April 11, 2016
The UK FinTech market is estimated to be worth over £20 billion, employing more than 60,000 professionals. The FinTech ecosystem in the UK is considered to be among the best when compared to those of Hong Kong, Singapore, etc. In order to boost UK’s position in the global FinTech, the government of UK has taken up numerous initiatives. The article focuses on key developments (especially announcement by FCA) which took place today at the Innovate Finance Global Summit 2016. The summit is expected to provide an opportunity to understand the latest developments in financial technology and rejoice the accomplishments of the UK FinTech community. The following key announcements were made at the summit today.
The government announced three new initiatives to ensure that the UK remains ahead of its peers:
— Firstly, the UK government plans to set up a FinTech panel and delivery support system to assist in developing a comprehensive FinTech strategy for the region as well as monitor and drive forward FinTech initiatives.
— The second initiative is to create a professional services hub for FinTech, from where firms can seek legal as well as accountancy services, and access practical and cost-effective basic services.
— And finally, the UK Trade and Investment will establish FinTech Bridges with priority global markets (something similar to what was done between the UK and Australia), helping UK FinTechs to expand internationally.
The government has also said that it will continue to work with Tech City, UK and other members of the industry to ensure that the new initiatives are tailored to create maximum value for the FinTech sector. It is also expected that the UK government will announce more policies to support the FinTech sector in due course. Other key topics which the event touched upon include the need for open banking standards to boost the FinTech industry and the need for the FinTech industry to focus on business plans where the company can scale globally at low cost. Discussions were also held with regards to the need for digital identity. Participants praised the concept of open identity exchange in the UK. Panel participants at the summit arrived at a consensus that the key success criteria for a digital identity platform to take off are to strike a balance between a verified identity and trust and expressing why a digital identity is valuable is critical to gaining traction in the market.
Christopher Woolard (Director of Strategy and Competition, and an Executive Board member of the Financial Conduct Authority) announced the new regulatory sandbox to develop innovative solutions. Sandbox is an extension of Project Innovate. Sandbox is a solution where FinTech businesses can test innovative products, services and business models without incurring normal regulatory consequences. The potential benefits of Sandbox are that it reduces time-to-market, provides startups a better way to access finance and allows more innovative products to reach the end-consumers. Furthermore, the sandbox enables the FCA to work with innovators to ensure that appropriate consumer protection safeguards are built into their new products and services before they reach a mass market.