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 a personal finance guide which compares financial loans offered by both Tandem and its own competitors. Other innovative banks are in the pipeline for authorisation.

Other initiatives to guide 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 improving the ability of innovative firms to gain access to Bank of England facilities. The financial institution has additionally embraced technology that is new 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 consideration technological, institutional, social and environmental change.

It is designed to facilitate open dialogue between the financial institution together with research community to support innovation and inform the Bank’s work. The Bank has put up a study Hub division to simply 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 response to fundamental change.

In particular the change that is fundamental takes a longer term glance at how technological (and other) innovations might affect central banking over a lengthier horizon. This consists of, for 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 includes long run historical data, the Bank of England’s balance sheet and data recorded by the Bank’s regional agents. The long-term plan is to start up even more of this Bank’s data into the public.

The financial institution in addition has set up an enhanced analytics division and data lab to exploit new and innovative analytical tools and techniques, analyse new data sources such as for example social networking, and help spread practice that is best within the analysis of the latest big datasets both outside and inside the Bank.

The division is also developing relationships with external partners in this region, and recently ran a data visualisation competition to interact with data scientists and students throughout the UK.

Into the payments space, the lender is conducting research into innovations in payments technology, with a specific concentrate on digital currencies therefore the distributed ledger systems that underpin them.

This builds on the Quarterly Bulletin articles published by the lender in 2014, which considered the technical architecture of digital currencies, and also the economic theories that govern how they work.

Polymer banknotes

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 material which has benefits over and above current paper banknotes.

Polymer notes are cleaner and more durable – these are generally more resistant to dirt and moisture, more environmentally friendly and last at the very 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 this Ј5 note will undoubtedly be unveiled on 2 June as well as the banknote introduced in September 2016, aided by the Ј10 note issued in 2017, and Ј20 note by 2020.

Use of Bank of England facilities

The lender has broadened the product range of collateral accepted with its market operations to now include residential mortgages, asset finance, personal loans, automobile financing, corporate loans, SME loans and credit that is revolving.

This allows access for a wider array of counterparties – over 80 banks and building societies currently have assets placed during the Bank, ready to be used in initiatives for instance 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 if the need arise.

As part of its technique to broaden liquidity provision on the market, the lender commenced operate in 2015 to assess the feasibility of establishing a Shari’ah compliant facility.

The financial institution recognises the difficulties Islamic banks face in meeting liquidity requirements using the current limited range of options – existing facilities are not Shari’ah compliant as they involve interest-bearing activity. The lender has also become an member that is associate of Islamic Financial Services Board (IFSB ).

In 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 trying to become people in these payment schemes.

Previously, a part of these schemes needed to hold securities as collateral and invest in a loss-sharing framework that is mutual. Prefunding allows each institution to control their exposure limit using reserves at the financial institution.

In January 2016 the Bank announced its want to design a blueprint for the future of the UK’s value that is high settlement system – the true Time Gross Settlement System (RTGS ). The financial institution can look to redesign RTGS in such a manner that its resilience is further enhanced, while in addition innovation that is enabling.

2.8 How services that are financial are better utilising new technologies to come up with efficiency savings and lower burdens on business – RegTech

Regulators not just have a role to relax and play in promoting competition and innovation, but additionally in using technological advances to reduce regulatory burdens on firms and drive efficiency savings. The FCA and PRA have been particularly dedicated to this problem.

Firms have to meet higher regulatory standards and greater reporting requirements following the financial meltdown. New technologies that help firms better manage these regulatory requirements and reduce compliance costs (so-called RegTech) are great for effective competition and innovation.

The main focus among these were to comprehend:

The purpose of helpful resources this consultation is to seek views in the work of financial services regulators to guide innovative technology and disruptive business models, and understand where there might be gaps in regulatory approach in terms of supporting innovation.

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, regarding the following specific questions.

  1. Does the UK’s regulatory environment for financial services effectively support innovation?
  2. Do financial services regulators understand innovation in financial services and potential areas where new technologies and disruptive business models might emerge when you look at the sector?
  3. Are there any gaps in approach or places where financial services regulators should always be doing more to support technology that is innovative disruptive business models in financial services?
  4. Is there 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 ought to 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’re making a representation on the part of a company, individual or body that is representative. Within the full case of representative bodies, please provide informative data on the amount and nature of people you represent.

3.3 Confidentiality

Information provided in response for this consultation, including personal information, can be published on disclosed according to the access to information regimes. These are primarily the Freedom of data Act 2000 (FOIA), the information Protection Act 1988 (DPA) together with Environmental Information Regulations 2004.

If you want the knowledge which you provide to be treated as confidential, please be aware that, beneath the FOIA, there was a statutory code of practice with which public authorities must comply and which relates to, amongst other activities, obligations of confidence. In view of this it would be helpful in the event that you could reveal to us why you regard the information and knowledge you have got provided as confidential.

If we receive an ask for disclosure associated with the information we are going to take full account of the explanation, but we can not give an assurance that confidentiality may be maintained in all circumstances. An confidentiality that is automatic generated by your IT system will not, of itself, be seen as binding on HM Treasury.

HM Treasury will process your private data in accordance with the DPA and in nearly all circumstances this can mean that your own personal data won’t be disclosed to parties that are third.