Other initiatives to support new and innovative firms
Lowering barriers to entry and expansion
Tandem Bank (authorised in November 2015) is a digital-only retail bank that will operate an individual finance guide which compares lending options made available from both Tandem as well as its competitors. Other innovative banks are in the pipeline for authorisation.
Other initiatives to aid new and firms that are innovative
The Bank of England supports innovation in financial services through its work to promote innovative research and data analytics in central banking, and improving 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 aims to facilitate open dialogue between the lender as well as the research community to guide innovation and inform the Bank’s work. The lender has put up an investigation 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 a reaction to fundamental change.
In particular the change that is fundamental takes a longer term have a look at how technological (and other) innovations might affect central banking over an extended horizon. This includes, as an example, examining 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 can include run that is long data, the financial institution of England’s balance sheet and data recorded because of the Bank’s regional agents. The long-term plan is to start up a lot more of the Bank’s data to your public.
The financial institution in addition has put 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 marketing, and help spread best practice in 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 region, and recently ran a data visualisation competition to engage with data scientists and students throughout the UK.
In the payments space, the financial institution is conducting research into innovations in payments technology, with a particular concentrate on digital currencies together with distributed ledger systems that underpin them.
This builds regarding the Quarterly Bulletin articles published by the financial institution in 2014, which considered the technical architecture of digital currencies, additionally the economic theories that govern how they work.
Polymer banknotes
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 more durable – these are generally more resistant to moisture and dirt, more environmentally friendly and last at the least 2.5 times more than paper banknotes. Polymer notes are also more secure, with advanced security features that provide a step-change in counterfeit resilience. The design that is full of Ј5 note may be unveiled on 2 June while the banknote introduced in September 2016, because of the Ј10 note issued in 2017, and Ј20 note by 2020.
Use of Bank of England facilities
The Bank has broadened the number of collateral accepted in its market operations to now include residential mortgages, asset finance, signature loans, auto loans, corporate loans, SME loans and credit that is revolving.
This enables access for a wider range of counterparties – over 80 banks and building societies currently have assets placed during the Bank buy an essay, ready for usage in initiatives such as the Funding for Lending Scheme. Work is underway to ensure there are no obstacles that are technical the Bank’s ability to accept equities as collateral should the need arise.
As an element of its strategy to broaden liquidity provision in the market, the Bank commenced operate in 2015 to evaluate the feasibility of establishing a Shari’ah compliant facility.
The financial institution recognises the difficulties Islamic banks face in meeting liquidity requirements with the current range that is limited of – 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 lender has introduced prefunding for Bacs and Faster Payments, which lowers barriers to entry for banks and building societies seeking to become people in these payment schemes.
Previously, a member of the schemes needed to hold securities as collateral and agree to a mutual loss-sharing framework. Prefunding allows each institution to manage their exposure limit using reserves at the financial institution.
In January 2016 the financial institution announced its plan to design a blueprint for future years of the UK’s value that is high settlement system – the Real Time Gross Settlement System (RTGS ). The Bank can look to redesign RTGS in such a way that its resilience is further enhanced, while at the same time innovation that is enabling.
2.8 How financial services regulators are better utilising new technologies to create efficiency savings and lower burdens on business – RegTech
Regulators not only have a task to relax and play in promoting 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 been particularly dedicated to this matter.
Firms need certainly 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 lower compliance costs (so-called RegTech) are good for effective competition and innovation.
The focus of those were to comprehend:
The goal of this consultation would be 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 in terms of innovation that is supporting.
3.1 Consultation questions
The federal government invites responses from all interested parties, in particular both regulated and unregulated firms and innovators in the financial services sector, in 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 disruptive business models might emerge into the sector?
- What are the gaps in approach or places where financial services regulators should really be doing more to guide technology that is innovative disruptive business models in financial services?
- Can there be more that financial services regulators could do to better utilise new technologies to provide their own work more effectively?
3.2 How to respond
This consultation will run from 22 April to 6 May 2016.
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
HM Treasury
1 Horse Guards Road
London SW1A 2HQ
When responding, please say if you are making a representation with respect to a business, individual or body that is representative. Into the case of representative bodies, please provide information on the amount and nature of people you represent.
3.3 Confidentiality
Information provided as a result to the consultation, including private information, may be published on disclosed according to the usage of information regimes. They are primarily the Freedom of Information Act 2000 (FOIA), the Data Protection Act 1988 (DPA) together with 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 of the it could be helpful if you could explain to us why you regard the information you have provided as confidential.
When we receive an ask for disclosure of the information we will take full account of your explanation, but we cannot give an assurance that confidentiality could be maintained in all circumstances. An confidentiality that is automatic generated by your IT system will not, of itself, be regarded as binding on HM Treasury.
HM Treasury will process your private data prior to the DPA and in nearly all circumstances this may imply that your own personal data will never be disclosed to third parties.