Speaking at the BBA FinTech Banking Conference, Christopher Woolard, the FCA’s executive director of strategy and competition, said that the regulator had received 69 applications to its regulatory sandbox since its launch. Seven of the successful applications are payments technologies.
The FCA launched the regulatory sandbox as part of its Project Innovate last May. The sandbox is a ‘safe-space’ where new products could be initially shielded from unnecessary compliance requirements. The regulator promoted the project as a way to foster innovation by helping startups that do not have sufficient resources to navigate burdensome regulation.
Woolard said that 24 applications have been accepted and are being developed for testing. The successful applicants covered a wide range of sectors: four came from retail banking, four from insurance, with others coming from the digital identity, disclosure and the mortgage sectors. However, payments topped the list with seven of the successful applicants, including blockchain firms.
Woolward said he was optimistic about the opportunities that blockchain offered in the financial sector, pointing to possible applications in Know Your Customer and anti-money laundering. He added that there were still problems with the technology around security and confidentiality that had to be resolved.
The executive director said that the UK had seen a healthy uptake in financial technology. In 2015 there was a 25% rise in the number of banking apps downloaded compared to the previous year. He went on to say that six in 10 global banks were partnering with fintech firms to facilitate their digital transformation.
“Traditionally financial regulators around the world have tended to look upon disruption and innovation with suspicion, at best a risk to the prudential security of the models of existing incumbents. In the UK, both we and the PRA have begun to change that analysis and focus on the long term benefits for the strength of markets of greater competition,” said Woolard.
