The FCA is collaborating with 11 financial regulators and related organisations on a new ‘global sandbox’.
A new initiative, the Global Financial Innovation Network (GFIN), will seek to foster the ambitions of cross-border fintech firms.
The FCA has joined forces with 11 financial regulators and related entities to form the group, which it says builds on its earlier proposals to create a ‘global sandbox’. Its UK-focused sandbox has allowed home-grown firms to test new and innovative products and business models with regulatory support since November 2015.
In July, the FCA announced its largest sandbox cohort to date, with 29 firms participating, whittled down from a record 69 applications. A full 40 per cent of those 29 firms utilise blockchain technology.
The global equivalent, GFIN, will promote a more efficient way for firms to interact with regulators as they seek to scale across multiple geographies.
The participating groups are as follows: Abu Dhabi Global Markets, Autorité des marchés financiers (Québec), Australian Securities & Investments Commission, Central Bank of Bahrain, United States Bureau of Consumer Financial Protection, Dubai Financial Services Authority, Financial Conduct Authority, Guernsey Financial Services Commission, Hong Kong Monetary Authority, Monetary Authority of Singapore, Ontario Securities Commission, and Consultative Group to Assist the Poor (CGAP).
Fintech ‘bridge’ agreements, as they are often called, have existed between many of these groups for some time.
To mark its launch, GFIN has launched a consultation on the role it ought to play and the tools it will use. Its three main functions are to act as a network of regulators sharing knowledge on innovation across the various markets its covers, to provide a forum to for joint policy work and discussion, and to provide firms with an environment ‘in which to trial cross-border solutions’.
Britain’s fintech sector boasts an increasingly large number of category-defining firms for which global expansion is a key priority, including peer-to-peer lender Funding Circle, active in the UK, Europe and US, and digital bank Revolut, which is eyeing launches across Asia and North America later this year.
As part of its consultation, the FCA will be inviting firms to comment on the new group’s mission statement and priorities.
“The creation of the Global Financial Innovation Network (GFIN) is an important next step for organisations like ours who are actively engaged in understanding and harnessing the benefits of innovation in financial services for consumers, while managing the potential harm,” said Christopher Woolard, the FCA's executive director of strategy and competition and board member.
“The establishment of the GFIN can help share the experiences and knowledge from across different markets, while also providing a platform for innovative firms wishing to scale their propositions via testing in multiple countries.”
The FCA first issued a consultation on the idea of a ‘global sandbox’ in February 2018, and received 50 responses. The regulator said that four key themes emerged in the feedback: a broad support for international regulatory cooperation, the need to promote speed-to-market across borders, the need to ensure the transparency and fairness of the GFIN project, and the sheer breadth of the topics highlighted, including everything from artificial intelligence to distributed ledger technology and Initial Coin Offerings (ICOs).
The consultation document may be accessed here. The deadline for submitting feedback is 14 October 2018.
Now in its sixth year, the AltFi London Summit returns on 18th March 2019 to 155 Bishopsgate. Last year proved to be a crucial turning point for the key players building the future of finance. Leading platforms launched oversubscribed IPOs, digital banks proliferated and mainstream financial institutions started their own disruptive propositions. With 2019 certain to be another landmark year, more questions will be asked by regulators with investor interest in disruption also poised for more rapid growth.