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…and the regulatory reaction
The rise of FinTech
Gillian Roche-Saunders Victoria Aderounmu January 2016
What is Fintech?
Oxford Dictionary
The rise of FinTech and the regulatory reaction Gillian - - PowerPoint PPT Presentation
The rise of FinTech and the regulatory reaction Gillian - - PowerPoint PPT Presentation
The rise of FinTech and the regulatory reaction Gillian Roche-Saunders Victoria Aderounmu January 2016 What is Fintech? Oxford Dictionary What is Fintech? Financial technology , also known as FinTech, is a line of business based on using
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What is Fintech?
Financial technology, also known as FinTech, is a line of business based on using software to provide financial services. Financial technology companies are generally startups founded with the purpose of disrupting incumbent financial systems and corporations that rely less on software.
Wikipedia
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What is Fintech?
Investopedia
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The climate for Fintech in the UK
Gaps in the market Competition mandate for FCA Government’s aim for a global FinTech centre London landscape: finance, technology and political power
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Currency
A flavour of the FinTech landscape
Payments & Transfers Financial Management Lending & Financing Investments & Exchanges Banking Virtual Currency Data Infrastructure
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Regulatory challenges for FinTech generally
Breaking new ground Competence of team Identifying your activities Old rules to new business Assessing what rules apply New ways of interacting Online risk Cybercrime, cybersecurity Getting a bank account Global business, local rules No harmonisation
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Financial management
Guided investing ‘Robo’ advice Online wealth management
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Financial management
CAPACITY FOR LOSS
Second-guessing Empowerment
CENTRALISED PROPOSITION
Shoehorning Overreliance
GUIDING TOOLS
Promotion Cost-effective
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Virtual Currency
Purchase Transfer to e-wallet Transaction Verification Added to Blockchain
“A type of unregulated, digital money, which is issued and usually controlled by its developers, and used and accepted among the members of a specific virtual community”
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Benefits
User anonymity: Privacy Transparency
- f
transactions Cheaper and faster transactions Cyber-crime defence Financial inclusion
Risks
User anonymity: Crime Lack of government intervention Volatility Low consumer protection Terrorist financing
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Distributed Ledgers
Digital Record
- One public version of identical
records of transactions and existence of VCs
Reliable
- Difficult to manipulate
information
Financial Services
- Potential to renovate the current
banking infrastructure
Further opportunities
- Endless possibilities of use,
such as taxes, passports, votes etc.
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The Future of Virtual Currencies
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Payments and Transfers
Registered vs Authorised PSD2 and Wire Money Transfer Regulations Security of payments (EBA guidelines) New: the Payment Systems Regulator
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Challenger banks
Credit risk: standardised vs internal ratings based approach Services vs risk on balance sheet Bank Start-Up Unit
FT
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Challenger banks
Bank authorisation when need early certainty in
- utcome
Initial Application Mobilisation Authorisation with Limitation Restriction lifted
- Business viability
- Senior appointments
- Capital and liquidity
- IT and outsourcing
- Governance
- Policies & procedures
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Crowdfunding & P2P lending
Crowdfunding Challenge of existing rules to new business Focus on ‘user journey’ P2P: A brand new regime Prescriptive rules not a good fit Latitude causing uncertainty
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FCA Sandbox
Regulated Sandbox activity Exemptions By Way of Business test Legislation
- Reducing uncertainty, cost and time
- Encouraging more solutions to be trialled
Individual guidance Restricted authorisation No enforcement action letter Waiver FCA Virtual sandbox Sandbox umbrella Industry
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FCA Sandbox
Innovative Consumer benefit Need for testing Sufficient preparation done In scope
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