The UK’s financial regulator, the Financial Conduct Authority (FCA), has announced the second cohort of its fintech sandbox on June 15. Out of the 24 startups joining this year’s cohort, nine are developing solutions using blockchain technology, which is a testament to the potential that the FCA sees for this new technology to play a major role in the financial services sector of the future.
The FCA’s fintech sandbox allows startups to trial new financial products and services without “incurring the normal regulatory consequences.” The idea behind the fintech sandbox is to boost technological innovation as well as competition in the UK’s financial industry.
The FCA’s Executive Director of Strategy and Competition, Christopher Woolard, stated that the fintech sandbox is growing in popularity as more firms applied for this year’s cohort than for the one in the previous year.
“It is particularly encouraging that both the number of firms applying and accepted for testing has increased in cohort two. That means more innovative firms, trialing more innovative propositions to bring to the market. This is an important part of the FCA’s commitment to promoting innovation and competition in the markets we regulate,” Woolard stated.
77 submissions were received for this year’s cohort of which 31 applicants met the eligibility requirements. Out of the 31 eligible fintech startups, the 24 chosen ones were accepted into the fintech sandbox as they are ready for testing. Now that the second cohort has been finalized, the startups will start testing their new products and services shortly on a small-scale and short-term basis to safeguard consumers while still having enough leeway for innovation to thrive.
The selection of startups is very diverse. The sectors covered by the participating fintech startups include insurance, payments, retail banking, and lending, among others, while new technologies involved include artificial
Professor Philip Treleaven and his renowned financial computer science team at University College London are working on a new project that involves automating financial regulation through the application of blockchain-based smart contract technology.
Treleaven and his team are assembling several technology-related components to create what Treleaven has coined core “regtech,” which enables the automation of financial regulation processes such as filing for FCA approval for a banking license.
The new solution is composed of five parts:
An artificially intelligent regulatory advisor as the front end to the FCA’s regulatory handbook. Fully automated real-time monitoring of digital and social media to identify potential consumer and market abuse. Fully automated reporting using digital compliance communication as well as big data analytics. Regulatory policy modeling using smart contracts to codify regulations and to assess impact before deploying new regulation. Fully automated regulation through applying distributed ledger technology to automate regulatory monitoring and compliance. Automating the FCA Registration Process
One of the first use cases Professor Treleaven and his team are targeting is the FCA registration process for companies that require regulatory approval to conduct financial services-related business in the UK.
The current process to receive FCA authorized status is lengthy, costly and involves a lot of engagement between FCA staff and applicant firms. This is made worse by the fact that the FCA now deals with almost twice as many financial services firms than previously, while still having roughly the same amount of staff as before. That is one of the reasons why automating regulatory approval process would be a create cost-saver and make the entire process more efficient and quicker.
“So we are trying to build a front end to the FCA Handbook that basically will interact with the registrant and try and fill in the forms for them; and
The United Kingdom has relied on its financial services industry to drive economic growth for decades. However, in light of the British population’s vote to leave the European Union and, thereby, potentially lose the access to the European Single Market, the UK’s status as Europe’s leading financial hub may wane. Is this for better or for worse regarding the crypto scene in the UK?
After surprising results of the ‘Brexit’ referendum in June 2016, several international London-based banks announced plans to move a significant part of their operations to mainland Europe to ensure future access to the European market.
Investment bank Goldman Sachs announced that in light of the uncertainty surrounding Britain leaving the European Union that it will move hundreds of staff to offices in Paris and Frankfurt as part of their Brexit contingency plans, which will now be executed as Article 50 was triggered by Prime Minister Theresa May on March 29. The American bank, however, is not the only financial institution that is relocating operations out of London.
London-headquartered HSBC intends to move 1,000 individuals from London to their Paris office within the next two years, while Swiss banking institutions UBS stated it could move as many as 5,000 employees to offices in Europe. US banks Morgan Stanley and Citigroup are also among the banks that will move staff out of London in light of the UK leaving the EU.
The primary reason for international banks relocating their key operations out of London and into the borders of the European Union is to prevent the banks from losing access to the Single European Market. The uncertainty stemming from the upcoming ‘Brexit” negotiations that will determine the terms of Britain’s exit from the European Union also includes uncertainty surrounding Britain’s future access to the Single European Market. Should