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Navigating the Future: The UK’s Competitive Edge in Fintech Regulation and Innovation

“The UK has a strong competitive advantage in areas like cybersecurity, privacy and, increasingly, artificial intelligence. A lot of work, however, remains to be done. This is not an automatic process by any means,” outlines Dr Devraj Basu, Senior Lecturer in Finance in the Accounting and Finance department at the Strathclyde Business School. Basu helped set up the RegTech Forum which brings together industry, academia and government to help understand the fast moving RegTech landscape and how Scotland and the UK can position themselves to become leading global players.

“While the UK has well established strengths, it needs to pull together all these very different areas by creating an ecosystem solution,” he continues. Basu feels that if the UK provides a proper regulatory framework in the context of technology it will provide a greater impetus in unlocking innovation. A stable regulatory framework is also needed to adapt to technological change to ensure it’s fit for consumers – AI being a prime example. But the UK needs to simultaneously join up with international best practice as well. “These elements require a deep understanding of all the issues, as well as an aspect of agility to bring together all the different stakeholders,” he says.

Regarding the appetite of UK regulators towards the development of overarching digital public infrastructures (such as the so-called India Stack’ built on Aadhaar, India’s digital ID system), Basu believes that the UK can learn from establishing digital identities, preferably through the creation of an overarching framework for privacy regulations. However, the parallels stop there. This is because the UK would, unlike India, have to tackle its legacy technology issues. Further, the UK’s Financial Conduct Authority (FCA) can only play a limited role in transforming legacy infrastructure because rather than dishing out prescriptive directions to industry, the FCA is a principles-based regulator which can only outline overarching maxims.

In terms of innovating financial regulation itself, Basu feels that the UK has done the right thing by introducing regulatory sandboxes. Moreover, he feels strongly that the FCA should start looking at the costs that regulations impose on businesses and how they can be minimised. This could be achieved by implementing a by design’ philosophy by providing either high-level roadmaps that minimise cost or interactive processes that lead to better regulation. “One way of being innovative is if the regulator could convince organisations that the adoption of new regulations would actually improve products or sales. One thing that’s come out of our RegTech Forum is this notion of the by design’ philosophy, which takes a proactive view on regulation, which in turn encourages innovation,” Basu explains. “Ideally a regulator should be a body that guides businesses through a process and helps them get better.”



New partnership to tackle financial fraud using synthetic data

In the ever-evolving landscape of financial fraud, Authorised Push Payment (APP) Fraud has become a prominent concern for both regulators and financial institutions. In 2022 alone, a staggering £485.2 million was lost to APP Fraud scams, accounting for a significant 40% of all financial fraud losses during that period. To combat this growing problem, the Financial Conduct Authority (FCA) and the City of London Corporation have teamed up with Smart Data Foundry to provide innovative solutions and support their mission to eradicate APP Fraud.

 

Smart Data Foundry’s aizle Synthetic Data Engine

At the heart of this collaboration lies Smart Data Foundry’s cutting-edge aizle® synthetic data engine. This powerful tool is being harnessed to create a synthetic dataset tailored specifically for APP Fraud. This dataset will be accessible through the FCA’s Permanent Digital Sandbox, providing a resource for innovators and stakeholders in the fight against APP Fraud.

 

Understanding APP Fraud

APP Fraud occurs when individuals are deceived into transferring money to fraudsters posing as legitimate entities or individuals. The consequences of falling victim to these scams are devastating, particularly for those who are financially vulnerable. It is a pervasive issue that requires comprehensive and innovative solutions to address effectively.

 

TechSprint Initiative and Continued Development

Recognising the urgency of the problem, the FCA and the Payment Systems Regulator (PSR) organised a TechSprint event in September 2022, focusing on combating APP Fraud. Smart Data Foundry played a pivotal role during this event by providing their APP Fraud synthetic dataset. Building on this momentum, Smart Data Foundry has continued to refine and expand their dataset to meet the evolving needs of the industry.

 

The Importance of Quality Data

Access to high-quality data is essential in the fight against financial fraud. It enables innovators to test ideas, develop proofs of concept, and refine models effectively. The APP Fraud synthetic dataset, provided by Smart Data Foundry, covers the entire lifecycle of APP Fraud, offering a representative and relevant resource for researchers and organisations striving to combat this growing threat.

Bryn Coulthard, Chief Product and Technology Officer at Smart Data Foundry, stated,

“We focus on creating high-utility synthetic data to enable innovation within the financial services industry. We are delighted to continue partnering with the FCA with our APP Fraud datasets to help play a part in tackling this growing problem and to help ignite and accelerate innovation in this space.”

