The Financial Conduct Authorities (FCA) pledged to unlock the benefits of financial technology innovation at the launch of the Innovation Hub in London this week. Speaking at the launch, Martin Wheatley (Chief Executive of the FCA) said: “The FCA is here to make financial markets work well for consumers. Innovation can benefit consumers. Whether by reducing hassle, reducing costs, or improving products. So we want to ensure that regulation unlocks these benefits, rather than blocks them.”
The Innovation Hub is part of the FCA's Project Innovate scheme which supports both small and large businesses developing products that could improve services for consumers with the aim of helping London’s technology sector to grow.
The Innovation Hub provides a dedicated service to support innovation in financial services. Under the initiative, a team of dedicated FCA staff will provide support to both regulated and non-regulated start-ups. The innovators will be guided through regulatory authorisation process and receive support for a year after they have been approved, as well as help to understand the regulatory framework and how it applies. To receive support from the FCA, start-ups will need to show that their innovation could bring benefits to the consumer (individuals or businesses).
The FCA intends to foster competition and growth in financial services and according to Wheatley, innovation can be a driver of effective completion and the FCA wants to support this. Amongst concerns that start-ups are receiving special treatment from the initiative, Wheatley identified that large firms already have direct access to regulators and stated that the FCA are simply trying to redress the balance.
This year has seen the emergence of many companies seeking to transform the way financial services operate and both the public and private sectors have tried to sustain the flourishing fintech sector. The regulator’s efforts to help businesses in the growing fintech sector coincides with the UK government’s launch of a new industry body established to promote the interests of the UK’s rapidly growing financial technology sector called Innovate Finance, in August.
London is already home to some of the most successful fintech start-up accelerator programmes which are sponsored by some of the biggest banks including, Barclays and Lloyds. Industry experts have predicted that if banks do not invest in innovation then they could be overtaken by new entrants.
The latest news from banks concerning innovation is that many are raising their innovation spend in an attempt to fend of competition from threat such as Apple, Google and Facebook. According to a poll by Efma on behalf of Infosys, 84 per cent of 100 banks polled plan to increase investment in innovation over the next year. 61 per cent have an innovation strategy and 26 per cent are planning to invest in start-ups.
By Nicole Miskelly, bobsguide Lead Journalist