The UK is the global capital for financial technology, or ‘FinTech’, which generated £6.6 billion in revenue and raised over £500 million of investment in 2015 and is growing rapidly. It is disrupting markets and changing the ways consumers interact with financial services.
In doing so, FinTech is radically reducing the cost of accessing financial services and broadening the range of services available. This is allowing those who may previously have struggled to access financial services to do so, and providing consumers with the tools they need to manage their finances well.
The government and regulators are taking a significant number of actions to support the UK FinTech industry:
- Supporting the banks to deliver Open Banking through a fully open application programming interface (API), providing ongoing access to authorised third parties by Q1 2018. Third-parties will then be able to access consumers data in real-time, thereby allowing them to offer budgeting tools to support individuals in managing their finances.
- Supporting industry to design and deliver a pensions dashboard by 2019 – a digital interface where an individual can view all their pensions in one place, enabling consumers to make more well-informed decisions about their pensions.
- Working with Tech City UK on a FinTech delivery panel to set out a long-term strategy for UK FinTech, identify key industry initiatives to deliver this, and drive forward progress. This panel comprises key representatives from the FinTech sector, existing financial services sector, and the Financial Inclusion Commission, given the significant potential of FinTech in supporting financial inclusion.
- Appointing regional FinTech envoys to ensure the continued growth of FinTech across the UK. To date, regional FinTech envoys have been appointed for the Northern Powerhouse and Scotland.
- Launching a professional services information hub.
- Showcasing the best of British FinTech to investors at the annual International FinTech Conference.
The Bank of England is also supporting the FinTech sector by:
- Establishing the New Bank Start-up Unit in January 2016 (in partnership with the Financial Conduct Authority). Nine new UK banks have been authorised in this parliament.
- Expanding access to central bank money to non-bank payments service providers, allowing them to compete on a level playing field with banks.
- Being open to providing access to central bank money for new forms of wholesale securities settlement, such as those based on Distributed Ledger Technology.
- Proactively seeking contributions from a wide range of perspectives and disciplines to feed into its long-term research into the impact of a digital currency on monetary and financial stability and whether new technology has the potential to be used to provide wider access to central bank money, via a Central Bank Digital Currency.
- Partnering with FinTech companies through a Bank of England FinTech Accelerator to help harness FinTech innovations for central banking.
Author Steve Taklasingh, Global Advisory for Global Chamber® London