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This contempt creates dilemmas in the field of fintech, an industry which melds the fast-paced world of technology with the highly-regulated field of finance.
Policymakers are left in a quandary; how do you create an environment that allows businesses to develop innovative products without putting the fragile post-2008 financial system at risk? That’s a question Christopher Woolard, executive director of strategy and competition at the Financial Conduct Authority (FCA), has found himself tackling during his career at the watchdog.
One of the projects Woolard has been tasked with at the FCA is Project Innovate. Launched in October 2014, it gave the regulator the chance to have a closer look at the fast-paced fintech scene and to help guide it through the red-tape landscape.
While Project Innovate was progressing nicely, Woolard and his team noted that, although they’d opened their doors to businesses of all sizes, few of the bigger players had come knocking.
Meanwhile, other ideas presented to them were so innovative, the regulators had no clue how to treat them.
Woolard warns that, although Brexit might be a good opportunity to tidy up rule books which have become unruly over time, it will not bode well for the UK if it immediately drops its efforts to be equivalent to the rest of the EU.
He adds: “When we think about what really makes London a global financial centre, one of the key things is its reputation and the efficiency, the effectiveness, the well-run nature of the markets that operate here and that we regulate. I think we would have to think very, very carefully about diluting that.”
Looking to the future of fintech, Woolard believes larger players will adopt tech at a faster pace and smaller firms will either continue to scale up organically or be snapped up by bigger companies.
“From a consumer’s perspective, this is maybe quite an exciting time where we begin to see change in the financial services industry that is perhaps not dissimilar to some of the changes we might have seen in other industries that have been impacted by technology in the last 15 to 20 years,” he says.