Growth in the UK’s FinTech sector is fuelling innovation in financial services. Backed by both government and regulator, digitisation is predicted to shake up the way customers access and use financial services. And this, of course, has profound ramifications for traditional providers and advisers.
All a tech pipedream? Well no, it is happening now and two recent announcements have signalled that the pace of change is set to get even faster.
Firstly, Harriet Baldwin, the Economic Secretary to the Treasury used a speech to highlight the UK’s position as the global capital for FinTech.
Last year, she said, the sector generated £6.6bn in revenue and now has a workforce of over 60,000 people. The government is committed to ensuring the UK continues to be the best place in the world to be a FinTech company and Ms Baldwin outlined a raft of measures to keep us there.
Perhaps the most interesting of these initiatives is the creation of FinTech bridges between UK FinTech firms and international priority markets. As well as boosting the UK market this is also designed to attract international FinTech companies and investors to the UK.
These FinTech bridges will build on the work of the FCA’s Project Innovate which is promoting competition in the best interests of the consumer by helping UK and non-UK innovators to meet regulatory requirements. This leads onto the second significant announcement which is that the FCA’s regulatory sandbox launched on 9 May. This so-called RegTech initiative represents a world first for financial services regulators and will allow innovative businesses a ‘safe space’ in which to test innovative products and services, without incurring all the normal regulatory consequences.
Underpinning this technological innovation are open standards in the way data is accessed and shared. All government departments and regulators now recommend the use of open standards to support open and competitive markets. This is particularly relevant for FinTech and the modernisation of the financial services digital landscape. Opening up innovation in the market also drives enhanced benefits for the consumer. So what constitutes an open standard?
The Open Data Institute (ODI) has developed a set of key data-sharing principles that support open standards. These begin with the premise that we all benefit from a strong data infrastructure that is accessible and usable to deliver services for people, supports new businesses and drives economic growth.
It is essential that consumer security and privacy be respected and so organisations should be open about what data is being collected and used, open about the way data is shared and secured and enable people to understand and control how their data is shared. The ODI also outlines how anyone who collects and uses personal data should be accountable for its misuse.
Taking these principles from the ODI together with the government and regulatory commitment it is clear why open standards should be the founding tenet of any approach to the digitisation of financial services. In practice this is likely to mean that for key development projects we could see an independent organisation being established to foster and manage the standards – free of any bias from a provider of solutions, products or services.
