Market Intelligence Note: International Fintech Conference 2017 — London UK
Wednesday, 12 April 2017
This week in London, UK, there has been a plethora of great fintech events: the Innovate Finance Conference, while the jewel in my honest opinion has been the inaugural International Fintech Conference, sponsored by HM Treasury and Trade Gov (with keynotes from Head of Bank of England, Chancellor of Exchequer, Secretary of Commerce among other dignitaries) — while on the sidelines HM Treasury has had a special 2 day hackathon bent on improving the pensions industry.
International Fintech Conference
The important thing about International Fintech Conference was the solidity of the tone and the actual weight of real cases and the accelerating proactive advice and regulation support from the authorities, all focused not on closing the loopholes for radicals, but paving the road for sustainable, equitable and scalable opportunity for financial services of the future. This is important in order to facilitate the role of London and the UK as the pioneer and the centre for global fintech innovation.
Housed by numerous global players in the financial services domain, creating a regulation framework to allow the incumbents to work with the radicals, allow the former to plant to seed of growth globally, and support the latter with regulation advice — all that is important to support the UK claim for fintech supremacy.
A number of initiatives has been commenced:
- the ongoing establishment of fintech bridges with other global regulators to facilitate a worldwide fabric of common rules around reporting, AML, data protection, and other elements of input and output
- the announcement of the planned Industry Sandbox, allowing the industry to advise the regulator on pending changes around regulation and setting up favourable and secure environments for emerging tech
- the push towards open data and necessary elements for data security — the PSD2 and the GDPR
The sandbox is ever more important to allow collaboration between banks and fintechs to proliferate, while helping the latter to focus on pertinent and real issues benefiting the market as a whole, while allowing banks to understand this: “banks try to maintain the edge and control the IP but are not agile enough to create new IP” — hence a cooperation model has to come first, it is no longer about IT software development.
More about PSD2 for UK: an Open Banking Initiative
The so called Open Banking Initiative is the ensuing step from the Competition and Markets Authority (CMA) report back from August 2016, where a set of proposals has been laid out, the most pertinent of which being around the implementation of APIs for leading (9) banks of the UK.
The so-called CMA9 Group is leveraging PSD2 ethos to set more standardised relationship between banks and fintech companies playing either account information or payment origination services. Where PSD2 only mandates for direct access, the CMA sees how it may be unsustainable in the end with banks having to maintain often point to point integrations and thus failing with:
- allowing for payment indemnity protection scheme as cybercrime is on the rise (where insurers would be unwilling to support different integration schemes)
- allowing for the regulator to properly vet and authenticate the connection as secure (where multitude of approaches would not work either).
Hence, the steering group came together to create a set of vetted API services, also feeling the benefit for a shared environment around data input and output, as well as:
- conserve cost on service development
- allow the cost-conscious fintech industry to focus on PoC rather than integration issues
- contribute to security and data privacy provisioning as part of GDPR
Notable requirements of PSD2, when enforced, is banning of screen-scraping — but the Directive, and even EBA’s Strong Customer Authentication and data access requirements only mandate for direct access, but no concrete detail on API requirements, leaving it to the industry players to figure out and agree on themselves. Importantly, the ones who’ve pushed the regulator and banks to move were the one who formerly were known for screen-scraping of data — people from Data and Financial Tech Association, a good vindication point on how pioneers and radicals are pushing adoption of equitable innovation. In terms of the planned final product is what Open Banking initiative calls a digital certificate: it is willing to create a registry to vet the tech process associated with account information and payment origination service, providing a digital certificate to the service applying for either payment initiation or account information service role.
Industry experts at the Conference understand the looming future of data as utility. Properly contextualised, it can drive governance decisions and drive more value to merchants, users and even regulators. A remarkable announcement by the Bank of England head was the announcement of another accelerator as part of BoE, while a number of data processing and deep knowledge analytics companies are already working with the Bank:
MindBridge AI: MindBridge’s AI Auditor detects anomalies in financial transactions and reports using data science, machine learning and artificial intelligence technologies. Using a small set of anonymised regulatory data the Bank is using MindBridge’s AI Auditor to explore the benefit of machine learning technology in analysing the quality of regulatory data input.
Threat intelligence: As part of the Bank’s wider information security and threat intelligence work we partnered with two firms — Anomali and ThreatConnect — that provide innovative technologies to collect, correlate, categorise and integrate security threat data.
Privitar: As part of our Proof of Concept, we tested the software on a manufactured dataset to examine the analytical value of the desensitised data to establish if this could allow us to provide wider access to data for researchers within the Bank.
The logic behind Pensions Dashboard TechSprint will be explained in a separate post.
