13th April 2017

What does good Fintech look like?

Written by Matthew Herbert, Director of Strategy and Digital

Fintech is already transforming the way that banks do business across retail and wholesale markets, with banks committed to promoting innovation in the interests of their customers – for example, we’ve seen Santander team up with Kabbage to offer fast loans to SMEs, and UBS, BNY Mellon, Deutsche Bank, and Santander and Icap advance the Utility Settlement Coin with Clearmatics. And the UK’s fintech infrastructure is some of the more sophisticated in the world, with a cluster of innovative firms, support networks and a widely-copied regulatory model. However, translating potential into sustained high performance isn’t necessarily simple.

For example, the FCA recently published a discussion paper on how distributed ledger technologies can be used in regulated markets.  As government and businesses focus on building strong global trade links, distributed ledger technologies such as blockchain could be an essential component of these relationships as it enables improved trade processes and outcomes. But, there are considerable hurdles to adopting new technology into highly-regulated areas – first and foremost banks want to ensure customers’ data is secure and protected.

Speaking at April’s UK FinTech Week the FCA’s Executive Director of Strategy and Competition Christopher Woolard set out three objectives for measuring the success of UK fintechs:

  • Can we see more innovative firms entering the market?
  • Is there greater innovation and competition by and between larger firms?
  • And ultimately are consumers benefiting from that?

I’d argue that we should add a fourth: banks’ single biggest ask is for early clarity and collaboration between policy makers. It’s essential that regulators and supervisors develop standards that keep pace with the way technology is developed and used, while maintaining both an even regulatory landscape and consumer confidence.

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