By Jane Jee, CEO
Following the release of the UK government-backed Independent Fintech Strategic Review, led by Ron Kalifa, former Worldpay chief executive and chairman at Network International, the fintech/regtech community welcomes its publication and the fine ideas it contains. Our hope is that the UK government takes these on board.
The review is a shot in the arm for our sphere, as it identifies the fintech sector as a key area of focus and a priority for future industrial strategy efforts after Brexit. The fintech sector is estimated to be worth about £7 billion to the UK economy, according to government figures, and employs around 60,000 people in the UK.
There are some stand-out observations for the significance of digital technology and how it empowers those in the financial services industry to prevent financial crime and remain compliant. In particular, the report states, "Fintech (including Regtech) has the potential to deliver benefits for several aspects of financial services – including promoting competition (for the benefit of consumers), improving operational resilience, helping prevent financial crime, driving efficiency in the financial services industry, and supporting financial inclusion."
However, the report also contains vital recommendations the Financial Conduct Authority and Bank of England must take on board, including, for example, “encouraging regulated firms, as part of their operational risk assessment, to actively, and periodically, consider whether they are supporting their operational resilience with effective technology (including Regtech).”
Additionally, my favorite recommendation from the report is the need to "deliver a digital finance package that creates a new regulatory framework for emerging technology." The review points out that many stakeholders are responsible for policy and regulation that impact the fintech sector, including government departments (such as HM Treasury, DIT, DCMS, DWP, Cabinet Office and BEIS), the financial regulators (the Bank of England, PRA and FCA) and other regulators such as the ICO and CMA.
As Kalifa's report says, “If a single body existed for such purposes, this would help fintech firms during their growth phase, as they may have limited resources at their inception and would find it easier if the number of bodies they have to deal with is reduced.” The report further recommends that this single body, the Digital Economy Taskforce, be set up ASAP. Its mandate is to champion the fintech sector.
Overall, the review is a welcome development. I hope the recommendations are implemented by the government in a timely manner. We in the regtech, anti-financial crime sector work hard to innovate and provide technology and expertise to enable regulated entities to keep progressing and refining their financial crime programs and make optimum use of their compliance budgets. By doing this, they can avoid fines and reputational damage and, ultimately, reduce fraud and financial crime.
The regtech sector must receive the backing required to prevent criminals from laundering funds through their systems and position the UK as the best place in the world to do business.
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