Other initiatives to aid new and innovative firms
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 loans offered by both Tandem as well as its competitors. Other innovative banks are in the pipeline for authorisation.
Other initiatives to support new and firms that are innovative
The financial institution of England supports innovation in financial services through its work 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 also embraced new technology in the provision of UK banknotes.
Research and analytics
The lender launched its One Bank Research Agenda initiative in February 2015 to try 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 lender together with research community to guide innovation and inform the Bank’s work. The lender has put up a study Hub division to help drive this forward and developed an innovative 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 response to change that is fundamental.
In particular the fundamental change workstream takes a longer term have a look at how technological (along with other) innovations might affect central banking over a longer horizon. This can include, as an example, exploring the impact of digital currencies or alternative finance providers, and any associated economic, technological and regulatory challenges.
Included in its broader research agenda, the Bank publishes new datasets to facilitate external research. This consists of long run historical data, the financial institution 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 the Bank’s data to the public.
The Bank has also put up a sophisticated analytics division and data lab to exploit new and innovative analytical tools and techniques, analyse new data sources such as for instance social media, and help spread best practice when you look at the analysis of brand 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.
Within the payments space, the Bank is conducting research into innovations in payments technology, with a certain focus on digital currencies additionally the distributed ledger systems that underpin them.
This builds on the Quarterly Bulletin articles published by the financial institution in 2014, which considered the technical architecture of digital currencies, and the economic theories that govern how they work.
Following extensive public consultation, 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 over and above current paper banknotes.
Polymer notes are cleaner and more durable – these are typically more resistant to dirt and moisture, more environmentally friendly and last at least 2.5 times more 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 should be unveiled on 2 June therefore 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 financial institution has broadened the product range of collateral accepted in its market operations to now include residential mortgages, asset finance, signature loans, automobile financing, corporate loans, SME loans and credit that is revolving.
This permits 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 including the Funding for Lending Scheme. Work is underway to make sure that there aren’t any obstacles that are technical the Bank’s capability to accept equities as collateral should the need arise.
As part of its technique to broaden liquidity provision available in the market, the Bank commenced work with 2015 to evaluate the feasibility of establishing a Shari’ah compliant facility.
The lender 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 financial institution has also become an associate member of 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 the schemes had to hold securities as collateral and agree to a mutual loss-sharing framework. Prefunding allows each institution to control their exposure limit using reserves at the financial institution.
In January 2016 the Bank announced its plan to design a blueprint money for hard times associated with the UK’s value that is high settlement system – the true Time Gross Settlement System (RTGS ). The Bank will appear to redesign RTGS in such a manner that its resilience is further enhanced, while at precisely the same time enabling innovation.
2.8 How financial services regulators are better utilising new technologies to come up with efficiency savings and minimize burdens on business – RegTech
Regulators not just have a task to relax and 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 now been particularly centered on this dilemma.
Firms have to meet higher regulatory standards and greater reporting requirements after the financial meltdown. New technologies that help firms better manage these regulatory requirements and lower compliance costs (so-called RegTech) are great for effective competition and innovation.
The main focus among these were to know:
The objective of this consultation is to seek views on 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 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 when you look at the financial services sector, in 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 business that is disruptive might emerge within the sector?
- Are there any gaps in approach or places where financial services regulators ought to be doing more to guide technology that is innovative disruptive business write my paper models in financial services?
- Can there be more that financial services regulators could do to better utilise new technologies to produce their work that is own more?
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
1 Horse Guards Road
London SW1A 2HQ
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