Lowering barriers to expansion and entry
Tandem Bank (authorised in November 2015) is a digital-only retail bank that will operate your own finance guide which compares financial loans made available from both Tandem as well as its competitors. Other innovative banks are in the pipeline for authorisation.
Other initiatives to support new and innovative firms
The lender of England supports innovation in financial services through its strive to promote innovative research and data analytics in central banking, and enhancing the ability of innovative firms to gain access to Bank of England facilities. The lender has additionally 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 attempt to understand and develop innovative practice that is best in central banking, taking into account technological, institutional, social and environmental change.
It aims to facilitate open dialogue between the Bank as well as the research community to aid innovation and inform the Bank’s work. The lender has set up a Research Hub division to greatly help 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 response to fundamental change.
In particular the fundamental change workstream takes a longer term look at how technological (along with other) innovations might affect central banking over a lengthier horizon. This includes, for example, examining 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 plan that is long-term to start up even more of the Bank’s data to the public.
The financial institution in addition has set up an advanced analytics division and data lab to exploit new and innovative analytical tools and techniques, analyse new data sources such as for example social media marketing, and help spread practice that is best in the analysis of the latest big datasets both inside and outside the Bank.
The division is also developing relationships with external partners of this type, and recently ran a data visualisation competition to interact with data scientists and students across 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, together with 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 which has benefits in addition to current paper banknotes.
Polymer notes are cleaner and much more durable – they truly are more resistant to dirt and moisture, more environmentally friendly and last at the least 2.5 times longer than paper banknotes. Polymer notes are also more secure, with advanced security features that offer a step-change in counterfeit resilience. The design that is full of Ј5 note are going to 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 lender has broadened the number of collateral accepted with its market operations to now include residential mortgages, asset finance, personal loans, automobile financing, corporate loans, SME loans and credit that is revolving.
This permits access for a wider number of counterparties – over 80 banks and building societies currently have assets placed at the Bank, ready for use in initiatives like the Funding for Lending Scheme. Work is underway to make sure that there aren’t any obstacles that are technical the Bank’s capacity to accept equities as collateral if the need arise.
As an element of its technique to broaden liquidity provision in the market, the Bank commenced work in 2015 to assess the feasibility of establishing a Shari’ah compliant facility.
The financial institution recognises the difficulties Islamic banks face in meeting liquidity requirements aided by the current limited range of options – existing facilities are not Shari’ah compliant as they involve interest-bearing activity. The lender has additionally become an associate member of the Islamic Financial Services Board (IFSB ).
In its provision of payment services, the Bank has introduced prefunding for Bacs and Faster Payments, which lowers barriers to entry for banks and building societies seeking to become members of these payment schemes.
Previously, an associate of those schemes had to hold securities as collateral and agree to a loss-sharing framework that is mutual. Prefunding allows each institution to control their exposure limit reserves that are using the Bank.
In January 2016 the lender announced its want to design a blueprint for the future for the UK’s high value sterling 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 at exactly the same time innovation that is enabling.
2.8 How services that are financial are better utilising new technologies to build efficiency savings and lower burdens on business – RegTech
Regulators not only have a job to try out to promote competition and innovation, but in addition in making use of advances that are technological reduce regulatory burdens on firms and drive efficiency savings. The FCA and PRA have been particularly focused on this issue.
Firms need to meet higher regulatory standards and greater reporting requirements following the crisis that is financial. New technologies which help firms better manage these regulatory requirements and minimize compliance costs (so-called RegTech) are great for effective competition and innovation.
The focus of these were to understand:
The purpose 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 could be gaps in regulatory approach when it comes to supporting innovation.
3.1 Consultation questions
The check over here government invites responses from all interested parties, in particular both regulated and unregulated firms and innovators into the financial services sector, regarding the following specific questions.
- Does the UK’s environment that is regulatory 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 when you look at the sector?
- What are the gaps in approach or places where financial services regulators should be doing more to aid innovative technology and disruptive business models in financial services?
- Will there be more that financial services regulators could do to better utilise new technologies to produce their work that is own more?
3.2 Simple tips to respond
This consultation will run from 22 to 6 May 2016 april.
Responses should always 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
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