Lowering barriers to expansion and entry
Tandem Bank (authorised in November 2015) is a digital-only retail bank that will operate a personal finance guide which compares financial loans offered by both Tandem and its competitors. Other innovative banks are in the pipeline for authorisation.
Other initiatives to support new and firms that are innovative
The financial institution of England supports innovation in financial services through its strive to promote research that is innovative data analytics in central banking, and improving the ability of innovative firms to access Bank of England facilities. The lender in addition has embraced technology that is new the provision of UK banknotes.
Research and analytics
The financial institution launched its One Bank Research Agenda initiative in February 2015 to try to understand and develop innovative best practice in central banking, taking into consideration technological, institutional, social and environmental change.
It aims to facilitate dialogue that is open the lender in addition to research community to support innovation and inform the Bank’s work. The financial institution has set up a Research Hub division to aid drive this forward and developed a new blog that is online Bank Underground.
The initiative covers research questions on five broad themes: policy frameworks and interactions; evaluating regulation, resolution and market structures; policy operationalisation and implementation; new data, methodologies and approaches; and reaction to change that is fundamental.
In particular the fundamental change workstream takes a longer term have a look at how technological (and other) innovations might affect central banking over a longer horizon. This can include, for example, exploring the impact of digital currencies or finance that is alternative, and any associated economic, technological and regulatory challenges.
As an element of its broader research agenda, the financial institution publishes new datasets to facilitate external research. This includes run that is long data, the financial institution of England’s balance sheet and data recorded by the Bank’s regional agents. The long-term plan is to start up much more of this Bank’s data to your public.
The Bank in addition has set up a sophisticated analytics division and data lab to exploit new and innovative analytical tools and techniques, analyse new data sources such as social media, and help spread best practice within the analysis of brand new big datasets both inside and outside the financial institution.
The division is relationships that are also developing external partners in this area, and recently ran a data visualisation competition to activate with data scientists and students throughout the UK.
The Bank is conducting research into innovations in payments technology, with a particular focus on digital currencies and the distributed ledger systems that underpin them in the payments space.
This builds from the Quarterly Bulletin articles published by the lender in 2014, which considered the technical architecture of digital currencies, while the economic theories that govern how it works.
Following extensive consultation that is public the Bank announced in December 2013 that new Bank of England banknotes will now be printed on polymer. Polymer is a thin and plastic that is flexible that has benefits over and above current paper banknotes.
Polymer notes are cleaner and much more durable – they truly are more resistant to moisture and dirt, more environmentally friendly and last at least 2.5 times more than paper banknotes. Polymer notes may also be more secure, with advanced security features that offer a step-change in counterfeit resilience. The design that is full of Ј5 note would be unveiled on 2 June together with banknote introduced in September 2016, because of the Ј10 note issued in 2017, and Ј20 note by 2020.
Access to Bank of England facilities
The Bank has broadened the range of collateral accepted in its market operations to now include residential mortgages, asset finance, personal loans, automobile financing, corporate loans, SME loans and revolving credit facilities.
This enables access for a wider variety of counterparties – over 80 banks and building societies now have assets placed at the Bank, ready to be used in initiatives including the Funding for Lending Scheme. Work is underway to ensure that there are not any technical obstacles to the Bank’s capacity to accept equities as collateral if the need arise.
The Bank commenced work in 2015 to assess the feasibility of establishing a Shari’ah compliant facility as part of its strategy to broaden liquidity provision in the market.
The lender recognises the challenges Islamic banks face in meeting liquidity requirements with the current limited variety of options – existing facilities are not Shari’ah compliant as they involve interest-bearing activity. The financial institution has also become an associate member of the Islamic Financial Services Board (IFSB ).
The Bank has introduced prefunding for Bacs and Faster Payments, which lowers barriers to entry for banks and building societies looking to become members of these payment schemes in its provision of payment services.
Previously, a part of the schemes needed to hold securities as collateral and invest in a loss-sharing framework that is mutual. Prefunding allows each institution to manage their exposure limit using reserves at the financial institution.
In January 2016 the Bank announced its plan to design a blueprint for future years for the UK’s value that is high settlement system – the Real Time Gross Settlement System (RTGS ). The financial institution can look to redesign RTGS in such a manner that its resilience is further enhanced, while as well enabling innovation.
2.8 How financial services regulators are better utilising new technologies to create efficiency savings and minimize burdens on business – RegTech
Regulators not merely have a task to try out in promoting competition and innovation, but also in using technological advances to reduce regulatory burdens on firms and drive efficiency savings. The FCA and PRA have now been particularly dedicated to this matter.
Firms have to meet higher regulatory standards and greater reporting requirements following the financial crisis. New technologies which help firms better manage these regulatory requirements and lower compliance costs (so-called RegTech) are good for effective competition and innovation.
The main focus among these were to comprehend:
The goal of this consultation is to seek views regarding the work of financial services regulators to support innovative technology and disruptive business models, and understand where there might be gaps in regulatory approach with regards to supporting innovation.
3.1 Consultation questions
The us government invites responses from all interested parties, in particular both regulated and unregulated firms and innovators when essay writing you look at the financial services sector, regarding the following questions that are specific.
- Does the UK’s regulatory environment for financial services effectively support innovation?
- Do financial services regulators understand innovation in financial services and potential areas where new technologies and disruptive business models might emerge into the sector?
- What are the gaps in approach or areas where financial services regulators should always be doing more to support technology that is innovative disruptive business models in financial services?
- Is there more that financial services regulators could do to better utilise new technologies to produce their own work more effectively?
3.2 How exactly to respond
This consultation will run from 22 April to 6 May 2016.
Responses should be sent by email to Innovation plan consultation.
Alternatively please send responses by post to:
Innovation Plan consultation
Banking and Credit team
1 Horse Guards Road
London SW1A 2HQ
When responding, please say if you are making a representation with respect to a small business, individual or body that is representative. Into the full case of representative bodies, please provide information about the number and nature of men and women you represent.
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HM Treasury will process your private data prior to the DPA and in the majority of circumstances this will imply that your individual data will not be disclosed to parties that are third.