without incurring the significant regulatory set up costs usually associated with going to market.

Participants in the sandbox will be given restricted authorisations to provide financial services to allow them to market test their ideas. The FCA will also develop a streamlined application process. Full authorisation will need to be sought to operate outside the sandbox.

Australia and Singapore discussing cooperation agreement

Apr 15 2016

By Jim Bulling and Michelle Chasser

The Australian Securities and Investments Commission (ASIC) and the Monetary Authority of Singapore (MAS) are in discussions to enter into a cooperation agreement to ensure Australian and Singaporean FinTech businesses will not be hindered by regulation when trying to enter the other country’s market.

The agreement is expected to be similar to that entered into between ASIC and the UK Financial Conduct Authority (FCA) in March. Under the ASIC-FCA agreement the two regulators will share information and implement a referral process for FinTech businesses interested in entering the UK or Australian market.

These agreements reflect the increasingly collaborative approach to FinTech regulation internationally.

Further information about the ASIC-FCA agreement can be found in our earlier post here.

What’s next in UK FinTech?

Apr 01 2016

By Aritha Wickramasinghe

The emergence of blockchain technology and the size of the FinTech industry were the major points of discussion at a recently concluded CBI Insights and KPMG webinar on the future of FinTech.

Blockchain is a data structure that creates a digital ledger of transactions. Using cryptography, blockchain allows participants to securely manipulate the ledger without any central authority. Once the information is entered, it is almost impossible to erase – creating an accurate record of the transaction’s history.

The technology is still in its infancy and currently undergoing significant experimentation. For established financial institutions such as banks, blockchain is seen as a possible solution to the problem of an increasingly complex regulatory landscape. The technology is also seen as an effective tool in combatting money laundering as it tracks a transaction’s entire digital history.

Venture capital investment in blockchain, which had seen a rapid rise over the last several years, is showing signs of plateauing as the technology matures. However, the boom in FinTech investment is expected to continue unabated as companies emerge from their infancy and the adoption of their technology becomes more widespread. In 2015, investments into FinTech were US$14 billion, with major banks such as J.P. Morgan and Goldman Sachs as primary investors. In the UK, Funding Circle, Atom Bank and World Remit each received in excess of US$100 million in funding in 2015. There are now 19 FinTech companies with a market capitalisation in excess of US$1 billion.

Category:FinTech Industry & Regulation