Photo by Sora Shimazaki: https://www.pexels.com/photo/crop-cyber-spy-hacking-system-while-typing-on-laptop-5935794/

New opportunity to join Scotland’s thriving fintech cluster

The University of Strathclyde has just published a new job opportunity and is on the look-out for a High Growth Advisor who will be working very closely with FinTech Scotland.

The successful candidate will play a key role in supporting the development of the Financial Regulation Innovation Lab which is launching later this year. They will collaborate closely with the University’s Industry Engagement and Innovation Directorate, the University’s FinTech Cluster Lead, and Fintech Scotland’s Strategic Innovation Director, Trish Quinn whose appointment was announced recently.

The Financial Regulation Innovation Lab builds upon the UK  Fintech Research & Innovation Roadmapunveiled last year. The roadmap highlighted the potential for further research and innovation in financial regulation. Aligned with the UK Government Science and Technology Framework published in March 2023, the Lab aims to position the UK at the forefront of global science and technology.

The Lab will create a unique environment where fintech entrepreneurs, established UK and global financial services firms, technology enterprises, regulators, universities, and third-sector organisations come together to drive financial innovation, addressing opportunities and challenges in financial regulation.

Key responsibilities for this role include facilitating the Innovation Call series for the Lab, which comprises demand-led challenges set by industry.

Additionally, the role will involve developing essential partnerships between the University of Strathclyde, FinTech Scotland, and the University of Glasgow, to create more collaboration opportunities in the Scottish and UK fintech clusters.

The ideal candidate for the role should have extensive leadership experience gained from transforming leading financial sector companies digitally. They will be instrumental in shaping the Lab’s interactions with diverse stakeholders, developing effective networks, sector relationships, and multi-party collaborations through their strong negotiation skills, business acumen, and strategic vision.

Interviews for this exciting opportunity are scheduled for October 2, 2023.

To apply visit this page

For more information or informal inquiries, please contact Catherine Breslin, Head of Industry Engagement & Commercialisation, at catherine.breslin@strath.ac.uk.

FinTech Scotland appoints senior leader to accelerate plans for the Financial Regulation Innovation Lab

FinTech Scotland has announced today the appointment of a new senior leader, Trish Quinn, who joins as Strategic Innovation Director. Trish will be leading the development of the Financial Regulation Innovation Lab (FRIL) which is due to launch later on this year.

The Financial Regulation Innovation Lab (FRIL) is one of the recommendations laid out in the UK Fintech research & Innovation Roadmap published in March 2022. It is set to be a new collaborative centre of excellence for cutting-edge fintech developments in financial regulation. The Lab will explore solutions that aim to streamline regulatory processes, enhance compliance measures, and drive efficiencies across the financial sector.

FinTech Scotland, in partnership with industry partners, and with the University of Strathclyde and the University of Glasgow, will stand up the launch the Lab and drive progress this year. This industry-led initiative showcases the power of the Fintech Scotland Cluster to drive innovation.  This project is funded by the Glasgow City Region Innovation Accelerator programme, led by Innovate UK on behalf of UK Research and Innovation. This financial support from the UK Government continues to endorse the opportunity from the emerging fintech sector to support growth across the UK economy.

As the newly appointed Innovation Director, Quinn will be responsible for leading the Lab and working with partners across Scotland and in the UK, in delivering a programme      that will enable efficiencies through technology to meet the needs of current and future financial regulation. Quinn brings a wealth of experience in digital transformation and digital product development to her new role, having previously served in a number of senior digital roles in both the UK and     Scottish Government.

Commenting on her appointment, Trish Quinn said:

“I am delighted to join FinTech Scotland as the Innovation Director and lead the Financial Regulation Innovation Lab. The potential to reshape      the financial industry through technology applied to financial regulation is significant, and I am excited to join the team at FinTech Scotland to drive innovation, foster collaboration, and contribute to the growth of the fintech sector.”

Nicola Anderson, CEO of FinTech Scotland, said:

“Trish brings      extensive experience in digital transformation, leading strategic initiatives across her career with an emphasis on      change through collaboration and partnerships.      Her leadership and experience will help us accelerate the Lab’s development, creating the conditions needed for more fintech growth in Glasgow and the FinTech Scotland cluster.

David Hillier, Associate Principal and Executive Dean of the University of Strathclyde Business School said:

“We are excited to welcome Trish to lead this critical initiative. The University of Strathclyde has significant expertise to bring, and we’re looking forward to driving this initiative, working closely with our industry partners across the FinTech Scotland Cluster and our academic partners in the University of Glasgow to drive this opportunity for Glasgow City Region. The Lab creates the environment for high-potential innovation in a subject that’s fundamental to the success of our financial system”.

