New standards will be developed to help major banks and insurers to collaborate with fledgling financial technology (fintech) companies, the UK government has announced.
The Treasury confirmed that the UK's Fintech Delivery Panel, which is comprised of members from across the financial services sector, will draw up the standards by the end of 2019 in partnership with the British Standards Institute. Barclays, Lloyds Banking Group, HSBC, RBS and Santander are sponsoring the project and have committed to implementing the standards when they are developed, it said.
The initiative was outlined as part of the UK government's new fintech sector strategy (28-page / 561KB PDF).
The Treasury said: "The benefits of innovation in the delivery of financial services are often maximised through collaboration with incumbents. Incumbents have longer established customer relationships, larger scale, more funding, and developed regulatory and legal knowledge. By contrast start-ups often have more innovative ideas, more specialised technological expertise, and agility."
"Despite the obvious mutual benefits of collaboration, it has not always been easy for fintechs to build these partnerships, in part because they are not always fully aware of what they need to do to meet incumbents' expectations. The government's Fintech Delivery Panel is looking to address this through its work on fintech standards," it said.
In its new strategy, the Treasury also announced that it would participate in a new Cryptoassets Task Force, together with the Bank of England and the Financial Conduct Authority, "to explore further the risks of cryptoassets and the potential benefits of the underlying distributed ledger technology" and to look into the issue of future regulation.
"The government is committed to working with industry to fully understand the risks of cryptoassets, and to consider how to mitigate them, as well as exploring the wider benefits of distributed ledger technology in financial services," the Treasury said.
The UK has also established a new 'fintech bridge' agreement with Australia, the Treasury announced.
The agreement "provides a framework for the UK and Australian governments to harmonise policies across a range of issues relevant to fintech", and "both governments have also committed to providing a range of additional support for UK fintechs selling products and services in Australia," the Treasury said.
The agreement contains a specific commitment for UK and Australian officials to "cooperate on developing their respective open banking regimes", it said.
The UK already has fintech bridge agreements with Singapore, South Korea, China and Hong Kong. The new UK-Australia agreement builds on the existing fintech cooperation agreement that the FCA has with the Australian Securities and Investments Commission.
In its new strategy, the Treasury also confirmed that work to automate regulatory reporting is also moving forward. It said "new reporting technology" could potentially be used for regulatory compliance practices before the end of 2018 in the banking market.
UK chancellor Philip Hammond said the new fintech sector strategy is designed to "preserve and extend the UK's international edge in fintech".
In a speech announcing the new strategy at the Treasury's International Fintech Conference in London, Hammond described Britain as "the global capital of fintech", but said the UK's continued progress on fintech cannot be taken for granted.
"The very nature of this industry means that it moves incredibly quickly and is fiercely competitive," Hammond said. "So let me restate my commitment and determination to ensure Britain remains the best place in the world to set up and grow a fintech business, and to continuously build upon our unique strengths to offer the most attractive home for global fintech leaders."
According to Hammond, the fintech sector is worth nearly $7 billion to the UK economy each year.
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