regtech -the fca approach · we held our first techsprint in april 2016: a two -day technology...

QEDRegTechSummit- 10January2017

RegTech- TheFCAApproach

NickCookHeadofData&InformationOperationsnick.cook@fca.org.uk

FinancialConductAuthority

2

Definition and Background

Definition:theadoptionanduseoftechnologytoassistfinancialservicesfirmstounderstandandmeettheirregulatoryrequirementsmoreefficientlyoreffectively

FCA’sProjectInnovatelaunchedinOctober2014,to:• Encourageinnovationintheinterestsofconsumers• Promotecompetitionthroughdisruptiveinnovation

Following a Government Office for Science report on how to support growth anddevelopment of the UK’s FinTech market in March 2015, we have been encouragingthe development and adoption of RegTech, as part of our Project Innovate activities.

ProjectInnovate

RegulatorySandbox

InnovationHub

RegTech AdviceUnit InternationalCooperation

3

Our Activities to Date

We’veengagedandlistenedattentivelytothemarket.InNovember2015,weissuedaCallforInput(CFI),whichattractedover350responsesfromacrosstheRegTechecosystem.WeaskedtheindustryforitsviewsonhowRegTechmaydevelopandwhatroleweshouldplay.WepublishedourFindingsinJuly2016.

Ourobjectiveistoencouragetechnologicalinnovationthatimprovescompliancewhilereducingthecostofregulation.Ourfirstyearactivitiesfocussedaroundbuildingourunderstandingandcredibility

WeheldourFirstTechSprintinApril2016:atwo-daytechnologyinnovationeventaimedatfindingsolutionstodigitalaccessproblemsfacedbyconsumers.Aglobalfirstforafinancialservicesregulator.

OursecondlargerTechSprintinNovember2016addressedthethemeof‘UnlockingRegulatoryReporting’,wheretechnologydirectlyimpactstheinterfacebetweentheregulatorandtheregulated.

#FCASprint

4

Our LearningsWe’vesoughttounderstandtheRegTechandFinTechecosystemandtherolesplayedbyaccelerators,incubators,investors,consultancies,academia,establishedtechnologyfirms,start-ups,tradebodiesandregulatedfirms.

Inourcallforinputfindings,wegroupedtechnologyinnovationsinto4themes:

Efficiencyandcollaboration - Technologyforefficientinformationsharing[e.g.alternativereportingmechanisms,sharedutilitiesandonlineplatforms]

Integrationstandardsandunderstanding – Technologytoclosethegapbetweenintentionandinterpretation[e.g.semantictechnologies,datapointmodels,APIs,androbo-handbook]

Predict,learnandsimplify – Technologytosimplifydata,aiddecision-making,andfacilitateadaptiveautomation[e.g.dataanalytics,real-timecompliancemonitoring,tradesurveillancesystems,machinelearningandcognitivesystems]

Newdirections– Technologythatallowsregulationandcomplianceprocessestobedelivereddifferently[e.g.DLT,automatedcompliancesystems,machine-readableregulation,andbiometrics]

5

Barriers and Issues

o Difficultieswithadoptingandintegratinginnovativetechnologiesontoexisting/legacy ITinfrastructure.

o FinTech/RegTechinnovatorsrestrictedaccess toincumbentfinancialservicesfirms.

o RegTechinnovatorsareconcernedaboutprotectingtheirintellectualproperty andachievingalong-termcompetitiveadvantage.

o Limitedestablishedstandards infinancialservicesmakingengagement,contractingandadoptionofRegTechsolutionsbyfinancialservicesfirmsexpensive,complexandrisky.

o Theregulatoryposition onFinTech/RegTechsolutionsisunknown.

6

Our Potential Role

EstablishingStandards - Clarifyingourexpectationsandhelpingdefineindustrystandardsandbestpractice.

CatalystandConvener– Engagingwithandbringingparticipantstogether;Sharingourviewsonpriorityareasoffocusandfuturedirection.

Certification - FCAapprovalorcertificationofsolutionsthatmeetrelevantcriteria.

LeadingbyExample - FCAtrialling/adoptinginnovativetechnologiesitself.

7

LookingAhead

TechSprints TechTalks TechKnowAcceleratorsTechShows Trials,ResearchandCollaboration

ConsumerPriorities(Access,Vulnerability,MentalHealth)

Real-TimeandNearReal-TimeComplianceSupport,MonitoringandSurveillance

RegulatoryInterpretationandReporting

Others

AML,KYC