Eleanor Shaw, Head of the University of Glasgow Adam Smith Business School said:

“Trish will lead a ground-breaking initiative that’s a first for Scotland and the UK, and we are delighted to be working with her. It’s fantastic to see Glasgow City Region’s innovation capabilities and ambition come together to create what will become a key asset for Scotland and the UK in driving innovation in financial regulation. The University of Glasgow is looking forward to playing a leading role.”

Dr. Catherine Martin, Vice Principal Corporate Services, University of Edinburgh said:

“I’m very pleased to welcome Trish to FinTech Scotland and want to congratulate her on this appointment. The Financial Regulation Innovation Lab is an exciting new endeavour and we at Edinburgh are pleased to support this opportunity for Glasgow and for Scotland. As a founding member of FinTech Scotland it’s a pleasure to see the fintech opportunity continue to grow across Scotland and the UK”.

OneSpan

AutoRek secures Best CASS Solution for the fourth consecutive year

Scottish fintech AutoRek achieved outstanding recognition at the Systems in the City Fintech Awards 2023.

Demonstrating unrivaled excellence, Autorek clinched the highly coveted title of Best CASS Solution for a fourth consecutive year. Organised by specialist business and technology consultancy Goodacre, those awards celebrate the finest achievements in the industry.

Leahn Parry, Head of Governance, Risk, and Compliance at AutoRek, claimed the individual award for Compliance Specialist.

In addition to securing the crown for Best CASS Solution, AutoRek was also recognised as a contender for Best Wealth Management Solution.

Lyn Canavan, Vice President of Marketing at AutoRek, stated,

“The recognition of winning this prestigious award, along with reaffirming AutoRek’s standing as the indisputable Best CASS Solution, fills us with immeasurable joy. Over the years, we have meticulously refined and perfected our CASS solution in close collaboration with our esteemed clientele. This victory serves as a testament to the unwavering dedication and tireless efforts exhibited by the entire AutoRek team behind the scenes.”

Leahn Parry added,

“It is with immense honor that I receive this prestigious award. I extend my heartfelt gratitude to Goodacre, the distinguished panel of judges, and the individual who nominated me.”

The Systems in the City Fintech Awards serve as a resounding endorsement for suppliers of services and systems within the regulated financial services sector.

Guided by an independent and fact-based annual accreditation process, the selection procedure is meticulously overseen by a panel of three independent judges.

These awards serve as a pivotal reference point for enterprises evaluating the suitability of their operational infrastructure, cementing their crucial role within the industry.

Fintechs and DORA, everything you need to know!

Season 3, episode 7

Listen to the full episode here.

On November 10th, 2022, the Digital Operational Resilience Act (DORA) was approved by the EU.

It is designed to standardise IT risk requirements in the financial sector to ensure that all participants of the financial system are subject to a common set of. 

Amongst other things it introduces an oversight framework for critical third-party providers.

In this podcast we will discuss how this new EU regulation can impact fintech firms that are very often providing 3rd party services to established financial firms.

Guests:

Yvonne Dunn, Partner at Pinsent Masons

Wayne Scott, Regulatory Compliance Solutions Lead at NCC

Jamie Graves, technical advisor on the TrueDeploy project

One year on, the FinTech Research & Innovation Roadmap drives FinTech growth in Scotland

A year on from publishing the FinTech Research and Innovation Roadmap, FinTech Scotland announced today that it is on track to hit its targets for economic growth.

In March 2022, FinTech Scotland, the independent cluster body, published a strategic FinTech Research and Innovation Roadmap, identifying industry priorities for the UK to accelerate its fintech ambition through research and development (R&D) and targeted innovation.

The Roadmap was developed in close coordination with fintech entrepreneurs, the financial services sector, academia, regulators, Government bodies and consumer groups, and provides a pathway and action-oriented framework to increase the positive impact of FinTech Innovation across Scotland and the UK.

The Roadmap also supports the recommendation in the Kalifa Review of UK Fintech, for increased R&D investment in fintech innovation to accelerate fintech cluster excellence, and was positively welcomed by Ron Kalifa, the financial services sector, UK and Scottish Government and the City of London Corporation.

The priorities laid out in the Roadmap centred on four strategic innovation themes:

  • Climate Finance
  • Open Finance Data
  • Payments and Transactions; and
  • Financial Regulation

Over a ten-year period, the ambition is to significantly increase fintech related jobs across Scotland and the UK, as well as produce an increase in economic gross value add (GVA) through fintech innovation.

