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 lending options provided by both Tandem as well as its competitors. Other innovative banks are in the pipeline for authorisation.
Other initiatives to aid 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 Bank in addition has embraced technology that is new the provision of UK banknotes.
Research and analytics
The Bank launched its One Bank Research Agenda initiative in February 2015 to attempt to understand and develop innovative best practice in central banking, taking into account technological, institutional, social and environmental change.
It is designed to facilitate open dialogue between the lender as well as the research community to support innovation and inform the Bank’s work. The lender has set up a Research Hub division to simply help drive this forward and developed a new online blog, 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 change that is fundamental.
In particular the fundamental change workstream takes a longer term look at how technological (and other) innovations might affect central banking over a lengthier horizon. This includes, as an example, exploring the impact of digital currencies or alternative finance providers, 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 consists of run that is long data, the financial institution of England’s balance sheet and data recorded because of the Bank’s regional agents. The plan that is long-term to start up a lot more of this Bank’s data into the public.
The financial institution 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 for example social media marketing, and help spread practice that is best in the analysis of new big datasets both outside and inside the financial institution.
The division is relationships that are also developing external partners in this area, and recently ran a data visualisation competition to engage with data scientists and students over 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 financial institution in 2014, which considered the technical architecture of digital currencies, and also the economic theories that govern how they work.
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 material 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 longer than paper banknotes. Polymer notes will also be more secure, with advanced security features that provide a step-change in counterfeit resilience. The full design of the Ј5 note will be unveiled on 2 June and also the banknote introduced in September 2016, utilizing the Ј10 note issued in 2017, and Ј20 note by 2020.
Use of Bank of England facilities
The financial institution has broadened the product range of collateral accepted with its market operations to now include residential mortgages, asset finance, personal loans, automotive loans, corporate loans, SME loans and revolving credit facilities.
This enables access for a wider selection of counterparties – over 80 banks and building societies now have assets placed in the Bank, ready for use in initiatives such as the Funding for Lending Scheme. Work is underway to ensure there are no technical obstacles to the Bank’s capability to accept equities as collateral should the need arise.
As an element of its technique to broaden liquidity provision on the market, the lender commenced work with 2015 to evaluate the feasibility of establishing a Shari’ah compliant facility.
The financial institution recognises the challenges Islamic banks face in meeting liquidity requirements using the current range that is limited of – existing facilities are not Shari’ah compliant as they involve interest-bearing activity. The Bank has also become an associate person in 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 those schemes needed to hold securities as collateral and commit to a loss-sharing framework that is mutual. Prefunding allows each institution to manage their exposure limit using reserves at the Bank.
In January 2016 the financial institution announced its intend to design a blueprint for future years of the UK’s high value sterling settlement system – the Real Time Gross Settlement System (RTGS ). The Bank will appear to redesign RTGS in such a way that its resilience is further enhanced, while as well enabling innovation.
2.8 How services that are financial are better utilising new technologies to come up with efficiency savings and reduce burdens on business – RegTech
Regulators not only have a task to relax and play to promote competition and innovation, but additionally in using advances that are technological reduce regulatory burdens on firms and drive efficiency savings. The FCA and PRA have been particularly focused on this buy essay dilemma.
Firms need certainly to meet higher regulatory standards and greater reporting requirements following the financial crisis. 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 main focus of those were to know:
The objective of this consultation is always to seek views from the work of financial services regulators to guide innovative technology and disruptive business models, and understand where there can be gaps in regulatory approach with regards to supporting innovation.
3.1 Consultation questions
The government invites responses from all interested parties, in particular both regulated and unregulated firms and innovators within the financial services sector, on 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 places where new technologies and disruptive business models might emerge within the sector?
- What are the gaps in approach or places where financial services regulators should always be doing more to aid innovative technology and disruptive business models in financial services?
- Is there more that financial services regulators could do to better utilise new technologies to provide their work that is own more?
3.2 How exactly 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
When responding, please say if you’re making a representation with respect to a small business, individual or representative body. In the full case of representative bodies, please provide home elevators the amount and nature of individuals you represent.
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