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The Fintech Strategic Review aims to ensure the ongoing growth and success of UK fintech as a world leader in financial innovation.

By Stuart Davis and Anna Lewis-Martinez

On 20 July 2020, HM Treasury announced the launch of an independent review into the UK’s fintech industry to “identify opportunities to support further growth in the sector”.

The Fintech Strategic Review aims to establish priority areas for industry, policy makers, and regulators to explore in order to support the continuing success of the UK fintech sector. The review will be led by Ron Kalifa OBE, the former CEO of Worldpay and non-executive director of the Court of Directors to the Bank of England. According to Kalifa, “Technology has a vital role to play in the UK’s COVID-19 economic recovery. The fintech review will ensure that we can leverage this innovative technology to help consumers and businesses, through a joined-up strategy that combines investment, skills and policy to deliver it.”

Bank for International Settlements selects Bank of England as UK centre to host new fintech hub.

By Stuart Davis, Brett Carr, and Sam Maxson

On 30 June 2020, the Bank of England announced that it had been selected to host a centre of the Bank for International Settlements’ Innovation Hub. The UK centre will support the global central banking and finance community through the development of digital public goods.

The US derivatives regulator continues to foster FinTech adoption and leadership in US markets.

By Yvette D. Valdez, Douglas K. Yatter, and Deric Behar

The US Commodity Futures Trading Commission (CFTC) has affirmed its commitment to engaging the fast-moving financial technology world by elevating its LabCFTC unit to be an independent operating office within the CFTC, reporting directly to Chairman Heath Tarbert. LabCFTC is the agency’s FinTech hub, led since October 10, 2019, by Chief Innovation Officer and Director Melissa Netram. The announcement about LabCFTC’s new status was made at the agency’s second annual FinTech conference, “Fintech Forward 2019: Exploring the Unwritten Future,” held on October 24, 2019.

LabCFTC initiatives such as the annual FinTech conference provide a way for FinTech innovators to access the CFTC, while also allowing the CFTC to keep apace of new technologies and ideas impacting the financial markets. The CFTC also uses the forum to evaluate the potential of new technology for agency oversight activities.

FCA teams up with other regulators to advance its idea of creating a global regulatory sandbox.

By Stuart Davis, Gabriel Lakeman, Sam Maxson, Brett Carr and Charlotte Collins

The FCA, along with several other financial services regulators, has launched a consultation on the operating framework for a Global Financial Innovation Network (GFIN). This is an evolution of the FCA’s proposal, mooted earlier this year, to create a global regulatory sandbox (see Latham’s related blog post).

The FCA reports that its proposal was received positively, with respondents keen to see greater regulatory coordination and cooperation at a global level. Therefore, the FCA sees merit in continuing to explore this idea.

The Strategy emphasises the UK government’s continued push to create a world-leading FinTech sector.

By Stuart Davis, Charlotte Collins and Sam Wong

At the second International Fintech Conference held on 22 March 2018, Philip Hammond, Chancellor of the Exchequer, announced the launch of the UK’s first Fintech Sector Strategy.

The Strategy includes the following key measures:

  • A new Cryptoassets Task Force — consisting of HM Treasury, the Bank of England, and the Financial Conduct Authority (FCA) — will be set up to help the UK manage risks relating to cryptoassets and to harness potential benefits of the underlying technology.
  • “Robo-regulation” pilot schemes will be developed to assist regulated firms in complying with regulation, by creating software that would automatically ensure regulated firms follow the relevant rules. It is hoped this will help reduce compliance costs for newer and smaller firms, who are often disproportionately burdened, as well as potentially improving the accuracy of data submissions.

By Andrew Moyle and Stuart Davis

The UK government’s 2017 Autumn Budget included some measures of particular interest for fintech firms, demonstrating the government’s continued commitment to making the UK a world-leading fintech hub.

The government has provided only scant detail on these measures at present, but no doubt firms will be watching closely to see how they are developed, and what benefits they can bring for the fintech sector.

By Andrew Moyle, Stuart Davis, and Charlotte Collins

On 15 November 2017, the European Central Bank (ECB) published a newsletter containing an article on how the ECB is dealing with the increasing number of fintech bank applications. The ECB is the banking supervisor, alongside national regulators, for all “significant” banks authorised in Eurozone countries. As such, the ECB is involved with the authorisation of such entities.

The ECB also reports that it is in the process of implementing a fintech hub, which will serve as a central point amongst Eurozone countries for information and questions about fintech.

Acknowledging the need to balance scope for innovation against maintaining appropriate safeguards, such as adequate regulatory capital requirements, the ECB has developed a “Guide to the assessment of fintech bank licence applications”. This guide is meant to help fintech bank applicants better understand the authorisation process and the ECB’s assessment criteria.