One year on, industry-led collaborations have driven growing action against each of the strategic innovation themes. These collaborations, at the cutting edge of innovation, are driving results. Examples include:

  • Climate Finance
    • 100% increase in fintech enterprises in Scotland focused on climate finance
    • Accelerated fintech partnerships and fintech adoption through new innovation labs launched with Lloyds Banking Group and TSB with outcomes helping UK customers towards carbon efficiency
    • Climate finance enabled through cross-sector collaboration with Space Scotland, accelerating innovations in ESG using data from satellite sources

  • Open Finance Data
    • 26% increase in fintech enterprises developing innovative solutions using Open Banking
    • Accelerated fintech adoption and creation of commercial opportunities through the launch of Phoenix’s innovation forum to build greater engagement and support the well-being of its customers, driving forward greater financial inclusion
    • The Smart Data Foundry’s research on vulnerability in the pension market, the impact of late payments on the SME market, and on the net zero agenda, all enabled through Open Finance Data

  • Payments & Transactions
    • 19% increase in fintech enterprises in Scotland developing payment solutions
    • Investment of £94m into fintech enterprises focused on payment innovation in the last 12 months
    • Development of Cryptofinance, blockchain and Distributed ledger courses at leading Scottish universities

  • Financial regulation
    • 13% increase in fintech enterprises specialising financial regulation innovation
    • Investment of £83m into fintech enterprises focused on financial regulation innovation in the last 12 months
    • Confirmed government and industry support to accelerate innovation in financial regulation enabling the creation of the Financial Regulation Innovation Lab

Nicola Anderson, CEO of FinTech Scotland, said:

“By enabling collaborative innovation across the fintech ecosystem not just in Scotland but the whole of the UK and beyond, we can see how the FinTech Research and Innovation Roadmap is already making a real difference ”“ helping businesses to build economic growth, create jobs, work through climate finance to enable a future net zero economy, and helping to alleviate the cost of living crisis.

“The FinTech R&I Roadmap demonstrates how collaboration and innovation can change people’s lives, driving positive outcomes for both business and citizens both in Scotland and across the UK.”

Charlotte Crosswell OBE, Chair of the Centre for Finance, Innovation and Technology, said:

“The UK Fintech Sector Review clearly set out recommendations to ensure the country retains its global leadership position in financial innovation. An important component of that success is increased investment in fintech, and ensuring the brightest minds across the UK are involved. It’s encouraging to see that in just one year, the FinTech Research and Innovation Roadmap has enabled more of that important R&D collaboration and aligns with our approach at CFIT.”

Damian Nussbaum, Executive Director, Innovation and Growth City of London Corporation, said:

“FinTech continues to be a major success story for the UK, and its development is critical to ensuring the UK maintains its position as a global financial hub. The UK has a unique innovation ecosystem where research and development play a critical role. The Roadmap highlights the power and potential of that ecosystem and the transformative impact that collaboration in this sector can have across society. The City of London Corporation welcomes the progress made and we look forward to working with Scotland and the other nations and regions of the UK to drive further fintech growth.”

Jane Martin, Managing Director of Innovation and Investment at Scottish Enterprise, said:

“Strong, effective and purposeful collaboration between industry, academia and the public sector is key to delivering much needed innovation and growth for Scotland. The FinTech Research and Innovation Roadmap is a demonstration of how collaborative action through purposeful strategic action can drive good economic outcomes and accelerate future growth.”

Catherine Martin, Vice Principal Corporate Services at the University of Edinburgh, said:

“As a founding partner of FinTech Scotland the University of Edinburgh is fully committed to the role R&D plays in developing fintech economic opportunities in Scotland and across the UK. Our experience and academic excellence in both disruptive technologies and other sectors has shown how strategic and purposeful partnerships can shape the future direction of vital industries and sectors in our economy and society. We’re committed to playing our role as a leader and as a collaborator in fintech and financial services innovation, pushing forward the FinTech Research and Innovation Roadmap priorities”.

Pardeep Cassells, Head of Securities and Claims at AccessFintech, said:

“Fintech innovation can’t afford to slow down. Technologies advance fast, customer expectations faster and the need for a fairer, more inclusive and more sustainable financial sector is still to be fulfilled. The fintech community has welcomed the FinTech Research and Innovation Roadmap. It focuses the mind, helping fintech businesses like AccessFintech accelerate through understanding the points of convergence across the sector which in turn enables more collaborations and innovations.”

