By Jim Bulling and Michelle Chasser
The Australian Treasury has announced an independent review into open banking in Australia. Open banking will require banks to share product and customer data with customers and third parties with the consent of the customer. The Government previously announced that the open banking regime would be introduced in 2018 to help customers seek more suitable products and increase competition.
By Jonathan Lawrence and Judith Rinearson
On July 10, 2017, the Bank of England (the “Bank”) published summaries of their third round of Proofs of Concept (“PoC”), completed by its FinTech Accelerator.
The FinTech Accelerator was established in 2016, and works in partnership with firms to understand the new technology they may be working with and how FinTech innovations could be utilised within central banking. These PoC provide valuable understanding in respect of FinTech trends and support to its continued development by providing a platform for those firms to demonstrate their solutions for real issues and knowledge from BoE experts.
By Cameron Abbott and Ling Zhu
No great surprises arising from the EY FinTech Adoption Index 2017 which has revealed impressive growth in consumer uptake of FinTech products and services, with 33% of 22,000 digitally active consumers using FinTech firms – doubling from 16% in 2015. With less brand loyalty and reduced trust in traditional organisations, consumers are increasingly turning to FinTech firms as better alternatives.
Money transfer and payment services are the most popular FinTech category, with 50% of consumers using these services. This has been driven by the increasing popularity of mobile phone payments and online digital-only banks. Insurance is the second most popular service, with insurance premium comparative services simplifying the process of acquiring insurance.
FinTech has particularly excelled in emerging markets, with an adoption by digitally active consumers across China, India, South Africa, Brazil and Mexico averaging 46%. The growing middle class have embraced FinTech to meet the growing demand for financial services, encouraged by cooperative regulators and policymakers.
EY anticipates that FinTech adoption will increase to 52% globally as consumers become more aware of the products and services on offer.
Read the full report here.
A new trade body has been launched in the UK – UK Finance. It has been created by combining most of the activities of existing UK finance associations – the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association. It operates across 300 companies and societies, who themselves operate in finance, lending, banking, markets, fraud prevention and payments. Its role will be to help its members build customer trust, facilitate industry-wide collaboration and innovation, and work with policy makers and regulators in the UK, European Union and at a global level to ensure that the UK retains its position as a global leader in financial services.
UK Finance recognises that FinTech is generating enormous possibilities for its members. Its CEO, Stephen Jones, envisages UK Finance’s collaboration with the sector will form one of the central pillars in the organisation’s role of ensuring all its members can deliver the latest advances to their customers. Peter Smith, the CEO and co-founder of Blockchain, represents the FinTech industry on the UK Finance board.
By Jim Bulling and Michelle Chasser
On 13 June 2017, the Australian Securities and Investments Commission (ASIC) entered into a FinTech co-operation agreement with the Hong Kong Securities and Futures Commission (SFC). Soon after, on 23 and 27 June 2017, ASIC also entered into similar arrangements with the Japan Financial Services Agency (JFSA) and the Malaysia Securities Commission (MSC). These arrangements provides a framework for ASIC to work more closely with these regulators.
As a result of these agreements, ASIC, SFC, JFSA and MSC can refer FinTech businesses to each other for advice and support via ASIC’s Innovation Hub, SFC’s FinTech Contact Point, JFSA’s FinTech Support Desk and MSC’s alliance of FINtech community (aFINity). This means Australian FinTech businesses wishing to operate in Hong Kong, Japan or Malaysia will now have a simple pathway for engaging with those countries’ regulators, and vice versa. This can provide valuable assistance for FinTech businesses operating in one jurisdiction which want to better understand the rules in the other.
The UK Financial Conduct Authority (FCA) has provided an update on its regulatory sandbox and unveiled the list of firms that were successful in their applications to begin testing in the second cohort of the sandbox. The regulatory sandbox allows businesses to test innovative products, services, business models and delivery mechanisms in a live environment. It is part of Project Innovate, an initiative begun in 2014 to coordinate the FCA’s approach to FinTech.
Like an iceberg, the majority of the internet is concealed from plain sight. The “Dark Web,” or websites and content that use anonymizing networks to provide untraceable access to unindexed sections of the web, comprises a segment of what lies beneath that which is visible through a Google search. Cliff Histed and Nicole Mueller contributed an article to American Lawyer on this topic. The article contains insight into the concerns shared by former FBI Director, James Comey, as well as European law enforcement authorities.
To read the article, click here.
The UK Financial Conduct Authority (FCA) asked Innovate Finance to chair a consultation on an ‘industry-led sandbox’. Innovate Finance is an independent not-for-profit membership association representing the UK’s global FinTech community. A report on their consultation on this industry sandbox has been published.
For the purposes of the consultation, an ‘industry sandbox’ was defined as ‘a shared off-market development environment where developers of FinTech solutions can access data, technologies, and services from different providers in order to validate innovative ideas or address common industry challenges‘. This sandbox would be set up and run by the industry to enable technology business to test their solutions (either virtually or live with limited participants) before they reach the market. It would also allow businesses and regulators to collaborate on developing the UK FinTech industry.
By Nicole C. Mueller and Clifford C. Histed
On May 31, 2017 the United States Court of Appeals for the Second Circuit unanimously affirmed the conviction and life imprisonment of Ross Ulbricht for drug trafficking and crimes associated with his creation and operation of the online marketplace known as Silk Road. Among others challenges, Ulbricht argued on appeal that he should have been allowed to introduce evidence regarding former government agents who pled guilty to stealing Bitcoins as they investigated Silk Road and Ulbricht. The Second Circuit disagreed, finding that while “the shocking personal corruption of these two government agents disgraced the agencies for which they worked,” it had nothing to do with whether Ulbricht operated Silk Road. The Second Circuit similarly found Ulbricht’s other arguments unavailing, namely that (1) the government’s violated his Fourth Amendment rights through the use of pen registers and trap and trace devices to monitor IP addresses associated with internet traffic to and from Ulbricht’s wireless home router, and the search and seizure of his laptop and Facebook, Google accounts; (2) he was denied a fair trial due to the preclusion of certain testimony and evidence; and (3) it was improper for the court to consider six drug-related deaths relevant to his sentencing.
By Jim Bulling and Michelle Chasser
ASIC is ramping up its focus on regulatory technology (RegTech).
On Friday 26 May 2017, ASIC released its Report 523 titled “ASIC’s Innovation Hub and our approach to regulatory technology”. This report gives an update on the work of ASIC’s Innovation Hub and outlines ASIC’s current and proposed future approach to RegTech.
The report defines RegTech as the use of new technologies to solve regulatory and compliance requirements more effectively and efficiently. These technologies could include use of artificial intelligence, natural language processing, data reporting, regulatory codification and big data analysis technologies.
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