FCA selects startups for fintech sandbox
(23 September 2016 – United Kingdom) The UK's Financial Conduct Authority (FCA) has accepted 24 applicants to participate in its fintech sandbox, where innovative financial products can be tested before proceeding to authorisation.
Speaking at a British Bankers' Association conference, Christopher Woolard, director of strategy and competition at the FCA, provided a two-year progress report on the watchdog's Project Innovate, designed to help incumbents and fintech startups navigate the regulatory maze and get new tech-driven products to market.
"Of 69 applications, we have accepted 24 to develop towards testing, which met the sandbox eligibility criteria, leading us to expand our team to meet demand," said Woolard.
"We have also offered assistance via Project Innovate or other colleagues to 40 of the applicants, in some cases to prepare for the next cohort of the Sandbox."
Of the 69 applicants, seven came from payment firms - including blockchain firms.
Speaking on the latter, Woolard said: "I have said before that the FCA does not view blockchain as a panacea, but at the same time although still in its relative infancy, the development of Distributed Ledger Technology (DLT), and its application as blockchain, has the potential to offer genuinely innovative solutions to financial services," he says.
"But there are a number of issues to be considered. For example, how do individuals gain access to a distributed network and who controls this process? What data security exists for users?"
He says the watchdog is currently engaged in discussions with government and industry on these issues.
Woolard also spoke about regulation technology, otherwise known as RegTech, an area devoted to using technology to reduce red tape and barriers to business growth. The watchdog held its first TechSprint hackathon earlier this year, bringing together a cross-section of financial services providers and technology companies to develop prototype solutions to overcome seemingly intractable access barriers.
Woolard says that three of the ideas generated at the event are now being explored commercially as products to bring to market.
"We are now planning to hold a second TechSprint event later this year on the theme of ‘unlocking regulatory reporting’," he says. "This might not be as glamorous as some projects but the costs to firms and to consumers in due course, are very significant indeed, let alone the contribution that could be made to enabling us as regulator to do a better job."
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