Eleanor Shaw, Associate Principal at the University of Strathclyde, said:

“Strathclyde is proud of its role in shaping the future of fintech. It was one of the first universities to launch an MSc in fintech in the UK. Very early on we understood the importance of financial innovation to re-invent a sector that was built to benefit the many, not the few. R&D is key and the Roadmap is a fundamental tool. It’s been a key component in advancing our fintech strategy at Strathclyde. As a result we’re working in collaboration with FinTech Scotland, the University of Glasgow and the industry to establish the Financial Regulation Innovation Lab, to advance innovation in financial regulation.”

Frank Gauld, CEO at Smart Data Foundry, who sponsored the Roadmap, said:

“When it comes to data and innovation, the potential is exciting and unlimited. The FinTech R&I Roadmap focuses the mind and provides a clear industry view on innovation priorities. In the last year we’ve worked closely with FinTech Scotland, progressing research and innovation to unlock the power of financial data to improve people’s lives across society, the economy and the environment. Examples include our work with the FCA to innovate in the area of APP Fraud, research on consumer vulnerability in the pension market, the impact of late payments on the SME market, and working with Bankers for Net Zero to support the initiative to transition to a zero carbon economy. The insights are used across the industry and by regulators to change outcomes for people and businesses for the better”.

FinTech Scotland secures UK Government funding to Accelerate Innovation in Financial Regulation

FinTech Scotland has secured UK Government funding to accelerate innovation in Scotland’s fintech cluster. The funding will advance research and innovation in financial regulation.

The FinTech Scotland initiative in partnership with industry partners, and with Strathclyde and Glasgow universities includes the creation of a new collaborative centre of excellence, called The Financial Regulation Innovation Lab.

The ground-breaking collaborative Lab will focus on leveraging new technologies to accelerate efficiencies, revolutionise risk management and shape future regulatory developments, accelerating the UK’s ability to seize competitive advantage in the future of financial regulation and fintech innovation.

The new funding is part of a broader successful bid by Glasgow City Region included in the UK Government’s initiative to accelerate the growth of high-potential innovation clusters’ in Glasgow, Greater Manchester, and the West Midlands. All of the projects in the Innovation Accelerator Programme will commence in the Spring, following Innovate UK’s normal diligence.

The funding allocation to fintech in Glasgow demonstrates the national commitment to drive fintech innovation across the UK.

The Lab enables FinTech Scotland to deliver one of the strategic recommendations laid out in the FinTech Research & Innovation Roadmap, launched in March 2022 and aligns with the recently announced UK innovation initiative, the CFIT, formed in response to the HM Treasury FinTech Sector Review.

FinTech Scotland will work across industry leading the development of the Lab, with initial actions focused on

  • A sandbox to test and advance fintech innovations that meet industry demand.
  • A facility to develop new businesses with an accelerated path to commercial success.
  • Industry driven academic research, advancing new deployment of tech in finance.
  • A technology focused skills programme for risk and regulatory professionals.
  • Researched, data driven contributions helping advance financial regulation policy.

Nicola Anderson, CEO at FinTech Scotland commented:

“I am delighted to see the commitment and recognition from the UK Government in the high-growth potential of fintech innovation in Glasgow. The Innovation Accelerator funding will help push this forward.

The Financial Regulation Innovation Lab is a ground-breaking initiative. It brings together, industry partners, fintech entrepreneurs, universities, and regulators to revolutionise the future of financial regulation and risk management through technology and data. The outcomes will shape jobs for the future and propel our fintech ambition, here in Scotland and across the UK. “

Charlotte Crosswell OBE, Chair at the Centre for Finance, Innovation and Technology (CFIT) commented:

“The development of the Financial Regulation Innovation Lab is an exciting opportunity both for Glasgow and for the UK.

We have significant potential across the UK to drive fintech innovation and realise our full fintech potential. Drawing on our regional strengths and bringing experts across the finance and technology ecosystem is key. This is our mission at CFIT, and we’re delighted to support FinTech Scotland as it continues to demonstrate its impact, identifying opportunities for fintech growth and working in collaboration to drive the Innovation Acceleration across the UK.”

Consumer Duty and fintech innovation

Season 3, episode 4

Listen to the full episode here.

In July 2022, the FCA published its Consumer Duty. Regulated firms need to implement the new rules by the end of July 2023 for open products and July 2024 for closed books of business.

Firms will need to review their products, communications and customer journey.

It will impact most areas in those organisations such as governance, reporting, product design, pricing, distribution, servicing and staff training.

In this podcast we will review the key principles, ask ourselves what the impact on both established firms and fintechs is as well as exploring innovative technologies that can help adhere to those new rules.

Guests:

Venetia Jackson – Senior Associate at Pinsent Masons

Joseph Twigg – Founder and CEO at Aveni

Chris Ansara – Founder and CEO at docStribute