Lowering barriers to expansion and entry
Tandem Bank (authorised in November 2015) is a digital-only bank that is retail will operate an individual finance guide which compares financial products provided by both Tandem and its competitors. Other banks that are innovative in the pipeline for authorisation.
Other initiatives to guide new and innovative firms
The Bank of England supports innovation in financial services through its work to promote research that is innovative data analytics in central banking, and enhancing the ability of innovative firms to get into Bank of England facilities. The financial institution in addition has embraced new technology in 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 is designed to facilitate dialogue that is open the financial institution together with research community to aid innovation and inform the Bank’s work. The Bank has put up a Research Hub division to simply help drive this forward and developed a unique 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 a reaction to fundamental change.
In particular the change that is fundamental takes a longer term look at how technological (along with other) innovations might affect central banking over a lengthier horizon. This includes, for instance, exploring the impact of digital currencies or finance that is alternative, and any associated economic, technological and regulatory challenges.
The Bank publishes new datasets to facilitate external research as part of its broader research agenda. This can include long haul historical data, the Bank of England’s balance sheet and data recorded by the Bank’s regional agents. The long-term plan is to open up a lot more of this Bank’s data towards the public.
The Bank has also 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 practice that is best within the analysis of the latest big datasets both inside and outside the financial institution.
The division is also developing relationships with 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 regarding the Quarterly Bulletin articles published by the lender in 2014, which considered the technical architecture of digital currencies, as well as 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 flexible plastic-type material which has benefits in addition to current paper banknotes.
Polymer notes are cleaner and more durable – these are typically more resistant to moisture and dirt, more environmentally friendly and last at the very 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 is likely to be unveiled on 2 June plus the banknote introduced in September 2016, using the Ј10 note issued in 2017, and Ј20 note by 2020.
Use of Bank of England facilities
The Bank has broadened the range of collateral accepted in its market operations to now include residential mortgages, asset finance, signature loans, automobile financing, corporate loans, SME loans and revolving credit facilities.
This allows access for a wider range of counterparties – over 80 banks and building societies are in possession of assets placed at the Bank, ready for use in initiatives including the Funding for Lending Scheme. Tasks are underway to make sure that there aren't any technical obstacles to the Bank’s capability to accept equities as collateral should 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 difficulties Islamic banks face in meeting liquidity requirements with the current limited array of options – existing facilities are not Shari’ah compliant as they involve interest-bearing activity. The Bank has additionally become an associate member of the Islamic Financial Services Board (IFSB ).
With its provision of payment services, the financial institution 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, a part of those schemes had to hold securities as collateral and commit to a mutual loss-sharing framework. Prefunding allows each institution to control their exposure limit reserves that are using the financial institution.
In January 2016 the lender announced its want essay help to design a blueprint for the future of the UK’s value that is high settlement system – the true Time Gross Settlement System (RTGS ). The financial institution will appear to redesign RTGS in such a manner that its resilience is further enhanced, while as well innovation that is enabling.
2.8 How services that are financial are better utilising new technologies to create efficiency savings and reduce burdens on business – RegTech
Regulators not only have a task to play to promote competition and innovation, but also in making use of technological advances to reduce regulatory burdens on firms and drive efficiency savings. The FCA and PRA have already been particularly dedicated to this problem.
Firms need to meet higher regulatory standards and greater reporting requirements after the financial crisis. New technologies that help firms better manage these regulatory requirements and lower compliance costs (so-called RegTech) are good for effective competition and innovation.
The focus among these were to understand:
The objective of this consultation is always to seek views regarding the work of financial services regulators to aid innovative technology and disruptive business models, and understand where there might be gaps in regulatory approach with regards to innovation that is supporting.
3.1 Consultation questions
The us government invites responses from all interested parties, in particular both regulated and unregulated firms and innovators when you look at the financial services sector, from the following specific questions.
- 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 business that is disruptive might emerge within the sector?
- Any kind of gaps in approach or places where financial services regulators must 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 deliver their work that is own more?
3.2 Simple tips to respond
This consultation will run from 22 to 6 May 2016 april.
Responses must 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're making a representation with respect to a small business, individual or representative body. When you look at the case of representative bodies, please provide home elevators the quantity and nature of people you represent.
Information provided as a result to this consultation, including information that is personal might be published on disclosed according to the usage of information regimes. These are primarily the Freedom of Information Act 2000 (FOIA), the info Protection Act 1988 (DPA) and also the Environmental Information Regulations 2004.
That you provide to be treated as confidential, please be aware that, under the FOIA, there is a statutory code of practice with which public authorities must comply and which deals with, amongst other things, obligations of confidence if you want the information. In view with this it might be helpful in the event that you could reveal to us why you regard the information and knowledge you have got provided as confidential.
We will take full account of your explanation, but we cannot give an assurance that confidentiality can be maintained in all circumstances if we receive a request for disclosure of the information. An automatic confidentiality disclaimer generated by your IT system will likely not, of itself, be seen as binding on HM Treasury.
HM Treasury will process your personal data prior to the DPA and in nearly all circumstances this will mean that your own personal data will never be disclosed to parties that are third.